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HomeMy WebLinkAbout06.b. BP 022 - Alhambra Valley Assessment Districts (AVADs)Central Contra Costa Sanitary District 6.6% ' BOARD OF DIRECTORS POSITION PAPER OD ° d69V Board Meeting Date: NOVEMBER 5, 2015 Subject: ADOPT NEW BP 022 — ALHAMBRA VALLEY ASSESSMENT DISTRICTS (AVADs) Submitted By: Initiating Dept. /Div.: Thomas Brightbill, Senior Engineer Engineering & Technical Services / Planning & Development Services REVIEWED AND RECOMMENDED FOR BOARD ACTION: D. Gemmell — Planning & Development Services Division Mgr. JM. Petit — Director of Engineering & Technical Services Kent Alm Roger S. Bailey Counsel for the District General Manager ISSUE: The creation of a new Board Policy requires the review and approval of the Board of Directors. BACKGROUND: In 2006, the Board of Directors approved Resolution 2006 -117, the Alhambra Valley Assessment District (AVAD) Policy. The resolution included a Policy Statement section but a separate Board Policy (BP) document was never created. In conjunction with a review and update of BP 010 Contractual Assessment Districts (CAD), this new Board Policy was drafted. While AVADs are a subset of CADs, there are several important distinctions between the two including the role of the District in providing financing for non - participating parcels and the length of the financing. The Board of Directors reviews and approves AVAD projects in the same manner as they review and approve CAD projects. ALTERNATIVES /CONSIDERATIONS: The Board of Directors could direct that additional edits and changes be made to the AVAD policy. FINANCIAL IMPACTS: None by this action. COMMITTEE RECOMMENDATION: The policy was reviewed by the Administration Committee at the October 26, 2015 meeting. RECOMMENDED BOARD ACTION: Approve BP 022 — Alhambra Valley Assessment Districts. Attached Supporting Document(s): 1. BP 022 — Alhambra Valley Assessment Districts 2. Resolution 2006 -117 — Resolution Establishing the Alhambra Valley Assessment District Policy Page 1 of 1 Number: BP 022 Authority: Board of Directors Effective: Reviewed: Initiating Dept. /Div.: Engineering /Planning & Development Services BOARD POLICY I 1 I 1 I ♦ I www.centralsan.org ALHAMBRA VALLEY ASSESSMENT DISTRICT PURPOSF To encourage residential property owners to connect to the public sewer system. The Alhambra Valley Assessment District (AVAD) program provides financial assistance to small groups of homeowners, often with inadequate septic tank systems, so that they may extend the public sewer system to serve their properties. The AVAD program is intended for residential properties, primarily owner - occupied, and not commercial properties. While the AVAD program is similar to the Contractual Assessment District (CAD) Program, it offers several additional incentives for property owners to connect to public sewers tributary to the Alhambra Valley Trunk Sewer, thereby enabling the District to more quickly collect reimbursement for District funds that were used for the planning, design, and 2008 construction of the trunk sewer. POLICY This policy establishes the criteria for formation of AVAD projects. Nothing in this policy is intended to bind the District to continue with the program for any predetermined time period, nor does it create any right or entitlement in favor of potential program participants. The Board may consider technical, economic, staffing, budgetary, environmental and other factors in its consideration of whether to form an AVAD. FUNDING The initial funding for design, construction and inspection of the sewer improvements will be provided by the District. The initial participating property owners repay their share of this money, either in a lump sum at the completion of construction or in 15 annual installments. The annual installments include a nominal interest rate, are secured by a lien on the property, and are collected on the property tax bill. Subsequent participants repay their share of this money when they connect to the sewer main. Number: BP 022 ALHAMBRA VALLEY ASSESSMENT DISTRICT POLICY STATEMENT Page 2 of 2 LEGAL CADs are formed pursuant to Streets and'Highways Code Section 5898, et seq. While the State Legislature has found that CADs are voluntary, imposed pursuant to an agreement and are not subject to Proposition 218, the District will not proceed with a CAD formation if a majority of ballots, weighted by the proposed assessment, are submitted in protest of the project. FORMATION CRITERIA In order to be eligible for participation in the District's AVAD financing program, the proposed mainline sewer extension project must meet the following criteria: • A minimum of three annexed properties must be directly tributary to a proposed AVAD facility. • A minimum of 60 percent of the properties directly tributary to a proposed AVAD facility must already be developed. • A participant parcel may not have more than two dwellings on it to participate in an AVAD. RESOLUTION N0.2006- 117 ATTACHMENT 2 RESOLUTION ESTABLISHING THE ALHAMBRA VALLEY ASSESSMENT DISTRICT POLICY WHEREAS, the Central Contra Costa Sanitary District (CCCSD) has, over the last several years, identified a prevalent sanitation issue occurring within Alhambra Valley, south of the City of Martinez, said issue being the need to replace residential septic systems by connection to CCCSD's collection system; and WHEREAS, this sanitation issue is increasing in importance as a result of the failure of existing septic systems due to age; and WHEREAS, in order to replace failing septic systems with connections to the public sewers, extension of existing public sewer mains is frequently required; and WHEREAS, the cost and complexity of undertaking a sewer main extension may prevent a single homeowner from connecting to the public sewer system thus perpetuating an ongoing health and environmental problem; and WHEREAS, public policy, as well as legal and fiscal constraints, limit the ability of CCCSD to build or extend local street sewers to serve individual or small groups of existing homes; and WHEREAS, CCCSD is in the process of constructing a trunk sewer in Alhambra Valley to serve as the backbone of an area -wide public sewer network; and WHEREAS, the use of assessment districts can provide the structure and financial assistance required to encourage neighbors to jointly undertake projects to provide sewer service to their properties; and WHEREAS, since 1997 on a demonstration basis, and from 1999 to 2004 on a program basis, CCCSD has made use of the provisions of the Streets and Highways Code Section 5898, et seq. in order to create Contractual Assessment Districts in order to provide for assessment financing of main extensions for failing septic systems; and Paps 1 *III Resolution No. 2006 -117 WHEREAS, at its July 20, 2006 meeting, CCCSD's Board of Directors voted unanimously to conceptually approve an Alhambra Valley Assessment District program. NOW, THEREFORE, the Board of Directors of the Central Contra Costa Sanitary District adopts the Alhambra Valley Assessment District Policy Statement, attached as Exhibit A and incorporated herein by reference. The Board of Directors of the Central Contra Costa Sanitary District further finds that this policy shall remain in effect until such further order of the Board; however, the adoption of this policy does not create any vested right or entitlement to any parcel owners within CCCSD's sphere of influence concerning eligibility for this program, nor shall CCCSD be precluded from modifying or terminating this program at any time it deems appropriate. The adoption of this policy also does not set a precedent for future funding of other neighborhoods' main sewers. { PASSED AND ADOPTED this 2nd day of November 2006 by the Board of Directors of the Central Contra Costa Sanitary District by the following votes: AYES: Members: Boneysteele, Hockett, Nejedly, Menesini NOES: Members: lucey ABSENT: Members: None a 1�cp �r�ri, Mario M. Menesini President of the Board of Directors, Central Contra Costa Sanitary District County of Contra Costa, State of California COUNTERSIGNED: Elting R. Soehme Secretary, Central Contra Costa Sanitary District County of Contra Costa State of Califo APPROVED AS TO FORM: 4L cz- ( n Kento . AI District Counsel Pop 2 of 11 EXHIBIT A ALHAMBRA VALLEY ASSESSMENT DISTRICT POLICY STATEMENT Introduction This policy statement for the Alhambra Valley Assessment District (AVAD) Program establishes the criteria for formation of AVAD projects, the process for the AVAD program, and methodology for allocating costs and assessments among AVAD participants. The AVAD program will consist of voluntary Contractual Assessment Districts (CADs), which are formed pursuant to Streets and Highways Code Section 5898, et seq. to extend sewer facilities to residential areas currently served by septic tank and leachfield systems. AVAD P=ram Purpose The purpose of the AVAD Program Is to provide financial assistance to Alhambra Valley property owners so that they may extend the public sewer system to serve their developed properties. The goals of the AVAD Program are to assist property owners with septic tanks to finance the cost of extending and connecting to the public sewer; to avoid future use of septic systems and sewage pumping systems in Alhambra Valley; and to facilitate direct and Indirect connections to the Alhambra Valley trunk sewer so that CCCSD can be reimbursed more quickly for its planning, design, and construction expenditures associated with the trunk sewer extension. AVAD Program Fundina CCCSD will budget sufficient funds for the extension of public sewer mains In Alhambra Valley. This amount is estimated to be $3.5 million. Funds for construction of the trunk sewer have already been budgeted. The Board of Directors, at its discretion, may modify this program, including increasing or decreasing the budgetary ceiling, at POP 3 0f ii anytime. Nothing in this policy Is intended to bind CCCSD to continue with the program for any predetermined time period, nor does it create any right or entitlement in favor of potential program participants. Definitions • An Alhambra Valley Assessment District (AVAD) is a contractual assessment district (CAD), a legal entity, established pursuant to Streets and Highways Code Chapter 5898 for the purpose of financing the construction of sewers in residential areas currently being served by septic tanks. • Parcel or Property denotes in this Policy a piece of residential real estate, Including land and anything permanently affixed to the land including buildings. The terms parcel and property have the same meaning herein and shall refer to the divisions of property as indicated on County Assessor's Parcel maps. • Direct connectors are parcels that can connect by lateral to the Alhambra Valley Trunk Sewer being constructed by CCCSD. • Indirect connectors are parcels that can connect by lateral to a public sewer main that is tributary to a part of the Alhambra Valley Trunk Sewer. • Participants are owners of direct or indirect connector properties who voluntarily agree to enter into an AVAD contract. s Nonparticipants are owners of direct or indirect connector properties who do not to enter into an AVAD contract. Non - participants will not be assessed for their share of the sewer improvement costs until the time of connection. • Participant Parcels are the direct or indirect connector properties owned by Participants. • Non participant Parcels are the direct or Indirect connector properties owned by non - participants. Paps 4 of 11 • AVAD Non participant Reimbursement Fees are fees collected from owners of Non - participant Parcels at the time of connection to the sewer to reimburse CCCSD for the Non - participant Parcel's share of the cost of sewer improvements installed under an AVAD. Criteria for Formation In order to be eligible for participation in CCCSD's AVAD assessment financing program, the proposed sewer extension project must meet the AVAD formation criteria. The criteria are as follows: • A minimum of three properties must be directly tributary to a proposed AVAD facility. • A minimum of 60 percent of the properties directly tributary to a proposed AVAD facility must already be developed. • A minimum of half of the properties directly tributary to a proposed AVAD facility must be willing to be a Participant, except in the case of the AVAD for Direct connectors to the Alhambra Valley Trunk Sewer. • A Participant Parcel may not have more than two (2) dwellings on it to participate In an AVAD. • Two or more proposed unconnected AVAD facilities may be combined into a single AVAD fbr administrative purposes. When this happens, the expenses and assessments for individual, unrelated facilities will be separated and assigned to the respective, benefiting properties. • After completion of the Alhambra Valley Trunk Sewer, CCCSD will establish Direct and Indirect connector reimbursement charges for the trunk sewer and form the first AVAD (AVAD No. 1) to finance allowable costs of direct connector Paps 5 of 11 participants. Direct connectors will have one year from the establishment of the trunk sewer AVAD No. 1 to become Participants by signing an AVAD contract. • Indirect connectors wishing to become Participants will have three years from the establishment of the AVAD No. 1, for the trunk sewer, to obtain CCCSD approval to initiate formation for an AVAD for their neighborhood, and eighteen months thereafter to receive CCCSD approval of an AVAD election. AVADs will be numbered sequentially in the time order Initiated by CCCSD. Notwithstanding the above- listed criteria, CCCSD will consider exceptions to this policy on a case -by -case basis. CCCSD may consider technical, economic, staffing, budgetary, environmental, and other factors in its consideration of whether to form an AVAD and the ultimate decision is at the sole discretion of the Board of Directors. AVAD Formation Process There are several staff level actions and three Board approval steps in the AVAD process. CCCSD's Board of Directors will consider approval of individual AVAD projects which staff has determined meet the formation criteria. The following Board actions are required: • Initiation of an AVAD • Approval of the Engineers Report and assessments; ordering of the improvements;, and approval of the AVAD election. • Approval and levying of final assessments. 1. Initial Actions • Groups of Alhambra Valley property owners may be eligible for an AVAD if they can directly connect to the Alhambra Valley Trunk Sewer or seek a sewer main extension to provide for connection to CCCSD system. CCCSD staff will work with the owners to explain the AVAD process. if Pape 6 or 11 a sufficient number of property owners and CCCSD remain interested in proceeding with an AVAD and the criteria for AVAD formation appears to be met, CCCSD will consider initiation of an AVAD. Property owners will be requested to submit letters indicating their interest in formation of an AVAD. Property owners must already be included in District Annexation 168 (Resolution of Application 2006 -047, adopted by the Board of Directors on July 6, 2006). Staff will issue a letter setting forth Its Initial determination of eligibility for the AVAD program. • If CCCSD staff determines that a proposed AVAD does not meet the formation criteria, staff will notify the property owners In the proposed AVAD of the staff decision in writing. Property owners may appeal this staff decision to the CCCSD Board of Directors in accordance with Chapter 1.16 of the District Code except as modified by this policy. This policy allows property owners 30 days to request an appeal of a staff decision. The Secretary of CCCSD will schedule the matter for a hearing before the Board of Directors and provide written notice of the time and place of that hearing to the affected property owners. 2. Creation of Assessment District • Participants are required to retain an engineer to design and solicit bids for the private work (the sewer facilities). • An Engineer's Report estimating project costs and assessment levels will be prepared by CCCSD in accordance with state law. Residents will have 18 months from when CCCSD initiates formation of an AVAD to submit sewer plans, construction bids, and other information necessary for CCCSD to prepare an Engineer's Report. Pap 7 of 11 • CCCSD will distribute Notices of Proposed Assessment and conduct an election in accordance with state law by which property owners may indicate their approval of or opposition to the proposed assessment. The Board of Directors will conduct a public hearing to announce the outcome of the election and receive public comment about the proposed assessment. • Following the public hearing, the Board of Directors will determine the election results and consider approval of the Engineer's Report, preliminary assessments, and the AVAD improvements. • If the proponent property owners do not provide all necessary Information, including approved plans and construction bids, within 18 months of CCCSD's initiation of the AVAD proceedings, the AVAD process will be terminated. 1= • a F V# us =.- 1 Kati • Following approval by the Board of Directors of the Engineer's Report and AVAD improvements, the Participants must enter into a written contract with CCCSD, which describes the responsibilities of the parties, the work, and the provisions for payments. • CCCSD will undertake the procedural requirements to form the AVAD; review the plans for compliance with CCCSD standards, finance the work, and establish the assessments. • Participants are required to hire a contractor and to supervise the construction of the private works AVAD facilities. CCCSD will have no contractual relationship with the contractor and will not provide construction management or site supervision; however, CCCSD will Paps e d i t inspect the project consistent with prevailing CCCSD inspection procedures. • CCCSD will accept the work if the work is done in accordance with CCCSD's standards. • Participants shall be required to provide all project cost records and related information. CCCSD staff will review project costs, evaluate eligible project costs, and determine the proposed final assessments. The Board of Directors will then consider approval and levying of the final assessments. 4. Payments and Assessments • Unless limited by other provisions of this policy, each Participant shall have the option to pay for his share of AVAD expenses after the work is completed by either: 1) lump sum cash payment or 2) by contractually subjecting the Participant's property to an annual assessment, including Interest, over the term of the AVAD. • The term of the Participant's assessment (payback period) shall be fifteen years with no interest penalty for early payoff. The interest rate shall be fixed when the CCCSD General Manager signs the contract between the Participants.and CCCSD. The annual Interest rate for assessments shall be 1 percent above the then current average interest rate on CCCSD temporary investments or 1 percent above the interest rate at which CCCSD has borrowed funds for the AVAD Program. The minimum interest rate shall be six percent. • Participants are limited to use of the fifteen -year annual assessment payment option for no more than two parcels at any given time. If a Paps 9 0111 person(s) owns three or more parcels in the same AVAD or different AVADs, that person(s) may be a Participant for three or more parcels, but will be eligible for the annual assessment option for only two parcels. The shares of the AVAD expenses for the other parcels must be paid by the lump sum payment option at time of connection. • The assessments shall be equal for each Participant Parcel unless otherwise provided for in the contract and documents creating the AVAD. If an existing Participant's Parcel can be legally subdivided, there are two dwellings currently existing on a single parcel or other cost of service related factors justifying differing assessments are present, said Parcel may be assigned more than one assessment. • To determine the assessment for each AVAD Parcel, the Board of Directors will divide the total allowable project costs by the total number of benefiting properties, adjusting for exceptions as noted above. • The costs of the work associated with designing and constructing sanitary, sewer mains, manholes, rodding inlets, and private sewer laterals within public streets or right - of-way may be included as eligible costs of the AVAD. Other eligible AVAD costs include paving and other appurtenances within public streets, rights of way necessary to bring the sewer service to a Participant Parcel, CCCSD's Capacity Fee, and CCCSD's Alhambra Valley Trunk Sewer reimbursement charge. • The cost of septic tank abandonment, installation of the private sewer laterals (not within a public street or public right of way), and other CCCSD fees and charges customarily due upon connection to the public sewer shall be excluded from AVAD financing. For purposes of this Pap 10 0111 paragraph, "rights of way" shall include public or private roads providing legal ingress and egress to multiple parcels. • The AVAD assessments will be imposed on each Participant Parcel and recorded as a lien against the Parcel. The assessment will include the principal and interest and will be collected on the property tax bill as an assessment along with taxes and other assessments and charges on the subject parcel. 5. MA12 Non-particln nt Reimbursement E M • CCCSD initially will be responsible for the Non - participant Parcels' share, of AVAD costs. Non - participants will reimburse CCCSD for these costs as they connect to AVAD facilities in the future. • When CCCSD staff determines that there are Non - participant Parcels that could connect to an AVAD facility, the Board of Directors, in accordance with CCCSD practice and the AVAD contract, will establish AVAD Non - part icipant Reimbursement Fees. The obligation of a Nbn- participant Parcel owner to pay a reimbursement fee upon connection to an AVAD facility will not expire; CCCSD will collect AVAD Non- participant Reimbursement Fees indefinitely. • The Board of Directors will establish AVAD Non - participant Reimbursement Fees when the final assessments are established for AVAD Participants. Subsequent adjustments to AVAD Non - participant Reimbursement Fees may be made by the Board of Directors periodically to recover CCCSD's carrying cost of advancing the Non - participants' share of AVAD expenses. Paps 11 of 11