HomeMy WebLinkAbout05.a. Appeal Hearing re 2500 Annalisa Drive, Concord (Caffe Classico) re capacity fees . a .
APPEAL HEARING REGARDING CAPACITY FEES FOR
2500 ANNALISA DRIVE, CONCORD (APN 159-362-001)
Caffe Classico
HEARING AGENDA
February 4, 2016
(Continued from January 7, 2016)
1. Call for public comment
2. Hearing
a. Open hearing
b. Introductions
C. Receive presentation from property owner, property owner's
attorney, or both
d. Staff response
e. Response from property owner or property owner's attorney, if any
f. Board questions
g. Close hearing
3. At the conclusion of the hearing, the Board of Directors may:
• deliberate, vote on the matter, and direct staff to prepare written
findings reflecting the Board's decision for adoption at a future meeting;
or
• recess into closed session to seek conference with special counsel,
Craig Labadie, to receive legal advice regarding exposure to litigation
and thereafter deliberate and vote on matter in open session.
NOTE: Attorney Craig Labadie will advise the Board on this matter.
Central Contra Costa Sanitary District
f; ` BOARD OF DIRECTORS
r , =
POSITION PAPER
Board Meeting Date: February 4, 2016
Subject: APPEAL HEARING REGARDING CAPACITY FEES FOR 2500 ANNALISA
DRIVE, CONCORD, APN 159-362-001 (CAFFE CLASSICO)
Submitted By. Initiating Dept:/Div.:
Danea Gemmell, Planning & Development Planning and Development/
Services Division Manager Engineering and Technical Services
REVIEWED AND RECOMMENDED FOR BOARD ACTION:
JM. Petit—Director of Engineering &Technical Services
Kent Alm /,—Roger S.Bail y
Counsel for the Dist' General Manager
ISSUE: A property owner has requested an appeal of a staff dtermination regarding
the calculation of capacity fees and the placement of those fees on the property tax bill.
District Counsel has directed that an administrative appeal hearing is appropriate.
BACKGROUND: On August 6, 2015, the Board of Directors held a public hearing to
place $114,970.47 in delinquent capacity fees ($102,974) and penalties ($11,996.47)
for 2500 Annalisa Drive in Concord on that parcel's annual property tax bill. An excerpt
of the meeting minutes covering the public hearing is included as Attachment 1. A copy
of the presentation which includes the calculation of the capacity fee is included as
Attachment 2.
On November 17, 2015, the District received Notice of Claim from the property owner's
attorney, Mr. Craig Nevin. This letter is included as Attachment 3. In the letter,
Mr. Nevin asserts that the capacity fee is not owed because of statute of limitations and
even if it were owed, it has been incorrectly calculated. The letter asserts that the
collection of the capacity fee is not an "administrative action" and therefore is subject to
a statute of limitations.
District Counsel Kent Alm has prepared a response letter dated December 29, 2015
which is included as Attachment 4. This letter presents Mr. Alm's basis for asserting
that the collection of the capacity fee is indeed an administrative action and therefore
statute of limitations would not apply. In addition, the letter presents the basis for the
capacity fee calculation and attempts to clarify what appears to be a misunderstanding
of the building square footage.
This appeal hearing was originally scheduled to take place on January 7, 2016, but it
was postponed to February 4, 2016 at the request of Mr. Nevin, the property owner's
attorney.
N:\ADMINSUP\ADMIN\DIST-SEC\Position Papers\2016\2-4-16 PP Caffe Classico appeal hrg.docx Page 1 of 2
POSITION PAPER
Board Meeting Date: February 4, 2016
subject APPEAL HEARING REGARDING CAPACITY FEES FOR 2500 ANNALISA
DRIVE, CONCORD, APN 159-362-001 (CAFFE CLASSICO)
In the interim, on January 22, 2016, Mr. Nevin provided a response letter to Mr. Alm's
letter of December 29, 2015, which was included in the agenda packet for the hearing
that was scheduled for January 7, 2016. A copy of the letter is included as
Attachment 5.
Mr. Alm responded to Mr. Nevin's January 22, 2016 letter in a letter dated January 27,
2016, a copy of which is included as Attachment 6.
A timeline of events and significant communications is included as Attachment 7.
As this appeal hearing will be a quasi-judicial proceeding and Mr. Alm has advised
District staff on this matter in the past, attorney Craig Labadie will advise the Board of
Directors on this item during the meeting.
A closed session has been scheduled at the end of this Board Meeting if the Board
wishes to consult with Mr. Labadie regarding the threat of litigation related to this matter.
ALTERNATIVES/CONSIDERATIONS: The Board of Directors could find that the fee
was incorrectly calculated or that it was not appropriate to place the charge on the
property tax bill.
FINANCIAL IMPACTS: If the property owner's request is approved by the Board of
Directors, all or part of the $114,970.46 charge could be refunded.
COMMITTEE RECOMMENDATION: This matter was not reviewed by a Board
Committee.
RECOMMENDED BOARD ACTION: Hold the appeal hearing. Confirm staff's position
that the capacity fee was correctly calculated and that it was appropriate to place the
delinquent capacity fee and penalty on the owner's property tax bill.
Attached Supporting Document(s):
1. Meeting minutes excerpt from August 6, 2015 Public Hearing
2. August 6, 2015 public hearing presentation
3. Letter dated November 17, 2015 from property owner's attorney
4. Response letter dated December 29, 2015 from Kent Alm
5. Response letter dated January 22, 2016 from Craig Nevin
6. Response letter dated January 29, 2016 from Kent Alm
7. Timeline of events and significant communications
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CENTRAL CONTRA COSTA SANITARY DISTRICT ATTACHMENT 1
Regular Board Minutes of August 6, 2015
h. Adopt Resolution No. 2015-027 rescinding Resolution No. 2008-111 and providing
for concurrent annual performance evaluations of the Executive Management Team
(General Manager, Secretary of the District, and District Counsel).
i. Direct staff to secure the services of an arbitrator in accordance with the District's
grievance procedure.
It was moved by Member Williams and seconded by Member Causey to adopt the Consent
Calendar. Motion passed by unanimous vote of the Board Members present.
4. CALL FOR REQUESTS TO CONSIDER ITEMS OUT OF ORDER
None.
5. PUBLIC HEARINGS
a. CONDUCT PUBLIC HEARING TO CONSIDER ADOPTING RESOLUTION NO.
2015-028 TO PLACE DELINQUENT CHARGES IN THE AMOUNT OF $114,970.47
FOR THE PROPERTY LOCATED AT 2500 ANNALISA DRIVE IN CONCORD (APN
159-362-001) (CAFFE CLASSICO) ON THE FISCAL YEAR 2015-16 CONTRA
COSTA COUNTY TAX ROLL FOR COLLECTION
This matter was reviewed by the Finance Committee on July 27, 2015.
Planning and Development Services Division Manager Danea Gemmell reviewed
the PowerPoint distributed prior to the Board meeting. She explained that in 2000,
Mr. Tom Heffernan was the property owner and operator of Caffe Classico, a gelato
and sorbet manufacturer. As a result of enforcement actions taken by the District's
Source Control group for discharge violations, Caffe Classico went to Zero
Discharge in February 2013. However, no capacity fees have ever been paid for the
creation of the business and the manner of their calculation, plus interest and
penalties, remains at issue.
In approximately 2007, the business was sold and subsequently operated by a
group of investors, but Mr. Heffernan remained owner of the property. Staff has
been attempting to collect capacity fees since 2012 and the account was declared
delinquent in early 2013. Interest and penalties were suspended in May 2013 at the
request of Mr. Heffernan pending the outcome of a legal proceeding between the
group and Mr. Heffernan. Last year, the District was informed that the arbitration
had concluded but the terms were confidential. Since that time, staff and District
Counsel have been in contact with Mr. Heffernan about payment of the capacity
fees, with no resolution.
Ms. Gemmell and District Counsel Kent Alm responded to questions from Board
Members during which it was clarified that the amount of capacity fees requested to
be placed on the tax roll at this time ($114,970.47) represents an exact calculation of
fees from 2012 to 2013, including penalties and interest, and is the down payment,
Book 64— Page 93
CENTRAL CONTRA COSTA SANITARY DISTRICT
Regular Board Minutes of August 6, 2015
based on square footage, for a capacity use agreement. The remaining balance,
which represents the burden placed on the sewer system by Caffe Classico prior to
2012, is estimated to be a much larger amount. That amount is more difficult to
calculate and further discussion with counsel in closed session is scheduled for
August 26, 2015. In the meantime, the County deadline for submitting items for
collection on the Fiscal Year 2015-16 tax roll is August 10, 2015. Mr. Alm noted that
if the Board decided to take some other course of action on August 26, the
resolution could be rescinded. It was staff's recommendation that the amount of
$114,970.47 be authorized via resolution at this meeting for collection on the tax roll.
President McGill opened the public hearing.
Mr. Heffernan stated his belief that the strength data the District is using to calculate
capacity fees is inaccurate. If he could provide some of the information presented
during the arbitration hearing, he believes the matter could be resolved.
Unfortunately, under terms of the arbitration agreement, that information is
confidential.
A lengthy discussion took place during which the possibility of obtaining some of the
confidential documents for closed session review was raised. Member Causey and
Member Williams said they would like to know the actual fees accrued, including
interest and penalties, had the District not suspended its efforts to collect in May
2013. Member Pilecki requested information as to the cost of staff time devoted to
this matter. Member Williams also said he would like to know what is staff's
understanding of any purported agreement reached with Mr. Heffernan with regard
to the capacity fees for Caffe Classico.
President McGill closed the public hearing.
It was moved by Member Causey and seconded by Member Williams to adopt
Resolution No. 2015-028 to place delinquent charges in the amount of$114,970.47
for the property located at 2500 Annalisa Drive in Concord (APN 159-362-001)
(Caffe Classico) on the Fiscal Year 2015-16 Contra Costa County tax roll for
collection.
Member Pilecki commented that the Finance Committee wanted to put a much
larger amount on the tax roll but, given the impending County deadline and the fact
that the Board will soon discuss the matter in more depth in closed session when all
five Board Members are expected to be present, he said he would vote in favor of
the motion. Motion passed by unanimous vote of the Board Members present.
PRESENT: Members: Causey, Pilecki, Williams, McGill
ABSENT: Members: Nejedly
Book 64— Page 94
ATTACHMENT 2
Item No. 5.a.
Public Hearing
Unpaid Capacity Fees
2500 Annalisa Drive, Concord
Danea Gemmell
Planning & Development Services Division Manager
August 6, 2015
Central Contra Costa Sanitary District
2500 Annalisa Drive, Concord
SUMMARY
• Former Light Industrial/Office use, now houses Caffe
Classico, a manufacturer of ice cream, gelato, sorbet.
• No permit issued for change in use; no capacity fees
paid
• Source Control took enforcement action against Caffe
Classico for discharge violations and reached
settlement agreements in 2010 and 2013.
• The settlement agreement required Caffe Classico to go
Zero Discharge.
• Staff has been working to collect unpaid capacity fees
since 2012.
1
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7
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2
How Capacity Fees Were Calculated
for Caffe Classico
• CCCSD has no standard user category or RUE
factor for a business of this type.
• A Special Study would typically be conducted
based on flow and strength data.
• Caffe Classico's flow and strength data showed
wide variations and was deemed not useful for a
Special Study calculation.
Typical Capacity Fee Calculation
1000 square feet X Business Factor = RUEs
RUEs X Capacity Fee = Capacity Charge
Example:
12,946 square feet of Restaurant:
12.946X4.010 = 51.91 RUEs
51 .91 RUEs X $6,005/RUE = $311 ,740
'49M
3
How Down Payment for Capacity
Use Agreement was Calculated
Gravity: 1.166 RUE/1,000 SF
x 12,946 SF
15.1 RUE
x 5,797 $/RUE
$87,506
Pumped: $15,468
CAPACITY FEE DOWN PAYMENT $102,974
How Capacity Fees Were Calculated
for Caffe Classico
• Caffe Classico considered "Permitted Industry".
• A Capacity Use Agreement to spread the
payment of capacity fees over 15 years.
• Annual charge is based on water consumption
and wastewater strength data.
• Caffe Classico subsequently went Zero
Discharge in February 2013. Annual billings
were suspended.
4
Efforts to Collect Fees
• Starting in 2012, staff has attempted to collect
capacity fees.
• Multiple letters, meetings, phone calls, etc.
• Declared delinquent in May 2013.
• Action suspended for two years by request of
business owner and property owner while they
carried out litigation.
• Staff recommends placing amount on tax roll for
collection.
Current Status
• Public Hearing on 8/6/15
• Place on 2015-16 tax roll (deadline is
August 10)
• File Certificate of Unpaid Charges to
secure our charges until tax bills go out
• Closed Session on 8/26/15 to consider
additional action
5
Questions?
6
ATTACHMENT 3
LAW OFFICE OF CRAIG S. NEVIN
CRAIG S.NEVIN,ESQ.
Email: C'rAeti in a.LtrwA vmxom
November 17, 2015
Via Email:
CENTRAL CONTRA COSTA
COUNTY SEWER DISTRICT
M. MCGILL— BOARD PRESIDENT
BOARD MEMBERS: P. CAUSEY;T. PILECKI; J. NEJEDLY; D.WILLIAMS
CARE OF: KENTON L.ALM, DISTRICT COUNSEL
DANEA GEMMELL, PLANNING AND DEVELOPMENT DIVISION MANAGER
Via US Mail.
CENTRAL CONTRA COSTA
COUNTY SEWER DISTRICT
ELAINE R. BOEHME, SECRETARY OF THE DISTRICT
ROGER S. BAILEY, GENERAL MANAGER
50'19 IMHOFF PLACE
MARTINEZ, CA 94553
Regarding:
Caffe Classico and Thomas Heffernan
2500 Annalisa Drive, Concord, CA
CCCSD Notice of Capacity Fees: December 26, 2012
CCCSD Tax Lien Imposed: September 1, 2015
NOTICE OF CLAIM
District Secretary, General Manager Members of the Board care of District Counsel:
After numerous discussions and meetings in anticipation of litigation, this letter is in part
a notice of claim and intention to sue and in part a final pre-litigation effort to resolve this matter
without the need for extended litigation. Caffe Classico and Mr. Heffernan dispute there is any
amount owing to the District, and the most overwhelming reason is the statute of limitations.
However, there are numerous other factors the District is urged to consider, some of which are
also discussed below.
First and foremost, the District knew of the existence of its claim for an increased
Capacity fee as early as 2003--when the original Industrial Users permit was filed. The 2003
permit application indicated that the operation was a manufacturer of gelato and sorbet, so the
District was well aware of the change and the nature of the change in use in 2003. Based on
California law, because employees of the District approached Caffe Classico operations in 2003
as an unpermitted user, their notice is imputed to the District and the statute of limitations cannot
be triggered any later, and might be earlier,than that.
ONE MARKET STREET—SPEAR TOWER,SUITE 3600
SANFRANCISCO,CALIFORNIA,94105
TEL EPHoNE:415-293-8465
November 17,2015
Page 2
Even beyond what is likely an insurmountable statute of limitations issue, as seen in the
attached schedule of facts and events we have prepared, there have been over 100 interactions
between Caffe Classico and the District, during these past 9 %z years including:
-Fourteen Annual permit applications for Industrial Users Permits submitted/approved;
-Nine instances where the District placed other sewer charges on the tax roll; and,
-Two negotiations and settlements of District code violations in 2009 and 2011
It cannot be disputed that there was never any request or mention for Capacity Fees from April
10, 2003 to December 26, 2012, a total of over 9 '/2 years, notwithstanding and despite all of
these interactions. Of course, the amount at stake is the reason why there have been so many
settlement related meetings.
We have researched the issues and the authorities not only ourselves but also those given
to us by District Counsel. It is our position that the statute of limitations is one obvious basis we
will use to defeat the assessment, whether or not it must be paid first. The Board's decision to
place a tax lien in September 2015 has likely caused an end to those discussions. Unless the
District releases (perhaps without prejudice) the tax lien, that lien and the amount at stake
guarantees that litigation will ensue--unless the dispute can be resolved. In that regard, and
without each side having to spend tens of thousands of dollars in litigation, we would like to
know on what basis and under what authority the District believes its claim would survive the
Statute of Limitations defense. (This is not an administrative action or labor practices matter
such as Cochella v. CalPers 35 Cal.41h 1072.) In that regard,please provide us with:
1)The code section(s)under which the District would base its claims,
2)The associated statute of limitations period for each code section(s),
3) And the date you contend the District discovered it had a claim under such code
section(s).
Our next point is possibly even more important, pragmatically. Even if the Board
imagines the District somehow overcoming the statute of limitations problem it has, it can be
demonstrated that the calculation of the Capacity Fee is incorrect. This can easily be shown as
follows: CCCSD staff has made an offer of$102,974 for "settlement" of capacity fees for the
property at 2500 Annalisa Drive in Concord. This figure is based on a calculation using the
Capacity Use Change Program. Specifically, the December 26, 2012 letter to Mr. Heffernan as
the property owner, preliminarily stated that based on an increase in the square footage of the
building and a change in use, a capacity fee would need to be charged. Tire letter also stated
that the original sewer permit that was issued in 1983 when the building was erected, indicated
a 6,000 square foot building, "whereas the current square footage is 12,946." Clearly
therefore, the calculations which derived the increased Capacity fee $102,974 was based on an
assumption that the new square footage was 12,946. This is wrong: no one ever increased the
square footage of the building as can be shown by the original stamped construction plans which
we have. They show how the building was originally built in 1983 at that it is the same today.
What Mr. Heffernan did do, was to remodel 1000 square feet within the existing building to
house his manufacturing room.
Moreover, Caffe Classico Foods only occupies about 45% of the total building and has
never at any time occupied the whole building. (The rest of the building has been leased to a
telecommunications company.) Just as if a business opens up a 1000 square foot deli within the
November 17,2015
Page 3
1,400,000 square foot Sun Valley Shopping Center, CCCSD cannot ask that business to pay
Capacity fees based on 1.4 million square feet, but only on the 1000. So clearly, even if the
District could somehow overcome the likely fatal statute of limitations issue, it would be
required to prorate the charge based on the 1000 square foot change--and simply could not
attempt to extract the Capacity fee (and now tax lien) based on the 12,946 square feet that the fee
is currently based on. This reveals that the District, at best--and if it hadn't failed to invoice the
amount on time--would have collected $7,954 (1000/12,946 of$102,974).
Even though it may not be evident, it should be mentioned now and prior to litigation that
we believe that litigation would demonstrate that the District's actions have been colored by
what can only be described at as a smear campaign against Mr. Heffernan, from the purchaser of
his business, Mr. Gaube. That individual has had dozens of staff meetings and written many
letters, directly to the Board, trying to portray a scene in which Mr. Heffernan over years
purposely defrauded the District. In our deposition of Mr. Tim Potter, when he was referring to
Mr. Gaube, he stated: "in my 20 plus years at the District, I've never seen someone try to get his
own business shut down". Mr. Gaube had his own ulterior motive for making those unfounded
assertions: an ill-fated suit against Mr. Heffernan. It would be unfortunate but likely that
litigation would uncover that some Board members may have been influenced by Mr. Gaube's
untrue and unfounded statements—or, may have unfounded animosities toward Mr. Heffernan.
While Mr. Heffernan may have at one time been inexperienced as to the proper procedures with
the CCCSD, there was no attempt to defraud the District--as Mr. Gaube had represented. Mr.
Heffernan is an honorable man and has always intended to do the right thing—as proven by and
through his numerous contacts with District Staff and District Counsel. Moreover, the Board
should know that it was conclusively found in the suit against Mr. Gaube that the assertions
against Mr. Heffernan and Caffe Classico were completely false; and, the sole purpose of these
claims against Mr. Heffernan were an attempt to get the CCCSD to shut down Caffe Classico for
Mr. Gaube's benefit in his (it has now be shown) frivolous case.
Another factor that should be considered is the conduct after the District first indicated
that a charge was "missed" by the District. That letter, dated December 26, 2012 to Mr.
Heffernan as the property owner, described that based on an increase in the square footage of the
building and a change in use, a capacity fee would need to be charged. Within only
approximately 2 months of their receipt of the out-of-date demand for an increased Capacity fee,
the business entered into a recycling program that uses its solid waste to make bio-fuels. Of
course, if the District had timely invoiced for the Capacity fees, the business would have made
the change to operate independent of the District much sooner. The annual fees paid, totaling
$147,000, could have been saved by the business if the District had asked for the Capacity fee
sooner. This could easily become the subject of a claim against the District, or at the very least
considered in the Court, in deciding the case--if this matter must be litigated.
In addition to the above—and perhaps because of it--we feel it is essential to remind the
Board and Staff that this is a matter which from all reasonable perspectives had been resolved
prior to the District placing the Capacity fee related tax lien: In September 2014, Ms. Danea
Gemmell and Mr. Heffernan came to a resolution, and one that Staff agreed to recommend to the
Board. Then, the Board not only refused to accept the Staff recommendation—the District then
waited eight (8) months to inform Mr. Heffernan that the Board refuse to approve the Staff
November 17, 2015
Page 4
recommended settlement. Thereafter, Mr. Heffernan has expended substantial time and
attorneys' fees to try to reach a resolution—apparently to no avail.
We believe that when you discuss the issues, the above, the attached and the applicable
legal authorities in closed session with District Counsel, he will be honest and forthright, and
will inform you that the statute of limitations is likely fatal to the District's levying an
assessment in September 2015. Discussions related to the issue between Mr. Heffernan and staff
point to other issues related to or caused by the (former) employee, Mr. Kinnon, and, that this
was most likely the reason for the lapse on the part of the District. Nonetheless and no matter
how one looks at the case, more than 9 '/2 years have passed since the District could and should
have requested the fee. All of the delays would be clearly demonstrated and would show
consistent delays, including the charging of the Capacity related fee itself. We believe that
when you discuss the above and the attached with District Counsel you will hear that the
impending litigation is one the District is far more likely to lose than to win. We urge the
District to take a less emotional and more logical approach. Moreover, we believe District
Counsel will also confirm that if and only if the District can somehow pass the statute of
limitations issue, based on Caffe Classico moving to zero-discharge, and based on the small
1,000 square feet that, at best, should have been invoiced in 2003, there will be no net recovery
to the District for Capacity Fees—and even if there is, it would amount to a great deal less than
the cost spent in litigation. The costs of litigation over this issue will cumulatively far exceed the
fee itself. As a result and based on the above, the legal authorities and the attached, we hope you
agree that it would be prudent to settle this matter and not prudent to force litigation against the
District.
Please advise if you would agree to release the tax lien and continue to discuss a
resolution informally. Otherwise, Mr. Heffernan will be forced to proceed with litigation against
the District. While we are not available for your November 19th meeting, we would be willing
to meet with you in open or (perhaps more suitably) in closed session either at or after the
December 2"d Board meeting. Please confirm in writing, within seven (7) days of the date of this
letter, what the Board's position is with respect to the above.
Sincerely,
LAW OFFICE OF CRAIG S. NEVIN
40-,
Craig S. Nevin
cc: Client
ATTACHMENT 4
555 12th Street,Suite 1500 Kenton L.Alm
Oakland,California 94607 Attorney at Law
tel(510)808-2000 Direct Dial:(510)808-2081
fax(510)444-1108 kalm@meyersnave.com
www.meyersnave.com
meyers nave
December 29, 2015
Via E-mail & U.S. Mail
Craig S.Nevin,Esq.
LAW OFFICES OF CRAIG S.NEVIN
One Market Street
Spear Tower, Suite 3600
San Francisco, CA 94105
Re: Caffe Classico
Dear Mr.Nevin:
I am writing in response to your November 17, 2015, correspondence and to provide certain
documents to clarify the basis for the imposition of the $114,970.47 as a delinquent fee in
August of 2015. The attached documents are being provided in advance of the January 7,
2016,hearing on your appeal of the staff's determination of the amount of the capacity fee
and that it could be imposed through a tax lien in August of 2015.
First, Central Contra Costa Sanitary District("CCCSD" or"District") does not agree with
your unsupported assertion that it is barred by an unspecified statute of limitations because its
imposition of a tax lien for delinquent fees "is not an administrative action" subject to the
holding in Coachella Valley Mosquito & Vector Control Dist. v. California Pub. Employment
Relations Bd., (2005) 35 CalAth 1072.
To the contrary,the District's pursuit of your client's delinquent capacity fee via imposition
of a tax lien is a quintessential "administrative proceeding" which is not subject to "the
statutes of limitations set forth in the Code of Civil Procedure, including the three-year
period in section 338(a)." (Id. at 1088.) The California Supreme Court reiterated this long-
standing legal principle in Coachella and cited City of Oakland v. Public Employees'
Retirement System (2002) 95 Cal.App.4th 29 in the string cite. (Id.)
In Oakland v. PERS,the Third District examined the principle and explained:
The trial court mentioned a couple of cases which reject application of the Code of
Civil Procedure statutes of limitations in administrative proceedings. (Robert F.
Kennedy Medical Center v. Department of Health Services(1998) 61 Cal.AppAth
1357, 1361-62, [recovery of overpayments made to a Medi-Cal provider by offsets
Craig S. Nevin, Esq.
LAW OFFICES OF CRAIG S. NEVIN
December 29,2015
Page 2
not controlled by civil statute of limitations];Little Company of Mary Hospital v.
Belshe (1997) 53 Cal.App.4th 325, 329, [`Statutes of limitations found in the Code of
Civil Procedure ... do not apply to administrative actions'].) In an earlier case, Bernd
v. Eu(1979) 100 Cal.App.3d 511,we concluded an administrative disciplinary
proceeding was not subject to the Code of Civil Procedure statutes of limitation. We
did not discuss these authorities in County of Mono. We do now.
`An action is an ordinary proceeding in a court of justice by which one party
prosecutes another for the declaration, enforcement, or protection of a right,the
redress or prevention of a wrong, or the punishment of a public offense.' (Code Civ.
Proc., § 22.) `The word `action' as used in this Title [re: statutes of limitation] is to
be construed,whenever it is necessary so to do, as including a special proceeding of a
civil nature.' (Id., § 363.) An administrative proceeding is neither a `civil action'
(id., §§ 22, 312) nor a `special proceeding of a civil nature' (id., §§ 23, 363), `to the
commencement of which the statute of limitations relates. Such provision ... relates
only to actions or special proceedings in courts, and not hearings before boards.
Respondent board is not a `court', even though it exercises a power judicial in its
nature.' (Bold v. Board of Medical Examiners (193 3) 133 Cal.App. 23, 25) Although
the Bold case ... also involved disciplinary actions,we see no reason why an
administrative proceeding which does not involve discipline is any more akin to a
`civil action' or `special proceeding of a civil nature.' (See French v. Construction
Laborers Pension Trust(1975)44 Cal.App.3d 479, 485, 118 Cal.Rptr. 731 [the `right
to rescind by notice without judicial proceedings is not barred by the statute of
limitations. Statutes of limitation act as a bar to actions or proceedings in courts'].)
Bernard Witkin's treatise states flatly: `The general and special statutes of limitation
referring to actions and special proceedings are applicable only to judicial
proceedings; they do not apply to administrative proceedings.
(Id. at 47-48.) (Original emphasis.)
Quite clearly then,the Board's imposition of a tax lien is an administrative proceeding not
subject to the statutes of limitation set for the Code of Civil Procedure. You have presented
no contrary authority or argument supporting your claim that the District's imposition of a
tax lien is not"an administrative proceeding."
Second, your letter questioned the calculation of the capacity fee. Your letter seems to imply
that the calculation is incorrect because the building has not been enlarged from 6,000 square
feet to 12,000 square feet since the original connection fee was paid in 1983. Again to the
contrary, the District has always recognized that the total area of the building is
approximately 12,000 square feet. The initial capacity fee paid in 1983, when the building
was constructed,was based on 3,000 square feet of office and 3,000 square feet of electrical
manufacturing. At that time, District Code specified that capacity fees were charged based
on the number of proposed plumbing fixtures, according to the tenant improvement plans
Craig S. Nevin, Esq.
LAW OFFICES OF CRAIG S. NEVIN
December 29,2015
Page 3
submitted. (See Attachment A, Ordinance No. 130; Amended Section 11-306 of the District
Code.) Also at that time,the District's procedure was that unimproved portions of buildings
were not charged capacity fees until the time tenant improvement plans were submitted.
Therefore, no capacity fees were ever paid for the remaining "unimproved" 6,000 square feet
of space which was improved sometime after 1983, and those fees are due to the District.
The One Hundred Two Thousand Nine Hundred Seventy-four Dollar($102,974.00) capacity
fee was based on the Capacity Use Charge Program calculation for an initial down payment
as detailed in the District's July 19, 2013, letter. (See Attachments B-E, letters of
December 26, 2012, March 14, 2013, May 3, 2013,July 19, 2013.) This fee is the minimum
amount that would be charged for the improvements in the building and the change of use to
food manufacturing and, as the District has pointed out in several letters and meetings, the
full capacity fee for the building could be as high as Eight Hundred Thousand Dollars
($800,000.00). The remodeled"1000 square feet within the existing building to house
...manufacturing room" noted in your letter is within the total unimproved space that has
not paid capacity fees and is included in the calculation.
Third,pursuant to your request, I am providing you with the following information:
1) The code section(s) under which the District seeks to recover the delinquent fees
from your client.
District Code states that payment of fees be provided upon"the time of the District's
discovery of the added burden." (CCCSD Code § 6.12.030.D.)
The District must give written notice of the fees due and they are deemed delinquent 45 days
after giving notice. (Id.) The District provided notice that the fees were due on
December 26, 2012. (Attachment B.) After the District provided notice and met with the
property owner to discuss the outstanding capacity fees, it issued a demand of payment in the
amount of One Hundred Two Thousand Nine Hundred Seventy-four Dollars ($102,974.00)
on March 14, 2013. (Attachment C.) Gov't Code section 66013 does not require payment to
be demanded any particular time and CCCSD Code section 6.12.030.13 allows the District to
demand payment at the time of discovery, but does not limit it as to when a demand must be
made.
Health& Safety Code section 6520.10 allows a sanitary district to recover"any delinquent
and unpaid charges for sewer and other services, or either, requested in writing by the owner
of the property that remain delinquent and unpaid for a period of 60 days or more on July 1"
by"add[ing] to and becom[ing] a part of the annual taxes next levied upon the property for
which the sewer service was provided and upon the property subject to the charges for any
other district services and shall constitute a lien on that property as of the same time and in
the same manner as does the tax lien securing the annual taxes." The property owner did not
remit the payment demanded in the March 14, 2013, letter and the payment was deemed
delinquent on April 30, 2013. Following the provisions in the Health& Safety Code,the
Craig S. Nevin, Esq.
LAW OFFICES OF CRAIG S. NEVIN
December 29,2015
Page 4
District notified the property owner of its intent to place the delinquency on the property tax
bill in letters dated May 3, 2013, and May 9, 2014. (Attachments D and F.)
2) The associated statute of limitations period for each code section(s).
See the discussion above.
3) The date the District discovered it had a claim under such code section(s).
See the discussion above.
Additionally, as already communicated to you orally, the Board has scheduled an open
session hearing on January 7, 2016, at 2:00 p.m. to consider your client's objection to the fee
calculation and its imposition of the tax lien as a delinquent fee in August 2015. It will
review your November 17, 2015, correspondence and any further written submissions your
client wishes to provide preceding the Board meeting. If the Board is presented with
additional written materials at the meeting, depending on its nature, it may continue the
matter in order to properly consider it. The Board will also allow an oral presentation by you
or your client of a reasonable length.
Very truly yours,
Kenton L. Alm
District Counsel
Attachments:
Attachment A, Ordinance No. 130; Amended Section 11-306 of the District Code
Attachment B, letter dated December 26,2012
Attachment C, letter dated March 14,2013
Attachment D, letter dated May 3, 2013
Attachment E, letter dated July 19,2013
Attachment F, letter dated May 9,2014
2568347.2
Attachment A to Alm letter dated 12/29/2015
ORDINANCE 130
AN ORDINANCE TO REVISE DISTRACT CODE SECTIONS
2-103, 3-104, 3-20$, 4-103, 9-301 , 10-101 ,
10-103, 10-1 7, 11-30, 11-306,
CHAPTER 11 - RTICLE 8AND 14-203
The Board of Directors of the CENTRAL CONTRA COSTA SANITARY DISTRICT
does ordain as follows:
Sections 2-103, 3-104, 3-205, 4-103, 9- O1 , 10-101 , 10-103, 10-107,
11-302, 11-306, Chapter 11 - Article 8 and 1 -203 of the Code of the
Central Contra Costa Sanitary District are hereby amended, inserted or
deleted to read as follows:
"Sec. 2-103. Compensation of BoardIiembers.
Each Board Member shall receiv compensption in an amount not to exceed
Fifty Dollars ($50.00) per day forach day's attendance at meetings of the
Board or for each day's service rengered as 4 director by request of the
Board, not exceeding a total of fouih days in any calendar month together
with any expenses incident thereto.
NOTE: Section 6489, Health ano Safety Code, limits the total compensation
a Board Member may receive for ashy one calendar month. At the
date of adoption of this Code tho amount is $200.00."
"Sec. 3-104. Right to enter on priv4te property and to terminate service:
Notice and hearing.
Each designated District employee shall carry official evidence establishing
his position, and upon exhibiting it, may enter upon private property for the
purpose of inspection and maintenance of sanitary and waste disposal facilities.
The District may terminate service to property in which a violation of any
rule or regulation is found to exist.
Prior to termination of servicq, however, the District Board shall notify,
in writing, the owner and tenant, if any, of- such property that service is
intended to be so terminated and co duct a h4baring thereon as herein provided.
Such notice shall be mailed to the dwner at the address shown on the records
of the assessor of the County or as �known to the clerk, and a copy shall be
delivered to the tenant or posted conspicuou$ly on the property. This notice
shall state the date of proposed termination of service and the reasons therefore
and the date the District Board shall hold a hearing upon such intended termi-
nation. Such hearing shall not be held less than 10 days subsequent to the
giving of notice as herein required:"
Attachment A to Alm letter dated 12/29/2015
1
"Sec. 3-205. General Manager-Chief tngineer may employ assistants.
Upon approval of the Board of irectors-, the General Manager-Chief
Engineer may appoint assistants. Eich appointment shall be made in accordance
with the employment procedures specified in Sections 3-101 , 3-102, 3-103 and
Chapter 4 of this Code."
"Sec. 4-103. Conflict of duties of m to ees.
An officer or employee of the ' istrict shall not engage in any activity
which is inconsistent, incompatible or in conflict with his duties as an
officer or employee of the District♦"
"Sec. 9-301 . Uniform rebate fees.
A. The Board finds that the cost of installation of main sewers is
generally determined by the density of land v' se and conditions of terrain
and that the fixing of rebate fees pon the Iasis of the density of land
use and said conditions of terrain is generally the most equitable method
of charging for a direct connection to a rebote sewer. Therefore, density
of use together with conditions of ierrain h ve been made the basis for
fixing the class of rebate fees set forth in;
the following Subsection B.
Within each class the Board has est4blished ranges of rebate fees. The
actual range of rebate fee that applies to a6y given rebate installation
is determined by the District takin into consideration the actual cost of
construction, the cost of comparably work in the area, and the number of
potential connections. However, th Board recognizes that these conditions
are not the only basis for determin;ng rebate fees in every case, and, therefore,
recognizes and authorizes exception$ to be made by the General Manager-Chief
Engineer as follows:
The General Manager-Chief Engineer may opply a class of rebate fees
other than that dictated by density 'of use and conditions of terrain where
a different application is justified in the opinion of the General Manager-
Chief Engineer by the total cost ofisewer installation or the class of
rebate fees charged in adjacent sew4r areas.
B. The uniform rebate fees are classified and established as follows:
(1) Class I - High density residential or commercial : (a) $682.50,
(b) $1 ,050.00,—$1 ,470.00 per Onit of use including $80.00 for District
administration.
(2) Class 11 - Medium density residential or commercial : (a) $1 ,050.00,
(b) $1 ,470.00,$1 ,785.00 per unit of use including $80.00 for District
administration.
(3) Class III - Low density residential or commercial ; level terrain:
(a) $1 ,470.00, b 1 ,785.00, (c) $2,100.00 per unit of use including
$80.00 for District administration. '
(4) Class IV - Low density, residential or commercial ; rolling terrain:
(a) $1 ,785.00,- 2,100.00, (c) $3,150. 0 per unit of use including
$80.00 for District administration. !
(5) Class V - Low densityjresidentlal or commercial ; steeper terrain:
(a) $2,100.00, —$3,150.00, (c) I $4,200. 0 per unit of use including
$80.00 for District administration.
(6) Class VI - Multi family residential or any commercial property
where there is no uniformity in land use development, or industrial use:
$15.75 per front foot including $1 .$5 per front foot for District administration,
or 0. 105 per square foot of served 'property including $0.01 per square foot for
District administration as determin d by the'General Manager-Chief Engineer.
C. The uniform rebate fees fi ed in Subsection B. of this Section apply
to every rebate line whether existi g or installed at some future date. However,
the amount of recovery which an installer is -,entitled to on or before July 6, 1967,
shall not be adversely affected by this Ordinance."
2
i
"Sec. 10-101 . Permit required.
A person engaging in any of tho following activities shall obtain a permit
from the District:
(1) construction or repair ofa trunk, main, or side sewer;
(2) connection to a trunk, maijn or side sewer;
(3) excavation within the paved surfac4 of a public right of way
for the purpose of workin on a sewer;
(4) engaging in the business d,f cleaning septic tanks;
(5) disposing waste from a se tic tank into the District system;
(6) discharging contents of a swimming 'pool into a sewer, subject
to the provisions of Section 8-308
(7) industrial wastewater discharge to the District system.
Cross-reference: See Section 11-101 for permit fee, and Section 11-102
for fee for disposing of septic tan4 waste into the District system. See
Section 8-404 for industrial wastewater discharge permits."
"Sec. 10-103. Permit form and agreement.
The General Manager-Chief Engineer may prescribe the form of permit
application and require information in addition to that required by
Section 10-102 and Section 8-404. �he signature of the applicant on
the permit application is an agreem nt to comply with the rules and regulations
of the District."
"Sec. 10-107. Effective period of permit.
A permit is effective for a pe iod of 6 ,months from the date it is issued,
unless stated otherwise on the permi;t."
I
"Sec. 11-302. Fixture charge established.
A person desiring to connect tc either a public sewer in the District
or a sewer flowing into a public sewer in the District shall pay a fixture
charge to the District. The fixture charge is in addition to all other fees
and charges."
Cross-reference: See Sec. 11-4101 which provides for the termination of
elective fixture charges."
"Sec. 11-306. Rate schedule for residential Oses, general commercial
and miscellaneous uses and multi-storied buildings.
The fixture charge for any use is the miinimum charge set forth in the
following schedule or the amount reached by multiplying the charge for each
fixture listed in Sec. 11-303 by the fixture multiple set forth below, which-
ever is the greater. Where the fixture multiple is designated a "special
study", the extent of use and its effect on the District system is not readily
ascertainable and the District shall conduct a study to determine the fixture
multiple.
3
The minimum total fixture charges and fixture multiples are as follows:
Minimum Charge
Type of Use Per Unit Fixture Multiple
Residential
Living units per gross acre
0-5 $375.00 1 .0
6-10 337.50 1 .2
11-20 300.00 1 .5
21-30 262.50 1 .8
31-50 225.00 2.0
over 51 use multistoried building fixture multiples
Multi-storied buildings (over two ( ) stori�e�)
The fixture charge shall be at .the rate of $40.00 per fixture unit
equivalent and shall be based on th4 fixture unit equivalents set forth
in Chapter 4 of the Uniform Plumbin4 Code published by the International
Association of Plumbing and Mechanical Officials, 1976 Edition, as
partially listed and modified* below:
Kind of Fixture Minimum Trap Size Units
Bath Tub 1-1/2 inch 2
Floor Drain 2 inch 2
Laundry Outlet 1-1/2 inch 2
Shower, Single Stall 2 inch 2
Sinks and/or Dishwasher (residential) 1-1/2 inch 2
*Garbage Disposal (residential ) 1-1/2 inch 2
Wash Basin (lavatory) single 1-1/4 inch 1
Water Closet (toilet) tank type 3 inch 4
*Mobile Home Park Trap (use fixtures) 4 inch min. 9
*For fixtures not listed above or in !Chapter 4 of the Uniform Plumbing Code
the water supply pipe size, as listed below, or two fixture unit equivalents
for each gallon per minute of flow 4ischarged shall be used.
Pi a Size Units
3 inch 2
1/2 inch 4
3/4 inch 6
1 inch 10
Minimum Charge
Type of Use ' Per Unit Fixture Multiple
General Commercial and Miscellaneou$
Auditorium, bank, bakery, barber Or
beauty shop, church, cleaning plant
delicatessen, department store, dru
store, dog kennel , fire house, groc ry
hall , meat market, medical or offic�
building $375.00 3.0
4
Types of uses not listed hereon $375 3.0
Cocktail lounge, bar, club, gas s�ation,
garage, restaurant, fountain, driveiin,
funeral parlor 750 5.0
Convalescent hospital , rest home, !hospital 150 per bed
Creamery, food processor 750 special study
Factory, industry 375 special study
Multi-use building, each use 375 by use
School 165 per classroom"
CHAPTER 11.
"ARTICLE 8. USE OF TAX ROLL FOR COLLECTION." Revised title only.
"Sec. 14-203. Conflict of duties oflemployeeR.
Delete this section in its entirety. It has been amended and inserted
as new Sec. 4-103."
This Ordinance shall be a genetal regulation of the District and shall
be published once in a newspaper of! general circulation published and circulated
in Central Contra Costa Sanitary District, and shall be effective upon expiration
of the week of publication.
PASSED AND ADOPTED by the Board of Directors of the Central Contra Costa
Sanitary District on the 4th day of! May, 1978, by the following vote:
AYES: Members: Campbell , Bpneysteete, Rustigian, Carlson and Allan
NOES: Members: None
ABSENT: Members: None
zo 11
�
President of the District Board of the
Central Contra Costa Sanitary District of
(Contra Cgsta County, State of California
COUNTERSIGNED:
f�
Secre . ry of the Dis rict Board oflthe
Central Contra Costa Sanitary District of
Contra Costa County, State of California
5
i
Attachment B to Alm letter dated 12/29/2015
qs'
- Central Contra Costa Sanitary District
PHONE: (925)228-9500
FAX.- (925)228-4624
www.centralsnn.am
December 26, 2012 ANN E.FAeelrl.L
General Manager
KhN'PON L.AIM
Mr, Thomas Hefernan " t�sloj soe 2000
Property Owner, APN 159-362-001 EIaINER eOEHnnr
60 Terra Teresa sarelarya/7he Dina
Lafayette, CA 94549
Dear Mr. Hefernan:
CENTRAL CONTRA COSTA SANITARY DISTRICT CONNECTION FEES — NOTICE OF
FEES DUE FOR 2500 ANNALISA DRIVE, CONCORD; APN 159-362-001
During our recent review of records associated with Caffe Classico and the property at 2500
Annalisa Drive in Concord it has become apparent that the scope of the operations has
expanded well beyond the activities upon which the calculations for the initial sewer capacity
fee were based. Our records indicate that a Central Contra Costa Sanitary District (District)
sewer permit was issued for the property in 1983. A notation on the permit describes the
property as 3,000 square feet of office space and 3,000 square feet of light industrial
manufacturing. The records indicate that a capacity fee based on the number of plumbing
fixtures and other associated fees were paid by Aspen Construction, an electrical contractor.
District Code defines the following, under Section 6.12.060, Change of Use:
A. Added Burden. Any change of use for a parcel which results in an added burden on
the District's facilities will subject that parcel to additional fees for the added burden.
Any person who causes an added burden to be imposed shall pay capacity fees in
accordance with this chapter...
B. It shall be the duty of the owner of the parcel as well as any other person made
responsible under this chapter for payment of fees, to notify the District of any added
burden imposed upon the owner's parcel or within the operations thereof prior to the
change of use or immediately upon learning of the change of use, whichever comes
first...
Attachment B to Alm letter dated 12/29/2015
N:\ENVRSRV\Special Studies 8 Capacity Fee Review\Capacity Fee Review\Calle Classico\Caffe Classico Connection Fee Letter 2012-12-26
(Hefernan)Final.doc
®Nfcyzletl Pape,
Caffe Classico
December 26, 2012
Page 2 of 3
Section 6.12.030 D of the District code states "payment of capacity fees shall be due and
made prior to the imposition of any added burden."Under District Code, Caffe Classico is
classified as a Permitted Industry and the capacity fees would be calculated under a special
study as described in Section 6.12.050 F. Under a special study, the District would typically
use wastewater flow and strength data from either comparable businesses or from the
business under analysis. Water consumption and wastewater strength data for this parcel
dating back to 2005 were reviewed but the values for both flow and strength have varied
widely making it difficult to calculate an appropriate capacity fee. Preliminary calculations
based on historic data place the total burden for this parcel between 30 and 53 residential unit
equivalents (RUEs). The corresponding capacity fee, including a credit for the RUEs of
capacity paid for in 1983, would be between $203,510 and $327,740 using the historic flow
and strength data. A summary of these estimates is shown in the table below:
Net
Water Total Capacity
Consumption BOD TSS Gravity Fee
Year (HCF) (m /I (mg/1) RUEs Estimate
2005 1,412
2006 473
2007 1,455 690 1,140 30.9 $203,510
2008 825 3,940 738 34.1 211,300
2009 1,177 4,267 924 53.2 327,740
2010 690 51100 735 34.2 209,910
2011 471 10,778 2,776 51.1 304,060
Installation of the pretreatment system referenced in our December 11, 2012 letter should
result in reductions of Biochemical Oxygen Demand (BOD) and Total Suspended Solids
(TSS). These reductions could have a pronounced affect on the capacity fee calculation and
could result in a significantly lower fee. Any such adjustments to the fee would require regular
and verifiable monitoring of wastewater flow and strength as part of a special study.
The purpose of the capacity fee is to equalize the investment in District assets among current
and new users, thus ensuring that all users pay their fair share of capital costs for facilities'
capacity and services.
Section 6.12.030 E of the CCCSD Code reads:
The person(s)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 a nonresidential use, (3) the wastewater utility service permit
applicant, and (4) the parcel owner at the time the District discovers an unpaid or
delinquent capacity fee, if those persons are not one and the same person or entity. ...
It is the intent of this chapter that the parcel owner at the time the added burden occurs
should be ultimately liable as between the persons jointly responsible for payment of the
NAENVRSRV\Special Studies&Capacity Fee Review\Capacity Fee Review\Caffe Classico\Caffe Classico Connection Fee Letter 2012-12-26
(Hefernan)Final.doc
Caffe Classico
December 26, 2012
Page 3 of 3
fee as set forth in this chapter, absent the existence of legally effective contractual
provisions between the responsible parties to the contrary.
This notice of outstanding capacity fees due to the District is being sent jointly as Mr. Hefernan
appears to be both the current owner and the owner at the time at which some, or all, of the
additional burden was added and Mr. Leser is the current tenant and business owner. We
believe, based on our understanding of the capacity fees paid to date and the changes in
property use, that additional capacity fees are owed whether the property continues to be used
for food manufacturing or if the property is used for some other business activity.
The District offers a Capacity Use Charge Program as one of several options to allow certain
businesses with high capacity fees to pay those fees over time. Please contact Thomas
Brightbill, Senior Engineer, at (925) 229-7338 or tbrightbill@centralsan.org, within 30 days
from the date of this letter to discus a mutually agreeable solution for calculating and paying
the additional capacity fees for this parcel.
Sincerely,
�CZ-(.e(i �1c21a�-ftir/�'1
Danea Gemmell
Environmental Services Division Manager
DSG:TB:sdh
Letter sent to: Mr. Larry Leser, CEO, Caffe Classico Foods
cc: Kent Alm
Ann Farrell
Tim Potter
N:\ENVRSRV\Special Studies&Capacity Fee Review\Capacity Fee Review\Gaffe Classico\Calle Classico Connection Fee Letter 2012-12-26
(Hefernan)Final.doc
Attachment C to Alm letter dated 12/29/2015
Central Contra Costa Sanitary DistHd
PHONE: (915)128-9500
FAX.- (915)128-4624
www.centralsan.org
March 14, 2013
CURT/SW SWANSON
ProVafono!Genera/Manager
KENTON L ALM
Mr. Tom Heffernan Counscl(310)8 8-2001
�slo�Rog-�000
60 Terra Teresa
ELAINE R.BDENME
Lafayette, CA 94549 Secretory ofthe David
Dear Mr. Heffernan:
CENTRAL CONTRA COSTA SANITARY DISTRICT CONNECTION FEES — NOTICE OF
FEES DUE FOR 2500 ANNALISA DRIVE, CONCORD; APN 159-362-001
On December 26, 2012, Central Contra Costa Sanitary District (CCCSD) notified you that
additional capacity fees were owed for the property that you own at 2500 Annalisa Drive in
Concord. On February 1, 2013, we met with you to review the history of fee payments and
operations for the parcel. At that meeting, we outlined several options for capacity fees and
payment. We also discussed how the operations of Caffe Classico and the possibility of Caffe
Classico adopting a "zero discharge" method of operation would affect the capacity fees owed.
Caffe Classico has met the February 28, 2013 deadline for achieving zero discharge and no
longer discharges waste from their manufacturing operations to the CCCSD sewer. Based on
this development, the most logical option for capacity fees for this parcel would appear to be
payment of the $102,974 fee we discussed. Accordingly, we request payment of this fee by
April 30, 2013. If we do not receive payment by April 30 or alternate arrangements are not
made for payment, the capacity fee will be declared delinquent and additional charges will be
assessed.
If you have any questions, please feel to contact us.
Sincerely,
(31
Danea Gemmell
Environmental Services Division Manager
DG:TB:sdh
Attachment C to Alm letter dated 12/29/2015
Attachment D to Alm letter dated 12/29/2015
AAA A&MMI 11110L, Central Contra Costa Sanitary District
FAX-(925)228-4624
May 3, 2013
CURTIOP Provisional
e slMNsoN
Ymws+anal General Manager
KENTONL ALM
Tom Heffernan Counselfor the District
Anmani Investments LLC (510)808-1000
60 Terra TeresaLLA,NEa 80SNME
Secretary of the Divincl
Lafayette, CA 94549
Dear Mr. Heffernan:
CENTRAL CONTRA COSTA SANITARY DISTRICT CONNECTION FEES
2500 ANNA LISA DRIVE, CONCORD; APN 159-362-001 (LOCATION OF CAFFE CLASSICO)
Central Contra Costa Sanitary District (CCCSD) records indicate that sanitary sewer capacity
fees remain unpaid for the property referenced above. You were notified that capacity fees
were owed on December 26, 2012, as well as in our meeting on February 1, 2013, and in our
letter dated March 14, 2013. The unpaid amount became delinquent on April 30, 2013,
CCCSD Code Section 1.08.080 states that a delinquent charge can be assessed on unpaid
amounts, and Code Section 6.24.150 states that the District may elect to use the tax roll for the
collection of fees and delinquent charges.
Enclosed is a copy of the CCCSD invoice in the amount of$114,970.47 for the outstanding
sanitary sewer capacity fees, delinquent charge and penalty. Payment shall be made to
CCCSD no later than 30 days from the date of this letter or additional penalties will be
assessed and a public hearing regarding this matter will be scheduled. After the public
hearing, the CCCSD Board of Directors will consider placing the unpaid charges on the Contra
Costa County property tax roll for collection. You will be notified of the public hearing.
If you have any questions, please feel free to contact Senior Engineer Thomas Brightbill at
(925) 229-7338.
Sincerely,
Danea Gemmell
Environmental Services Division Manager
enc.: Invoice
CCCSD Code Sections
Attachment D to Alm letter dated 12/29/2015
\\DistGroups\Groups$\ENVRSECV{dmin\Gemmell\Letters\2013\Letter No 2-2500 Annalisa Drive Concord(Gaffe Calssico)5-3-13 dcoercvdea°.,;
Central Contra Costa Sanitary District
Invoice ---
Customer
Date 5/3/2013
Anmani Investments LLC, Attn: Mr. Tom Heffernan _
60 Terra Teresa Capacity fees for 2500 Anna Lisa
Lafayette, CA 94549 Drive,Concord
CCCSD Acct.# Description Charge TOTAL
Capacity fees and pumped zone fees: $102,974.00 $102,974.00
Delinquent charge(10%of unpaid amount): $10,297.40
Subtotal: $113,271.40
Penalty(1.5%per month from 4/30/13 to 5/30/13): $1,699 07
(Penalty will be waived if$113,271.40 is received by May 30, 2013)
For: Capacity fees and pumped zone fees
owed for ice cream manufacturing operation
at 2500 Anna Lisa Drive, Concord,per
settlement agreement reached on February 1, 2013.
APN 159-362-001
Job 3280
l
TOTAL DUE $114,970.47
Payment Details
Payment shall be made no later than May 30, 2013.
PLEASE REMIT TO:
CENTRAL CONTRA COSTA SANITARY DISTRICT
ATTN: Earlene Millier
5019 Imhoff Place
Martinez,CA 94553
(925)229-7359
Please return copy of invoice with remittartice.
Attachment E to Alm letter dated 12/29/2015
Central Contra Costa Sanitary Di trid
Offer to Compromise
California Evidence Code Section 1152
PHONE. (915)128-9500
July 19 2013 FAX.- (925)228-4624
www.ceniralsan.org
CUPT/SW SWANSON
Mr. Tom Heffernan Provisional General Manager
xrxrox L.ALM
60 Terra Teresa Counsetforthe District
Lafayette, CA 94549 (510)808-7000
CLONE R.BOEHME
Dear Mr. Heffernan: Secretary afthe Datrict
CENTRAL CONTRA COSTA SANITARY DISTRICT CAPACITY FEES FOR 2500 ANNALISA
DRIVE, CONCORD; APN 159-362-001
This letter is in response to your recent request for clarification of capacity fees for your
property at 2500 Annalisa Drive in Concord. Section 6.12.010 B of the Central Contra Costa
Sanitary District (CCCSD) Code states:
The purpose of the capacity fee program is to provide for each new user, by payment of
a capacity fee at the time of initial connection of a building or facility on their property to
the District's sewer system or, subsequently, when creating an added burden, to
equalize their investment with the investment of other existing users in the value of all
District assets.
The charging of capacity fees is common in most utilities, including sewer utilities such as
CCCSD. The equity buy-in approach in a common methodology for calculating those fees and
is listed in Financing and Charges for Wastewater Systems by the Water Environment
Foundation (WEF).
Our file indicates that an initial permit for a sanitary sewer connection was issued on August 3,
1983 for the property at 2500 Annalisa Drive in Concord. At that time, capacity fees were
calculated based on the number of plumbing fixtures in the building. The permit application
shows that fees of$3,248.27 were charged and a notation on the permit indicates "6000
square feet. 3000 Office, 3000 Manufacturing." The type of business was listed as "Electrical
Contr." and the business name was listed as "Aspen Constr. Co."
Subsequent notes in the file indicate that in June 2003, CCCSD Source Control inspectors
inspected the property and noted that the property was being used to manufacture "ice cream".
Caffe Classico's annual Sewer Service Charge has been calculated based on the quantity of
wastewater discharged as well at the strength of the wastewater as measured by Biological
Oxygen Demand (BOD) and Total Suspended Solids (TSS). In September 2011, CCCSD
learned that BOD and TSS sampling had been performed in a manner that resulted in lower
1\DistGroups\Groups$\ENVRSEC\Admin\Brightbill\2013\Letters\Gaffe Classico Connection Fee Letter 7-19-13 doc
Attachment E to Alm letter dated 12/29/2015
Mr. Tom Heffernan
Page 2
July 19, 2013
values for those parameters and thus understated the strength of the wastewater being
discharged. We believe that this constitutes the discovery of an added burden on our system.
Section 6.12.030 D1 states:
If an added burden occurs without the payment of capacity fees, payment shall be due
at the time of the District's discovery of the added burden.
Section 6.12.03-0 A1c defines "added burden" as including the following:
An existing connection from a parcel where capacity fees were never paid or where
inaccurate information was given which resulted in a lesser fee having been paid than
would have been required with a correct calculation of the fee.
Current CCCSD District Code and ordinances require that capacity fees for non-residential
property be calculated based on the quantity and strength of the wastewater being discharged.
On December 26, 2012, CCCSD notified you that additional capacity fees were owed for the
property and on February 1, 2013, we met to discuss capacity fees for the property and how
various operating scenarios would affect the fees.
At the meeting, we reviewed what the capacity fee would be using the wastewater strength
values obtained after September 2011, what the capacity fee would be using the inaccurate
wastewater strength values provided prior to September 2011, and how the difference
between those two figures represents the added burden discovered in September 2011. This
calculation is shown below:
Total capacity fee based on post 9/2011 wastewater strength data' $866,264
Capacity fee based on inaccurate pre-9/2011 strength data - 300,033
Capacity fee based on net increase in burden revealed through discovery
of inaccurate strength data in 2011 $566,231
We discussed how the property would be eligible to participate in CCCSD's Capacity Use
Charge program which is described in Section 6.12.050 H of the CCCSD District Code. Under
this program, an initial down payment of$102,9743 would be due with the balance paid off
over 15 years. We also discussed that any payments made under this program would result in
a corresponding sewer capacity entitlement to the property.
In February 2013, Caffe Classico adopted a "zero discharge" method of operation and stopped
discharging wastewater from the manufacturing process to CCCSD sewers. In recognition of
1 Section 6.12.050 of CCCSD District Code— Non-residential Capacity Fees specifies the calculation based on
flow rate and strength —Biological Oxygen Demand (BOD)and Total Suspended Solids (TSS). Using water
consumption data of 929 HCF per year, BOD of 12,047 mg/I and TSS of 7,962 (all values from billing data), the
resulting Capacity Fee would be$866,264.
2 Using water consumption data of 929 HCF per year, BOD of 4,955 mg/I and TSS of 1,263 (all values from billing
data), the resulting Capacity Fee would be$300,033.
3 Based on an assumed building area of 12,000 square feet. This figure may be adjusted if the actual building
square footage is different.
\\DistGroups\Groups$\ENVRSEC\Admin\Brightbill\2013\Letters\Calle Classico Connection Fee Letter 7-19-13.doc
Mr. Tom Heffernan
Page 3
July 19, 2013
the change to zero discharge and as discussed at our February 1, 2013 meeting, we notified
you in writing on March 14, 2013 that a capacity fee of$102,974 was due under the Capacity
Use Charge program. No additional annual Capacity Use Charge payments would be due as
long as Caffe Classico continues to follow zero discharge of manufacturing wastewater to
CCCSD sewers. Failure to pay the $102,974 fee would mean that the property enjoyed the
benefit of a substantial increase in the use of CCCSD's capacity for at least 10 years with no
compensation to the District.
Please feel free to contact me with any further questions or comments.
Sincerely,
Thomas Brightbill, PE
Senior Engineer
TB:sdh
cc: Kent Alm, District Counsel
\\DistGroups\Groups$\ENVRSECAdmin\BrightbiIK2013\Letters\Caffe Classico Connection Fee Letter 7 19-13.doc
Attachment F to Alm letter dated 12/29/2015
Central Contra Costa Sanitary District
. , .
Offer to Compromise
California Evidence Code Section 1152
PHONE: (925)228-9500
FAX: (925)3 72-7892
May 9, 2014
www.centralsan.org
ROGER S.BAILEY
Mr. Tom Heffernan General Manager
60 Terra Teresa KENTON L.ALM
Lafayette, CA 94549 Counsel(10the)A District0
ELAINE R.BOEHME
Dear Mr. Heffernan: Secretary of the District
CENTRAL CONTRA COSTA SANITARY DISTRICT CONNECTION FEES FOR 2500 ANNALISA
DRIVE, CONCORD; APN 159-362-001
Central Contra Costa Sanitary District (District) received your letter dated March 31, 2014. While
the District is anxious to get the issue of capacity fee payment resolved and would consider a
compromise to close the matter, we cannot accept your offer.
Our discussions related to the payment of capacity fees have been delayed several times, at your
request, to accommodate your legal proceedings and arbitration related to Caffe Classico. At our
last meeting, you indicated that the arbitration had been resolved and that you would provide us with
a copy of the final arbitration decision. We still have not received that document.
Your March 31 letter reiterates several points brought up during our meetings. Our position remains
unchanged —specifically, that the parcel you own and the business you started paid capacity fees
only for office use, failed to get permits from both the District and Contra Costa County in a timely
manner for a change of use to an ice cream manufacturing, and discharged high-strength waste for
a number of years to the public sewer system without compensating the District for the capacity
used by that waste.
Our suggestion at this point is to schedule a meeting with you, your legal counsel, and District
Counsel in order to review the legal and engineering issues and attempt to reach a reasonable
compromise.
If a settlement on the capacity fee issue cannot be reached by July 1, 2014, then the District intends
to declare the capacity charge of$102,974, requested in our March 14, 2013 letter, as delinquent
and proceed with the remedies under the California Health and Safety Code to place those charges
on the property tax bill for the subject parcel.
If you have any questions, please feel free to contact us.
Sincerely,
0 (Yeowl�
Danea Gemmell
Environmental Services Division Manager
N:\ENVRSEC\Admin\Gemmell\Letters\2014\Gaffe Classico Connection Fee Letter 5-9-14 doc ®RKy J a rape
Attachment F to Alm letter dated 12/29/2015
ATTACHMENT 5
W OFFICE OF CRAIG S. NEIN
CRAIG S.NEVIN,EsQ.
Email:CNevisiQTr LawNevin com
January 22, 2016
Via Email.
Central Contra Costa
County Sewer District
M. McGill—Board President
Elaine R.Boehme, Secretary of the District
Roger S. Bailey,General Manager
Board members: P. Causey; T.Pilecki; J. Nejedly; D.Williams
Care of: Kenton L.Alm,District Counsel
Danea Gemmell,Planning and Development Division Manager
Caffe Classico and Thomas Heffernan
2500 Annalisa Drive, Concord, CA
CCCSD"Discovery of the added burden" [CCCSD Code§6.12.030.D.]: April 10,2003
CCCSD Notice of Capacity Fees: December 26,2012 [9.5 years later]
CCCSD Tax Lien Imposed: September 1,2015 [12.5 years later]
District Secretary, General Manager and Members of the Board, Care of District Counsel:
Although there have been numerous discussions and meetings in anticipation of and in an
attempt to avoid litigation, it appears that CCCSD does not have an accurate understanding of the
parties' positions and the relevant law. This letter and our meeting on February 4th will be our
final pre-litigation effort to resolve this matter.
CCCSD cannot act in such an untimely, tardy, arbitrary and capricious manner as it has
done with Mr. Heffernan. CCCSD's 9 %2 year delay in attempting to extract an increased
capacity fee is fatal, due to both the principal of laches and the fact that said action violates the
statute of limitations. Even the IRS is limited by time in its actions: The IRS has at most six
years to audit your tax return and ten years to collect any tax due. Statute of limitations are also
statutes of repose; and, they support several unquestionable principals in law, including that
delay can cause prejudice, laches, and estopple and the basic fact that at some point in time it is
too late to charge or collect an amount arguably due — because an individual or an agency has
waited too long.
District counsel takes the position and we assume he has urged the CCCSD Board to
think that there is no statute of limitations applicable to, or limiting when, the CCCSD Board can
collect a fee. With this logic, the CCCSD Board can charge a customer at any time, can place a
tax lien and take other collection actions at any time and, therefore, CCCSD is not subject to any
of the laws or the cases in California that provide any customer of the District protection from
unduly delayed collection. As demonstrated here, there is no support for the extreme position
that there is no statute of limitations controlling when the District must act.
ONE MARKET STREET—SPEAR TOWER,SUITE 3600
SANFRANCISCO,CALIFORNIA,94105
TELEPHONE.415-293-8465
January 22, 2016
Page 2
In taking this extreme position, District counsel is relying primarily on one case:
Cochella v. CalPers. District counsel's letter of December 29, 2014 does also include a "string"
citation including some of the cases mentioned within the Cochella case. However, District
counsel failed to acknowledge — and we fear he has failed to advise CCCSD -- that none of the
cases cited supports the notion that a sanitary district has unlimited time to charge fees or levy
charges either on an account or as a property tax lien and that there is case support for a suit
and/or Petition against CCCSD.
First,the Coachella case clearly is not on point with the issues concerning Mr. Heffernan.
In Coachella, the court was asked if a 6 month statute of limitations (in Gov. Code §3541.5)
applied to the parties there, rather than the general 3 year statute of limitations that had
previously applied to actions filed in the Superior Court. This is not a labor practices matter such
as existed in Cochella. Clearly the relationships between the parties was different there than
here. There, the claims were of the California School Employees Association filing unfair labor
practice charges under the Meyers-Milias-Brown Act (Gov. Code §§ 3500-3511, the "MMBA")
in the Public Employment Relations Board (PERB). The MMBA governs collective bargaining
and employer-employee relations for most California local public entities, including cities,
counties, and special districts.
Clearly stated in the opinion itself, the issue in Coachella was, "...whether the limitations
period for making an MMBA unfair practice charge to the PERB is three years, which the PERB
insists was the generally accepted limitations period for an MMBA cause of action filed in
superior court...or six months, which is the limitations period for all other unfair practice
charges subject to the PERB's jurisdiction..." Coachella, at page 1077. Therefore, Coachella
has no bearing on the relation between CCCSD and Mr. Heffernan.
District counsel's letter includes a "string" citation of additional cases, perhaps thinking
that the more cases cited the better the position. Like Coachella, however, none of the other
cases cited justify the position that CCCSD is not limited in time in charging a fee or an
assessment. In other words, according to District counsel's letter, the concepts of time, delay,
limitations and well-settled and acknowledged principals of statutes of limitations are statutes of
repose are simply inapplicable to Mr. Heffernan — but none of the cases relied on stand for this
proposition.
The other cases in District counsel's letter are equally, if not further, distinct from the
case at hand. In City of Oakland v. Public Employees'Retirement System, the holding was that
there were no statutory limitations bar to an administrative claim for reclassification to a local
firefighters' safety status for airport servicemen. Therefore,just as in Coachella, the City of
Oakland case related to and therefore analyzed an obviously dissimilar situation than the
application of the statute of limitations between a public utility or public entity and their client,
constituent, citizen or customer.
In the City of Oakland v. Public Employees'Retirement System case, the underlying facts
and the opinion related to an action under Government Code § 20164(b), pertaining to erroneous
payments into and out of a Retirement fund. The rationale for there being no statute of
limitations in the City of Oakland case was clear: the obligations of CalPers to its members
January 22, 2016
Page 3
continues to run even after the death of its member, and until all obligations to all beneficiaries
are discharged. This, or the other cases cited by District counsel, do not support the position
that there are no limits whatsoever on when they must charge fees.
Similarly, the Robert F. Kennedy Medical Center v. Dept. of Health Services case was
cited for the District Board. However, that case was within the context of the following facts:
the California Department of Health Services, the agency charged with the administration of the
California Medical Assistance Program (Medi-Cal), informed plaintiff Robert F. Kennedy
Medical Center, a certified provider of hospital services under the Medi-Cal program, that it
owed Medi-Cal $511,258, because of the application of the all-inclusive rate per discharge limit
(Cal. Code Regs., tit. 22, § 51536) to the calculation of the hospital's Medi-Cal reimbursement
for the fiscal year ending December 31, 1981.
Even given the context of the Department of Health Services collecting from a certified
provider under the Medi-Cal program, the Court there held that the Department's collection
demand was made within four years of the termination of the federal litigation, which in its view
would be the appropriate period to be "borrowed as a measure of the outer limit of reasonable
delay in determining laches..." Kennedy, at pages 1362. The Kennedy case clearly cannot be
used as support for, and may in and of itself be fatal to CCCSD's position here.
District counsel also cited the case of Little Company of Mary Hospital v. Belshe.
However, once again, this case has nothing to do with Mr. Heffernan's situation. This case,just
like the Kennedy case related to a State of California Department of Health Services suit against
a provider of hospital Services,. an action under Welfare and Institutions Code §14172 and
§14200. The parties there were not in the relationship or context of a public utility or public
entity and their client, constituent, citizen or customer. The decision makes this clear when it
refers to the Kennedy case and then states, "We face the identical issue in this appeal."
Therefore, in this case, again, the relationship of the parties is so distinct from the parties at hand
that the case cannot be relied on in any way by CCCSD.
District counsel cited the case of Bernd v. Eu. However, that case relates to an
administrative decision between the Secretary of State and a Notary who is licensed by the
Secretary of State; and, it was an action under Government Code § 8214.1 (a) before an
Administrative Law Judge. There, the statute of limitations was inapplicable to disciplinary
proceedings of a state administrative agency within the context of revocation or suspension of a
notary's commission under Government Code § 8200, et seq. The rationale in that case is clear-
- but not present - in the case at hand. There is no way this Board can think that this case
justifies it charging its customer a fee at any time.
Lastly, District counsel cited the case of French v. Construction Laborers Pension Trust.
As the case name indicates, the case related to a petition for a Writ of Mandate against
Construction Laborers Pension Trust for Southern California (Trust), Fund Administrative
Associates, Inc., a corporation (Administrator), and 16 individuals (Trustees), who were trustees
of a pension trust, to compel continued payment of pensions to which petitioners were allegedly
entitled under a pension fund plan entitled Construction Laborers Pension Trust for Southern
California. There were not only parties in French in a completely different relationship, there
January 22, 2016
Page 4
were other considerations used by the Appellate Court in reaching its decision. In fact, it stated,
"...it must be borne in mind, that we are here considering a trust in the nature of a quasi-public
trust which had been entered into under provisions of federal law by labor unions and employer
associations representing large numbers of persons." Clearly,just like every other case District
counsel has referred to, the relationship between the parties in French was so different than the
case at hand, that the case provides no support whatsoever for CCCSD's position.
As demonstrated, none of the cases cited by District counsel support the Board's position
that a sanitary district is able to charge and then levy an increased capacity 9 %2 years after their
discovery or notice of the increased capacity. In fact, none of the cases cited even related to a
relationship between a customer of a public utility or a customer of a sanitary district. In the
situation before the Board, there is such a relationship. At best, and we are confident District
Counsel will agree with this, all of the cases cited by District counsel simply confirm that Mr.
Heffernan can and would also file a Petition for Writ of Mandamus against CCCSD along with a
civil suit for, inter alia, declaratory relief, slander of title and damages.
There is an applicable statute of limitations and the principal of repose that applies to an
IRS action against a taxpayer which is 10 years. There is an applicable statute of limitations and
the principal of repose that applies to a public utility action to collect an undercharge which is 3
years. There is a statute of limitations and the principal of repose that applies to this District's
attempt to charge an increased capacity fee and this is also 3 years. The only other conclusion is
that this District can charge fees any time it wants, regardless of time, delay and prejudice to its
customer. This cannot be true -- and even CCCSD's own Code jettisons the belief that the Board
can charge a fee at any time. District Code states that fees are to be charged "upon the time of
the District's discovery of the added burden." [CCCSD Code § 6.12.030.D.] It cannot be
seriously disputed that the District's discovery of the added burden was April 10, 2003. If the
District disputes this, please be prepared to discuss on February 4t" how this fact can be disputed
and on what basis.
District staff and District counsel also agree that it was not until late-2012/early-2013 that
the District for the first time ever communicated that the "added burden," which they knew of
since April 10, 2003, would potentially be collected. District counsel's letter confirms that no
fees were charged for over 9 %2 years after the District had "discovered" an added burden.
District counsel states (and presumably the Board believes) that Mr. Heffernan has no
authority to support his argument. That is not true. The District appears unaware that there are
cases where Courts have confirmed that a sanitary district customer may file suit and/or a
Petition for Writ of Mandamus against a sanitary district due to the delay, statute of limitations
defenses, and the tardiness of charges and assessments.
These authorities confirm that once customers have paid the arguably tardy
assessment/tax lien they were entitled to file suit and/or a Petition for Writ of Mandamus in the
Superior Court and thereafter argue that the sanitary district assessment was invalid because of
the statute of limitations or laches, or both. In fact, a suit against the sanitary district for a tardy
levy in violation of the statute of limitations is specifically sanctioned by a number of appellate
decisions and the following confirm a suit and/or Petition for Writ of Mandamus against the
January 22, 2016
Page 5
District is warranted — and the only bar to filing the litigation is the payment under protest
of the tax lien imposed by the sanitary district in violation of the statute of limitations —which
Mr. Heffernan has already done. See: Los Altos Golf and Country Club v. County of Santa
Clara (2008) 80 Cal.Rptr.3d 340, 165 Cal.App.4th 198; Pinewood Investors v. City of Oxnard
(1982) 184 Cal.Rptr. 417, 133 Cal.App.3d 1030; Health &Safety Code § 5472; See also,Borst v.
City of El Paso De Robles. Mr. Heffernan has paid the untimely fee, after it became a lien on his
real property tax statement, and there is now no bar to his filing suit and seeking a Writ of
Mandamus against CCCSD.
In addition to Mr. Heffernan arguing in court that the District assessed the fee in violation
of the statute of limitations he will also be able to argue in the litigation that other and further
reasons support his position that the District is barred or estopped from making this tardy charge
and assessment. As we wrote earlier, as seen in the schedule of facts and events we have
provided, there have been over 100 interactions between Caffe Classico and the District, during
these past 9 %2 years including: Fourteen Annual permit applications for Industrial Users Permits
submitted/approved;Nine instances where the District placed other sewer charges on the tax roll;
and, Two negotiations and settlements of District code violations in 2009 and 2011. It cannot be
disputed that there was never any request or mention for Capacity Fees from April 10, 2003 to
December 26, 2012, a total of over 9 %2 years, notwithstanding and despite all of these
interactions.
Add to this the fact that after the District first indicated that a charge was "missed"by the
District (December 26, 2012), within only approximately 2 months, the business immediately
entered into a recycling program that uses its solid waste to make bio-fuels. Of course, if the
District had timely invoiced for the Capacity fees, the business would have made the change to
operate independent of the District much sooner. The annual fees paid, totaling $147,000.00,
could have been saved by the business -- if CCCSD had timely asked for the Capacity fee.
Clearly, Mr. Heffernan will be able to establish not only an unreasonable delay but also resulting
prejudice and therefore be protected by the doctrine of laches. (See, Kennedy, 'at page 1360.) If
Mr. Heffernan is forced into litigation, he will seek reimbursement for these additional fees as a
claim against the District.
Lastly, if the Board imagines the District somehow overcoming the statute of limitations,
statute of repose, estopple and laches problems it has, it can be demonstrated that the calculation
of the Capacity Fee is incorrect, as we described in our previous letter, and CCCSD would be
required to prorate the charge based on the 1000 square foot change. This reveals that the
District, at best--and if it hadn't failed to charge the increased capacity fee in a timely manner--
would have collected $7,954 (1000/12,946 of$102,974).
District counsel's letter needlessly confuses the facts which are quite clear: 1000 square
feet, and no more, were added to the initial capacity fee paid utilization. There is simply no basis
in reason or logic to charge for any more than the 1000 square feet added. As well, the letter by
Mr. Alm of December 29, 2015 states that "no capacity fees were ever paid for the remaining
`unimproved' 6000 square feet of space which was improved sometime after 1983." Of the 6000
square feet of previously unimproved space, only 1000 feet of that has been improved by Mr.
Heffernan leaving the other 5000 feet space in the same condition as it was in 1983! We believe
January 22, 2016
Page 6
this is a significant misunderstanding by the CCCSD and despite all the issues surrounding the
timing of when the District can or can't ask for fees, the amount of the charges being imposed
are significantly overstated.
In addition to the above—and perhaps because of it--we feel it is essential to remind the
Board and Staff that this is a matter which from all reasonable perspectives had been resolved
prior to the District placing the Capacity fee related tax lien: In September 2014, Ms. Danea
Gemmell and Mr. Heffernan came to a resolution, and one that Staff agreed to recommend to the
Board. Then, the Board not only refused to accept the Staff recommendation—the District then
waited eight (8) months to inform Mr. Heffernan that the Board refuse to approve the Staff
recommended settlement. Thereafter, Mr. Heffernan has expended substantial time and
attorneys' fees to try to reach a resolution—apparently to no avail.
No matter how one looks at the situation, it cannot be disputed that more than 9 % years
passed after the District could and should have requested the fee. We believe that when you
discuss the above with District counsel you should be informed that the impending
litigation/Petition is one the District is far more likely to lose than to win. We urge the District to
also recognize that only if the District can somehow pass the statute of limitations, estopple and
laches issues, then, because Caffe Classico moved immediately to zero-discharge, and based on
the small 1,000 square feet that should have been invoiced in 2003, not 2015, even the best
recovery would be far less than the damages claimed by the CCCSD. We thank you for your
time and considerations in this matter and look forward to our February 4t"meeting.
Sincerely,
LAW OFFICE OF CRAIG S. NEVIN
Craig S. Nevin
cc: Client
ATTACHMENT 6
555 12`h Street,Suite 1500 Kenton L.Alm
Oakland,California 94607 Attorney at Law
tel(510)808-2000 Direct Dial:(510)808-2081
fax(510)444-1108 kalm@meyersnave.com
www.meyersnave.com
meyers nave
January 29, 2016
Via E-mail & U.S. Mail
Craig S.Nevin, Esq.
LAW OFFICES OF CRAIG S.NEVIN
One Market Street
Spear Tower, Suite 3600
San Francisco, CA 94105
Re: Caffe Classico
Dear Mr.Nevin:
' I am writing in response to your January 22, 2016, correspondence which attempts to address
the legal authority cited in my December 29, 2015, correspondence and separately suggests
the imposed fees were not calculated correctly. I will address your legal analysis first.
The authority found in my December 29 letter rebutted your prior assertion that Central
Contra Costa Sanitary District("CCCSD"or"District") is barred by an unspecified statute of
limitations because its imposition of a tax lien for delinquent fees is not an administrative
action subject to the holding in Coachella Valley Mosquito & Vector Control Dist. v.
California Pub. Employment Relations Bd., (2005) 35 Ca1.4th 1072.
As I explained,the District's pursuit of your client's delinquent capacity fee via imposition
of a tax lien is a quintessential "administrative proceeding"which is not subject to "the
statutes of limitations set forth in the Code of Civil Procedure, including the three-year
period in section 338(a)." (Id. at 1088.)
As fully elucidated in City of Oakland v. Public Employees'Retirement System (2002) 95
Cal.App.4th 29, 47-48 "[a]n administrative proceeding is neither a `civil action' nor a
`special proceeding of a civil nature,' `to the commencement of which the statute of
limitations relates. Such provision . . . relates only to actions or special proceedings in
courts, and not hearings before boards. Respondent board is not a `court,' even though it
exercises a power judicial in its nature.'." Likely,because of its inescapable effect, you have
entirely failed to address this holding in your January 22, 2016, correspondence. Notably,
the City's position was similar to yours in that it was attempting to prevent the retroactive
increase of certain pensions authorized by the PERS Board based on the assertion that the
action was time barred.
A PROFESSIONAL LAW CORPORATION OAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA SAN DIEGO
Craig S. Nevin, Esq.
LAW OFFICES OF CRAIG S. NEVIN
January 29,2016
Page 2
Instead, you embark on a futile effort to obscure the relevant issues by attempting to
distinguish cases not relied upon by me in my prior correspondence, but described by the
Appellate Court in Oakland v. PERS as having been "mentioned by the trial court." (Id. at
47.) To reiterate, I relied upon the unequivocal holding set forth in Oakland v. PERS
(adopted in Coachella Valley Mosquito & Vector Control Dist. v. California Pub.
Employment Relations Bd., (2005) 35 CalAth 1072, 1088)that held, even where a Board
exercises quasi-judicial functions, it does not equate to an action to which"the statute of
limitations relates." Your effort to distinguish these other cases is,therefore, irrelevant.
Additionally,you seek to diminish the conclusive effect of this holding by asserting it is
inapplicable because"the relationship between the parties [is] so different." However, you
have offered no authority for your claim that"the relationship between the parties" is a factor
courts consider when determining whether a particular proceeding is an administrative
proceeding or not. In fact,there is no such authority.
To the contrary,the court in Oakland v. PERS rejected a similar attempt to limit its holding
to one type of administrative proceedings (e.g. disciplinary proceedings) and determined
"[a]lthough the Bold case . . . also involved disciplinary actions, we see no reason why an
administrative proceeding which does not involve discipline is any more akin to a `civil
action' or `special proceeding of a civil nature.'." (Oakland, supra, at 48.)
Moreover, you have failed to identify how this Board's imposition of a tax lien for delinquent
fees is not an administrative proceeding. In fact, your analysis buttresses our position in that
you refer to statutes of limitations applicable to "an IRS action against a taxpayer" and"a
public utility action to collect an undercharge." In both instances, the statute of limitations
applies to a judicial action brought by the public agency against another party seeking
redress in court, but not to its underlying administrative proceedings.
You next posit the unconvincing argument that two inapplicable cases (and one unreported
case) as well as an inapplicable Health and Safety Code provision support your position that
the District's administrative proceeding to "attempt to charge an increased capacity fee" is
subject to a three (3)year statute of limitations.
Without actually citing any discussion from this authority, you describe it as standing for the
legal principle that"a sanitary district customer may file suit and/or Petition for Writ of
Mandamus against a sanitary district due to the delay, statute of limitations defenses, and the
tardiness of charges and assessments." These references do not suggest that administrative
enforcement actions are subject to statutes of limitation.
Instead,Los Altos Golf& Country Club v. County of Santa Clara(2008) 165 Cal.AppAth
198 upheld the trial court's dismissal of a taxpayer action seeking a tax refund for sewer
service fees from the County because the taxpayers failed to first pay those fees under protest
before filing suit. It held"because the legislative enactments of both the State and the City
continue to require payment under protest, appellants' action was foreclosed by their failure
to follow the prescribed procedures." (Id. at 207.) These facts are not at issue here.
A PROFESSIONAL LAW CORPORATION OAKLAND LOS ANGELES _ SACRAMENTO SAN FRANCISCO SANTA ROSA SAN DIEGO
Craig S. Nevin, Esq.
LAW OFFICES OF CRAIG S. NEVIN
January 29,2016
Page 3
The court in Pinewood Inv'rs v. City of Oxnard, (1982) 133 Cal.App.3d 1030 determined
that: (1)the city council's attempt to upwardly adjust the sewer connection fees by resolution
was invalid, since Health and Safety Code section 5471 requires that such action be
accomplished by ordinance; (2)the city could not achieve the same result under its police
power or under Government Code section 38900; and (3)the trial court properly rejected the
city's estoppel argument, which was based on plaintiff's asserted payment of the fees without
objection, since the city, in its answer, admitted and established that plaintiff paid the fees
under protest, as permitted by Health and Safety Code section 5472. Thus, this case also
offers no support for your assertions concerning limitations period for administrative
proceedings and you have provided no other authority.
You further claim that your inability to apply any statute of limitations to the District's
administrative proceeding renders it"arbitrary and capricious" extrapolating that such a
result allows the District to seek to collect a late fee at any time. Any court which might
review the District's action is required to examine the administrative record and not
hypothetical extrapolations of counsel. The record in this case, as explained in detail in my
last correspondence and presentations to this Board demonstrates the District acted in a
reasonable manner to assess and seek recovery of your client's delinquent capacity fees once
the issue of significant non-payment came to light.
You also contend that the equitable doctrines of laches and estoppel are applicable to these
facts and that these principles somehow bar the District from proceeding as it has. Because
your contention is again fact-free and without authority, I will provide only a general
response as to the inaptness of these principles here.
"The defense of laches requires unreasonable delay plus either acquiescence in the act about
which plaintiff complains or prejudice to the defendant resulting from the delay. Prejudice is
not presumed from the simple fact of delay; it must be affirmatively shown. In determining
whether a defendant has sustained its burden of proving laches, the court may consider the
extent to which the defendant is partially responsible for the delay." (Farahani v. San Diego
Community College Dist. (2009) 175 Cal.App.4th 1486, 1494.)
In addition, "laches is not available where it would nullify an important policy adopted for
the benefit of the public." (Feduniak v. California Coastal Com'n(2007) 148 Cal.App.4th
1346, 1381.) Importantly,the court in Feduniak rejected a laches defense where the Coastal
Commission failed to enforce the terms of a permit for violations originating in 1985 and
then sought to enforce the permit conditions against a new owner nearly three (3) decades
later. The new owner purchased the property for 13 million dollars with no knowledge of the
permit's limitations; nonetheless,the permit conditions were enforced. (Id. at 1351-56.)
Consequently,there are no facts present which would support a defense of laches for your
client.
A PROFESSIONAL LAW CORPORATION OAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA SAN DIEGO
Craig S. Nevin, Esq.
LAW OFFICES OF CRAIG S. NEVIN
January 29,2016
Page 4
With regard to estoppel, "four elements must be present in order [for the doctrine] to
apply . . . : (1)the party to be estopped must be apprised of the facts; (2)he must intend that
his conduct shall be acted upon, or must so act that the party asserting the estoppel had a
right to believe it was so intended; (3)the other party must be ignorant of the true state of
facts; and (4) he must rely upon the conduct to his injury." (Id. at 1359.)
In addition, like laches, the government may only be bound by an equitable estoppel "when
the elements requisite to such an estoppel against a private party are present and, in the
considered view of a court of equity,the injustice that would result from a failure to uphold
an estoppel is of sufficient dimension to justify any effect upon public interest or policy that
would result from the raising of an estoppel." (Id. at 1359-60.) Again the Feduniak court
rejected the estoppel defense holding, "we conclude that the Commission's regulatory
inaction for so many years in the face of a prominently located golf course does not, by itself,
support the trial court's finding that the Commission had constructive knowledge of the
violation." (Id. at 1367.) The court further found that"the mere failure to enforce the law,
without more,will not estop the government from subsequently enforcing it." (Id. at 1369.)
Thus, here again, there are no facts to support a claim that the requisite five elements of
estoppel are present.
Separately,you again suggest that the calculation of fees is in error and that the fee must be
calculated based on a pro rata basis for 1,000 square feet. This suggests that you do not
understand the basis for the Capacity Fee calculation.
A proper analysis requires initially to understand the District Code requires that construction-
related activities which may impact the District or its facilities require permits. (CCCSD
Code § 9.20.010.) Capacity fees are to be reviewed during that initial review of
improvement plans process. Your client was obliged to obtain permits from the District for
the initial conversion of the building to a food processing, ice cream manufacturing facility
and later for installation of the freezer. He did not. Simply stated, it is not the responsibility
of the District to ascertain when improvements to a building are made, rather it is the
property owner's responsibility to ascertain what approvals are required and obtain those
approvals including payment of any applicable fees.
Our records suggest some capacity fees were paid in 1983 for a portion of the building(based
on 3,000 square feet of office and 3,000 square feet of electrical manufacturing). Your client
is responsible for the balance of the fees that were owed based on his change of use of the
property from electrical manufacturing to ice cream manufacturing. This change in use as
noted above required a review of the capacity fees which did not occur due to his failure to
obtain proper permits. Typically 100 percent of the additional fees are due before the
improvements are made. However, the District also has a Capacity Use Charge Program
(similar to a rent to own process)that allows businesses with unique wastewater flow or
strength characteristics to finance their capacity fees with an initial down payment and
annual payments over fifteen (15)years for the balance of the fee. The total fee due under
both approaches utilizes the flow and strength data to determine the total number of
residential unit equivalents for a business. Other provisions of the District Code allow for a
A PROFESSIONAL LAW CORPORATION OAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA SAN DIEGO
Craig S.Nevin, Esq.
LAW OFFICES OF CRAIG S. NEVIN
January 29,2016
Page 5
five-year review of this data to determine the final basis for the total capacity fees due. The
down payment for the Capacity Use Charge Program is based on total building area and a
fixed factor of 1.166 RUEs per 1,000 square feet. In the case of parcels where wastewater is
pumped to the District, District Code specifies that the "pumped zone"fees be included in
the down payment calculation. In the case of Caffe Classico,the down payment under this
program was properly calculated to be $102,974.
As you have previously been informed,the District was provided irregular strength and flow
data for Caffe Classico between 2003 and 2012. During that time,there were ongoing
disputes between the operators, owners and the District as to the correct data. There were
also allegations of fraudulent manipulation of that data which were made by company
employees during that period. Due to source control program violations and resultant
enforcement, the creamery operation went to zero process discharge in March 2013.
Accordingly, although significant capacity fees were owed for Caffe Classico's operations
during the 2000 to 2013 period, the most equitable approach based on the change to zero
process discharge was to assess the minimum Capacity Use Charge Program down payment
of$102,974 as the capacity fee owed. Accordingly, proration of the remodeled "1000
square feet within the existing building to house. . . manufacturing room"noted in your
letter is not relevant to either the lump-sum Capacity Fee calculation or the Capacity Use
Charge Program down payment calculation. Accordingly, it has no bearing on the fee owed
by your client.
Although, I assume your client and the District may continue to disagree on a number of
issues, I hope this response clarifies the District staffs' position.
Very truly yours,
fi
Kenton L. Alm
Attorney at Law
2598331.1
A PROFESSIONAL LAW CORPORATION OAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA SAN DIEGO
Timeline of Events and Significant Communications ATTACHMENT7
2500 Annalisa Drive (APN 159-362-001)
Calle Classico
February 4, 2016
August 3, 1983 Capacity fees paid for new 12,000 square foot (SF) building.
Fee calculated based on number of plumbing fixtures, as
prescribed by District Code at that time. Notation on the
permit indicates the use was 3,000 SF office and 3,000 SF of
electrical manufacturing.
2000 Property is purchased by Mr. Heffernan and his business,
Caffe Classico, moves in. No building permit obtained from
Contra Costa County for tenant improvements so plans not
routed to the District for review.
June 19,.2003 Source Control inspects Caffe Classico, issues warning notice.
June 19, 2003 to Source Control inspects or takes other action 34 times;
November 22, 2011 multiple warning notices and notices of violation are issued.
March 13, 2006 Caffe Classico grease interceptor plans are reviewed and
approved. Facility type is noted as "ice cream manufacturing"
on grease removal form.
2007 Mr. Heffernan sells Caffe Classico to an investment group,
maintains ownership of the parcel.
September 2011 CCCSD determines that an added burden has occurred
without payment of capacity fees because waste strength has
been understated, building was expanded without plan review
by the District, and permits were not sought or issued.
December 26, 2012 Letter to property owner advising that additional capacity fees
were owed based on "scope of operations [having] expanded
well beyond the activities upon which the calculations for the
initial sewer capacity fee were based."
February 1, 2013 Meeting with property owner to review the basis for and
calculation of additional capacity fees. Property owner
advised that going to "zero process discharge" would not
eliminate the obligation to pay Capacity Fees.
February 7, 2013 Update to Board of Directors on Environmental Compliance
actions and Capacity Fee.
February 28, 2013 Deadline for Caffe Classico to meet "zero process discharge"
which was met.
March 14, 2013 Letter acknowledging zero process discharge and requesting
payment of$102,974 in Capacity Fees based on the down
payment amount under the District's Capacity Use Charge
Program.
1
Timeline of Events and Significant Communications
2500 Annalisa Drive (APN 159-362-001)
Caffe Classico
February 4, 2016
May 3, 2013 Letter advising property owner that unpaid Capacity Fees
"became delinquent on April 30, 2013."
July 19, 2013 Letter explaining basis for Capacity Fee and showing
calculation for down payment based on the District's Capacity
Use Charge Program.
October 24, 2013 Meeting with property owner and District Staff to review
Capacity Fee issues.
March 31, 2014 Letter from property owner raises various issues associated
with timing and the validity of wastewater strength data.
May 9, 2014 Letter to property owner
• rejects an settlement offer ($10,000)
• states that District would be "consider a compromise to
close the matter"
• states that if settlement cannot be reached by July 1,
2014, District intends to place Capacity Fee charges on
property tax bill
September 9, 2014 Meeting with property owner, District Staff, and respective
counsel.
September 26, 2014 E-mail from property owner offering $20,000 for settlement of
Capacity Fees owed.
October 2, 2014 Offer from property owner presented to Board of Directors in
closed session. Offer rejected.
July 27, 2015 Finance Committee reviews position paper to set public
hearing to place Capacity Fee charges on property tax bill.
July 29, 2015 Notice of Public Hearing mailed to property owner and
property owner's attorney as well as being posted and
published as required.
August 6, 2015 Public hearing. Board of Directors approves places delinquent
Capacity Fee charges on property tax bill.
August 27, 2015 E-mail to property owner confirming basis of Capacity Use
Charge Program down payment is square footage not strength
data and that building square footage of 12,946 SF from
County Assessor's records was used for calculations.
November 17, 2015 Property owner's attorney submits Notice of Claim to District
Counsel.
December 29, 2015 District Counsel responds via letter to Notice of Claim.
January 7, 2016 Scheduled appeal hearing postponed to February 4, 2016 at
request of property owner's attorney.
2
Timeline of Events and Significant Communications
2500 Annalisa Drive (APN 159-362-001)
Caffe Classico
February 4, 2016
January 22, 2016 Property owner's attorney submits response letter to District
Counsel's letter of December 29, 2015.
January 29, 2016 District Counsel responds via letter to property owner's
response letter of January 22, 2016.
3