HomeMy WebLinkAbout08.a.1)a) Update on recent effort to collect commercial capacity feesCentral Contra Costa Sanitary District
December 1, 2016
TO: THE HONORABLE BOARD OF DIRECTORS
8.a.1)a)
VIA: ROGER S. BAILEY, GENERAL MANAGER f;
JEAN MARC PETIT, DIRECTOR OF ENGINEERING AND TECHNICAL
SERVICES z---,ne
FROM: DANEA GEMMELL, PLANNING AND DEVELOPMENT SERVICES
DIVISION MANAGER
SUBJECT: DEBRIEF OF A RECENT EFFORT TO COLLECT COMMERCIAL
CAPACITY FEES
On February 4, 2016, Central San conducted an appeal hearing for $114,970.47 placed
on the Contra Costa County property tax roll for the property located at 2500 Annalisa
Drive in Concord. The appeal was denied to the property owner who had been the
former business owner of ice cream manufacturer, "Caffe Classico". This delinquency
represented a complex situation that existed for several years and was handled by both
Source Control (now known as Environmental Compliance) and the Rates and Fees
workgroups over that period.
As part of Central San's commitment to continuous improvement, staff was asked to
summarize the lessons learned, to describe the procedural and operational changes
implemented since this event, and to provide opportunities for further improvement that
should reduce the likelihood of a future occurrence.
Background
The building at 2500 Annalisa Drive was built and connected to sanitary sewer in 1983.
Central San issued a sewer permit and collected $1,515 in capacity fees which, based
on the District Code at the time, were based on a plumbing fixture count. Notes on the
permit reference a total of 6,000 square feet; 3,000 square feet of office space and
3,000 square feet of light industrial space. in 2000, Mr. Thomas Heffernan purchased
the property and relocated his food processing business, Caffe Classico, onto the
parcel. A number of improvements were made to the building to facilitate the food
processing but no building permits were obtained from Contra Costa County, no plans
were submitted to Central San for review and therefore, no sewer fees were or could be
collected at that time.
Board of Directors
December 1, 2016
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In 2003, District Source Control Inspectors became aware that an ice cream
manufacturer, "Caffe Classico", was operating on the premises and was not in
compliance with District discharge regulations. Source Control took enforcement action
and had over 30 interactions with Caffe Classico between 2003 and 2013, and
eventually reached a settlement agreement for the discharge violations in January 2010
and again for subsequent violations in January 2013. Mr. Heffernan sold the business
to an investment group in 2007, yet retained ownership of the property.
In September 2011, Caffe Classico management notified Central San that the testing for
Source Control strength data had been intentionally manipulated to reduce wastewater
strength readings. District staff then started investigating whether an added burden had
been placed on the sanitary sewer and in the course of that investigation discovered in
the next few months that no capacity fees had been paid for the change in use or the
subsequent expansion from 6,000 square feet to over 12,000 square feet.
In December 2012, Central San notified the property owner that capacity fees were due
based on the property's change of use and increased burden. In February 2013, Caffe
Classico converted and achieved zero process discharge status as specified in the
January 2013 formal enforcement settlement agreement with Source Control.
On May 3, 2013 after multiple meetings with the property owner, Central San notified
the property owner that $114,970.47 in capacity fees were due, which were comprised
of a capacity fee down payment of $102,974, an additional 10% delinquent charge of
$10,297.40 and penalties at 1.5% per month totaling $1,699.07. Central San delayed
putting the delinquency on the property tax bill until August 6, 2015, in order to allow the
property owner time to resolve third party litigation that allegedly was to clarify
ambiguous facts in the case.
Permitting Process
For new construction or changes of use where tenant improvements are constructed,
Central San relies on the local building department to route plans to us for review.
Capacity Fee Calculation
Capacity fees for non-residential users are calculated based on the anticipated burden
as determined from the estimated flow and strength of their wastewater discharge. For
most users, a standard factor based on their business type is multiplied by the building
area to determine the burden. A credit is given for any capacity fees that had previously
been paid for the parcel. District Code section 6.12.050 describes the basis for non-
residential capacity fees including the calculation of the wastewater burden based on
flow and strength. District Code section 6.12.080 describes the Schedule of Capacity
Fees which includes the various business types and corresponding burden factors.
Board of Directors
December 1, 2016
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Some businesses use a special study to calculate the appropriate capacity fee. The
special study reviews site-specific wastewater flow and strength for a period of time up
to five years. As provided for in District Code, the Special Study frequently includes a
review period of up to five years during which the strength and flow from the parcel is
monitored. If the strength and flow differs significantly from the initial Special Study
results, the capacity fee is adjusted and additional fees are imposed or an appropriate
refund is issued. Special Studies are used:
• For all Permitted Industries, such as food manufacturers;
• For businesses that do not fit neatly in the business types listed in the Schedule
of Capacity Fees; and
• For individual users that make the request because they believe the applicable
capacity fee is unreasonably high based on the user's anticipated site-specific
wastewater flow and strength.
For Caffe Classico, a special study was performed. However, based on the
questionable wastewater strength data and thecomplication of the business adopting a
zero discharge method of operation, a capacity fee settlement based on the Capacity
Use Charge Program down payment was calculated from the building square footage
and the Capacity Use Charge Program factor.
Communication
District staff diligently worked with Caffe Classico to achieve compliance with Title 10 of
the District code (Source Control ordinance) between 2003 and 2013 on more than 34
occasions. Staff's primary focus during this time was geared toward compliance.
Making this information available to other workgroups at Central San and breaking
down silos between work groups in Central San is the key to improving and fostering
better communication and more effective coordination. Caffe Classico had not pulled
permits for their change of use to ice cream manufacturing, so the Development staff
had not focused on outstanding capacity fees during this period.
As a result of this incident the Planning and Development Services Division has
implemented new internal processes to improve communication with the Source Control
group. Copies of Notice of Violations (NOVs) and Warning Notices are now sent to the
Permit Counter for review to determine if all fees have been paid for those businesses.
Additionally, the Quarterly Report of Environmental Compliance Inspections is being
forwarded to the Permit Counter who check for new businesses. Both groups have
begun regularly meeting to coordinate work. Future plans include linking databases and
software to make information more accessible to both groups.
Board of Directors
December 1, 2016
Page 4 of 5
Education/Traininq
Cross -training teams means improving employees' proficiency levels in roles outside
their current responsibilities. Each Permit Counter technician has already cross trained
in the field for two days with the Source Control inspectors. As time allows, Source
Control inspectors will shadow permit counter staff to develop an awareness of Permit
Counter processes including capacity fee determination and collection and the
development review processes.
While not a factor in the Caffe Classico collection effort, coordination with the partner
cities and Contra Costa County is critical to identify new businesses and change of use
of existing businesses. The Planning and Development Services Division recently
hosted our second annual Sewer Summit to foster customer engagement and
awareness of Central San's role in the development process. This year staff focused on
commercial development and capacity fees, for the municipalities that Central San
services, on both March 24 and again on April 26, 2016. The Summit has yielded
immediate improvements to our relationships with the agencies. For example, agencies
are now requiring contractors to obtain Central San's signoff on job cards, prior to the
building permits being finalized. inspection requests have risen as a result. Next year's
.
event is currently scheduled for March and April 2017.
Internal Processes
Planning and Development Services staff has begun a review of non-residentialp arcels.
Approximately 200 multi -use parcels are currently being field reviewed. A new student
co-op position has been added to undertake this review. For parcels where a change in
use is discovered which results in a capacity fee being owed, a letter and invoice is sent
to the property owner. The remaining non-residential parcels have been categorized
and prioritized; review of those parcels will begin upon completion of the multi -use
review.
District staff is proposing a simplification of the Capacity Use Charge Program which will
update District code in calendar year 2017. A simplified program may offer benefits for
parcels where the increased code enforcement efforts identify additional capacity fees.
In summary, District staff has:
• Implemented new internal processes to improve communication between the
Source Control, Permit Counter as well as the Rates and Fees workgroups;
• Source Control now forward copies of NOVs and Warning Notices to check for
outstanding fees directly to the Permit Counter;
• Review Quarterly Report of Environmental Compliance Inspections to identify
new businesses;
• Cross trained Permit Counter staff with Source Control;
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December 1, 2016
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• Engaged partner agencies to enhance coordination by holding a two-day Sewer
Summit; and
■ Conduct annual review and audit of business categories including mixed use.
Identified improvements that have not yet been implemented include:
• Link databases and software to make information more accessible; and
• Update District code.
This matter was reviewed with the Finance Committee on September 22, 2016.
Attached Supporting Document:
1, PowerPoint Presentation