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Home My WebLink About10. Adopt Assessment District Installment Payment Program Page 1 of 5 Item 10. CENTRAL SAN BOARD OF DIRECTORS ' POSITION PAPER MEETING DATE: APRIL 5, 2018 SUBJECT: CONSIDER ADOPTING RESOLUTION NO. 2018-006 AUTHORIZING AN ASSESSMENT DISTRICT INSTALLMENT PAYMENT PROGRAM FOR ASSESSMENT DISTRICT PROPERTIES OWING REIMBURSEMENTS TO CENTRALSAN SUBMITTED BY: INITIATING DEPARTMENT: RUSSELL LEAVITT, ENGINEERING ENGINEERING AND TECHNICAL SERVICES- ASSISTANT I I I PDS-RATES AND FEES REVIEWED BY: THOMAS BRIGHTBILL, SENIOR ENGINEER DANEA GEMMELL, PLANNING AND DEVELOPMENT SERVICES DIVISION MANAGER JEAN-MARC PETIT, DIRECTOR OF ENGINEERINGAND TECHNICAL SERVICES Roger S. Bailey General Manager ISSUE The authorization of a new installment payment program for certain assessments which reimburse Central San requires the review and approval of the Board of Directors. BACKGROUND On November 2, 2006, the Board of Directors adopted Resolution No. 2006-117 approving the Alhambra Valley Assessment District (AVAD) Policy. The policy establishes the criteria for formation of AVAD projects, the process for the AVAD program, and the methodology for allocating costs and assessments among AVAD participants. The program uses voluntary Contractual Assessment Districts April 5, 2018 Regular Board Meeting Agenda Packet- Page 109 of 164 Page 2 of 5 (CAD)to extend sewers to residential areas currently served by septic tank systems. (This policy was updated on November 5, 2015 as No. Board Policy(BP) 022.) Central San has formed six AVADs beginning in 2008. These AVADs consist of the Trunk Sewer AVAD No. 1 and five AVADs that extended public sewer mains to neighborhoods in the Alhambra Valley. Under the AVAD program, Central San is initially responsible for covering the non-participants' share of the AVAD costs. Central San is reimbursed for this cost when the non-participant parcel owner connects to the sewer system.AVAD financing was offered for a limited time. Direct connectors to the Alhambra Valley trunk sewer had one year from completion to apply for financing, and indirect connectors had three years to initiate formation of an AVAD to extend sewers to their neighborhoods. The one-year deadline was in June 2009. The indirect connector deadline was June 2011. After these time periods passed, staff had received requests from residents to participate in the AVADs and receive financing assistance. On July 15, 2010, the Board of Directors approved Resolution No. 2010-053 to extend the period for property owners to participate in the AVADs to June 30, 2015. During that period, nine property owners used the program to finance reimbursements to Central San and several of their connection fees. The terms of the extended financing were 6.0 percent annual interest for up to 15 years. Three of these owners have already paid back their financing. Since the expiration of the extended financing program, staff has received inquiries from Alhambra Valley residents who have expressed interest in participating in a financing program. The range of financeable costs for the AVADs ranged from $27,000 to $46,000. This amount did not include on-site work, such as lateral construction and septic tank abandonment; nor did it include Central San's application fee, inspection fee or pro-rated sewer service charge.Although property owners would have more time to reimburse Central San, there is a financial incentive for them to participate sooner. Under the AVAD policy, the reimbursement charges to Central San are increased annually to cover Central San's carrying or lost investment opportunity costs (i.e., LAI F rate). Later participants will also pay the current Sewer Capacity Fee, instead of the fee that was in effect at the time of AVAD formation. Of the 160 parcels currently in an AVAD, 110 are participants and 50 are non-participants. For similar reasons, staff proposes to allow current non-participants in the St. Mary's Road CAD to also have access to extended financing. At its May 17, 2012 meeting, the Board approved an exception to CAD Policy No. BP 010 to allow Central San to cover up to 3.5 non-participant shares of the 14 total shares (the remaining 10.5 shares were funded by participants and the City of Lafayette) and several conditions to ensure Central San recoups the share of the costs it would cover. These conditions included a due-on-sale clause for participants'assessments, a provision for Central San to recoup its lost investment opportunity cost, a requirement that non-participant reimbursements are to continue until all of Central San's funds are recovered, and Board findings to justify the reasons for approving an exception to the CAD Policy. By extending the time period for this CAD's financing, Central San could be reimbursed sooner. Those converting from septic to sewer would already qualify for participation in Central San's Septic Conversion financing program, but the CAD reimbursement is over$25,000 and each parcel also requires installation of a costly pumping system. Of the 15 benefitting parcels, eight are participants and seven are non-participants. Staff proposes that Central San offer an Assessment District Installment Payment Program for such property owners who, prior to connecting to the sanitary sewer, must reimburse Central San for the assessment district costs it advanced. By extending the time period for installment payments for assessment district reimbursements, Central San could be reimbursed sooner. Staff proposes the terms of the financing be up to 15 years at the minimum annual interest rate established by the Board of Directors for assessment districts (currently 6.0 percent). ALTERNATIVES/CONSIDERATIONS April 5, 2018 Regular Board Meeting Agenda Packet- Page 110 of 164 Page 3 of 5 None. FINANCIAL IMPACTS Providing an Assessment District Installment Payment Program for the existing AVADs and the St. Mary's Road CAD will not result in additional costs to Central San. It will provide abetter opportunity for non- participants to become participants and could result in earlier reimbursement of project costs and connection fees to Central San. The financing instrument would be a promissory note, a system which is already used by Central San for the septic conversion capacity fee financing.A processing fee to cover the cost of preparing and administering the promissory note is charged at the time of initiation. COMMITTEE RECOMMENDATION The Finance Committee considered this matter at its February 27, 2018 meeting and recommended Board approval. RECOMMENDED BOARD ACTION Adopt proposed resolution authorizing an Assessment District Installment Payment Program for assessment district properties owing reimbursements to Central San. Stratedc Plan Tie-In GOAL ONE: Provide Exceptional Customer Service Strategy 1 - Foster Customer Engagement and Awareness ATTACHMENTS: 1. Proposed Resolution April 5, 2018 Regular Board Meeting Agenda Packet- Page 111 of 164 Page 4 of 5 RESOLUTION NO. 2018-006 AUTHORIZING AN ASSESSMENT DISTRICT INSTALLMENT PAYMENT PROGRAM FOR ASSESSMENT DISTRICT PROPERTIES OWING REIMBURSEMENTS TO CENTRAL CONTRA COSTA SANITARY DISTRICT WHEREAS, the Central Contra Costa Sanitary District (Central San) has established assessment districts in which Central San has earned reimbursements by covering the assessment costs of non-participants, so as to make the assessment district more financially feasible by reducing the assessments of participating properties; and WHEREAS, specifically these assessment districts consist of six Alhambra Valley Assessment Districts (AVAD) and St. Mary's Road Contractual Assessment District (CAD) No. 2011-1 ; and WHEREAS, after 5 to 10 years of their initial financing programs' expiration, it could be advantageous both to non-participating property owners and to Central San for these property owners to begin paying their reimbursement to Central San through an installment payment program. NOW, THEREFORE, the Board of Directors of Central San hereby authorize an Assessment District Installment Payment Program for assessment district properties owing reimbursements to Central San. The terms of the financing will be up to 15 years at the minimum annual interest rate established by the Board of Directors for assessment districts (currently 6.0 percent). As with the original AVADs, AVAD participants may finance their direct Trunk Sewer reimbursement or individual AVAD sewer share and indirect Trunk Sewer reimbursement, capacity fees, and annexation fees. St. Mary's Road CAD participants may finance their CAD share and may finance their capacity fees, if converting from septic to sewer. PASSED AND ADOPTED this 5th day of April, 2018, by the Board of Directors of Central San by the following votes: AYES: Members: NOES: Members: ABSENT: Members: James A. Nejedly President of the Board of Directors Central Contra Costa Sanitary District County of Contra Costa, State of California April 5, 2018 Regular Board Meeting Agenda Packet- Page 112 of 164 Page 5 of 5 Central Contra Costa Sanitary District Resolution No. 2018-006 Page 2of2 COUNTERSIGNED: Katie Young Secretary of the District Central Contra Costa Sanitary District County of Contra Costa, State of California Approved as to form: Kenton L. Alm, Esq. Counsel for the District April 5, 2018 Regular Board Meeting Agenda Packet- Page 113 of 164