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HomeMy WebLinkAbout14. Appeal hearing re capacity fees for 1776 Arnold Industrial Way, Suite A, in Concord Page 1 of 3 Item 14. CENTRAL SAN BOARD OF DIRECTORS vie . , Hill. , , . . POSITION PAPER MEETING DATE: NOVEMBER 7, 2019 SUBJECT: CONDUCT HEARING TO CONSIDER APPEAL OF A STAFF DECISION REGARDING A REQUEST TO ALLOW PAYMENT OF $11,688.89 IN CAPACITY FEES FOR 1776 ARNOLD INDUSTRIAL WAY, SUITE A, IN CONCORD OVER A THREE-YEAR PERIOD SUBMITTED BY: INITIATING DEPARTMENT: BRYAN MCGLOIN, MANAGEMENT ANALYST ENGINEERING AND TECHNICAL SERVICES- THOMAS BRIGHTBILL, SENIOR ENGINEER PDS-RATES AND FEES REVIEWED BY: DANEA GEMMELL, PLANNING AND DEVELOPMENT SERVICES DIVISION MANAGER JEAN-MARC PETIT, DIRECTOR OF ENGINEERING AND TECHNICAL SERVICES Roger S. Bailey Kenton L. Alm General Manager District Counsel ISSUE An applicant (a new tenant) requested to pay additional Capacity Fees for a change of use over a three- year period. The project does not meet the criteria for the Capacity Use Charge Program. District Code does not allow for payment of Capacity Fees in the requested manner, so staff believed they had no authority to enter into an agreement for a payment plan and denied the request. District Code Section 1.16.020 allows the appeal of a staff decision to the Board of Directors. BACKGROUND This appeal is a request for special consideration for payment of sewer Capacity Fees due for a proposed project at 1776 Arnold Industrial Way, Suite A, in Concord. November 7, 2019 Regular Board Meeting Agenda Packet- Page 105 of 414 Page 2 of 3 Parcel History The parcel contains a single building with multiple tenants in separate suites. Central San collected sewer capacity fees for the parcel under the fixture fee methodology when the light-industrial building was first connected to the sewer in 1986. Current Project On August 5, 2019, Central San received an application for proposed tenant improvements at 1776 Arnold Industrial Way, Suite A, in Concord. The Permit Counter staff calculated a capacity fee of $11,688.89 for the proposed project based on the current project square footage and the proposed business classification of "Coffee Shop." This fee included credit for the suite at the "light industrial/warehouse" rate based on fees collected when the building was constructed. District Code Section 6.12.070 states that Capacity Fees are credited at the current rates. During discussions with the applicant, it came to light that Suite A had once been used as a dental office. Central San staff checked the records once again to ensure that no Capacity Fees had been collected for a dental office which might result in additional fee credits for this project. No records of permits or fees for a dental office or any other tenant improvements for Suite A were found. Central San staff also contacted the City of Concord and confirmed that no sewer capacity fees had been collected by them for this parcel. Fee Payment Discussions The applicant indicated that payment of the $11,688.89 in full was problematic and asked about payment options. Staff asked the applicant to contact the property owner and see if the owner was willing to sign a Capacity Use Charge Program agreement which would allow Central San to collect payments on the property tax bill; the owner is unwilling to sign the agreement. On October 8, 2019, staff notified one of the applicants, Mr. Dorsett, of the final determination that $11,688.89 in Capacity Fees were owed for the project. On October 9, 2019, Mr. Dorsett requested in writing that he be allowed to pay the $11,688.89 fee over three years. Staff's understanding is that the payment agreement requested by the applicant would be as follows: • $2,922.23 upon approval by the Board of Directors • $2,922.22 paid no later than November 1, 2020 (end of first year) • $2,922.22 paid no later than November 1, 2021 (end of second year) • $2,922.22 paid no later than November 1, 2022 (end of third year) Such a payment plan would amount to an unsecured loan for the deferred payments. ALT ERNAT IVES/CONSIDERAT IONS The Board of Directors could: • a. Grant the appeal, waive the time of payment requirements in District Code Section 6.12.030, and allow the applicant to make payments over three years without interest, as requested by the applicant; or • b. Grant the appeal, waive the time of payment requirements in District Code Section 6.12.030, and allow the applicant to make payments over three years with an annual interest rate of 6%, which would increase the payments by$260.18 to $3,182.40; or • c. Deny the appeal and require payment of the full $11,688.89 prior to approving the plans for the November 7, 2019 Regular Board Meeting Agenda Packet- Page 106 of 414 Page 3 of 3 project; or • d. Provide other direction to staff. FINANCIAL IMPACTS If Central San enters into an unsecured installment payment agreement with the business owner, total Capacity Fees of $11,688.89 would be collected over three years. It is possible that the business could close or relocate before payments are completed. If that happens, staff would calculate the Residential Unit Equivalent (RUE) of the capacity fees collected up to that point and would credit those RUEs to the property. A subsequent business in the same location would then be required to pay any additional Capacity Fees due, either upon opening or under an arrangement such as a Capacity Use Charge Agreement. It is also possible that the business owner could stop making payments but stay in business. If that happens, Central San's options would be: 1) negotiate a new payment plan with the business owner; or 2) place the unpaid amount on the property tax rolls for collection. Termination of sewer service to the business is likely not an option as multiple tenants share a sewer lateral. COMMITTEE RECOMMENDATION District Code Section 1.16.030 states that appeals of staff decisions are to be heard "ata regular meeting of the Board of Directors." Therefore, this matter was not reviewed by a Board Committee. RECOMMENDED BOARD ACTION Hear the appeal and provide direction to staff. Strategic Plan Tie-In GOAL ONE:Provide Exceptional Customer Service Strategy 3- Maintain a strong reputation in the community GOAL THREE:Be a Fiscally Sound and Effective Water Sector Utility Strategy 2- Manage costs November 7, 2019 Regular Board Meeting Agenda Packet- Page 107 of 414