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HomeMy WebLinkAbout14. Discuss customer assistance program alternatives Page 1 of 30 Item 14. CENTRAL SAN BOARD OF DIRECTORS POSITION PAPER MEETING DATE: DECEMBER 19, 2019 SUBJECT: DISCUSS CUSTOMER ASSISTANCE PROGRAM ALTERNATIVES, AS REQUESTED BY BOARD OF DIRECTORS AT THE APRIL 18, 2019 MEETING, AND AS DISCUSSED BY THE ADMINISTRATION COMMITTEE ON OCTOBER 15, 2019 SUBMITTED BY: INITIATING DEPARTMENT: PHILIP LEIBER, DIRECTOR OF FINANCEAND ADMINISTRATION-FINANCE ADMINISTRATION REVIEWED BY: KEVIN MIZUNO, FINANCE MANAGER DANEA GEMMELL, PLANNING & DEVELOPMENT MANAGER ANN SASAKI, DEPUTY GENERAL MANAGER Roger S. Bailey Kenton L. Alm General Manager District Counsel ISSUE Central San does has not historically offered a specific program to assist customers with the payment of their sewer service charge should they encounter financial difficulties on a short-term or long-term basis. I n connection with the last rate hearing, Board Members requested staff to develop alternatives for a customer assistance program. BACKGROUND Central San Board Members requested, during the public hearing on the four-year rate adjustments on April 18, 2019, that staff report back on potential customer assistance programs. Additionally, discussion of potential customer assistance programs has arisen at past Board meetings initiated by Board Members December 19, 2019 Regular Board Meeting Agenda Packet- Page 224 of 260 Page 2 of 30 and public commenters. Consideration of a customer assistance program is timely and appropriate for multiple reasons: • Commonality of such programs: 30% of large utilities serving over 100,000 customers have one or more customer assistance programs according to a 2016 EPA led study"Drinking and Wastewater Utility Customer Assistance Programs." o The 2015 National Association of Clean Water Agencies (NACWA) Financial Survey indicated that two thirds of respondents (80 out of 122) reported having programs for those customers that have difficulty paying their bill, with payment plans the most common offering (39%), followed by help from community organizations (34%), lifeline/discounted rates (20%), and utility collected funds from customers to fund the program (12%). Twenty four of those agencies reported that between 0.3% and 18% of customers (with median of 2%) used some form of payment assistance. o Attachment 1 lists California water/wastewater utilities that have a customer assistance program and provides some indication of the size of potential bill discounts for eligible groups. • Certain customers have inquired as part of the Proposition 218 protest process during past rate hearings about the availability of customer assistance programs, particularly for seniors on fixed incomes. • On September 25, 2012, Governor Brown signed Assembly Bill (AB) 685, making California the first state in the nation to legislatively recognize the human right to water. Section 106.3 of the Water Code statutorily recognizes that"every human being has the right to safe, clean, affordable, and accessible water adequate for human consumption, cooking, and sanitary purposes." AB 401 (2015) charged the State Water Resources Control Board with the development of alternatives for a statewide customer assistance program for drinking water.A draft report was issued in January 2019 with alternatives for funding, eligibility and distribution of benefits for a "Low-I ncome Water Rate Assistance Program." While not presently covering wastewater, it is conceivable that the State could further expand such programs to include wastewater in the future. • While the median household income in Central San's service territory is higher than the State ($71,805 as of 2017) and national average ($60,336), nonetheless, sizable numbers of lower income people are present. Data from the last Census (2010) and the 2015 American Community Survey indicate a poverty rate of about 5.2% for individuals in the Central San service territory excluding wholesale areas of Clayton/Concord (or 7.4% including those areas as well).An analysis of census and other data indicates that approximately 9,173 households in the service area currently receive means-tested financial assistance (through programs like Medicaid, SNAP, CHI P, LI HEAP)which provide assistance to persons with incomes lower than specified levels, typically 130-150% of federally defined poverty levels). The 2016 EPA study specified four types of customer assistance programs: 1. Bill Discount (long-term reduced bill) 2. Flexible Terms (to help customers stay current with bills by waiving penalties, fees, interest, and/or changing how they are billed over time) (This program is not relevant to Central San's billing model.) 3. Lifeline Rate (subsidized rate for basic allotment) 4. Temporary Assistance (short-term or one-time basis to prevent disconnection of service or restore service after disconnection for households facing an unexpected hardship) I n these or other alternatives, numerous issues have to be addressed including: December 19, 2019 Regular Board Meeting Agenda Packet- Page 225 of 260 Page 3 of 30 • Funding sources given Proposition 218 constraints. While the EPA statistics mentioned above citing 30% of larger utilities nationwide have a customer assistance program of some sort, publicly owned water/wastewater utilities in California are constrained by Proposition 218, which sets a higher burden and limits flexibility in the design of such programs. • Eligibility definitions and administration issues; potential recipients include one, several or a combination of the following: • Low-income households • Households in crisis (due to an emergency/change in circumstances) • Senior citizens • Disabled individuals Some programs (such as the State Controller's property tax deferral program listed below) require that individuals be both low income AND senior or disabled. Central San staff has conducted research into various programs and has identified, at a high level, many potential alternatives. Some of these alternatives would require significant additional development prior to implementation.Additional commentary regarding these options is provided in Attachment 2. ALTERNATIVES 1. Sewer Service Charge (SSC) discount program A lower SSC is billed through the tax roll, other Central San revenues. Certain other California sewer service providers offer discounts ranging from 5% (Sausalito Marin City Sanitary District)to as much as 35% (East Bay Municipal Utility District (EBMUD) and San Francisco Water Power and Sewer (SFPUC)). The funding source for such discounts could be other Central San revenue sources not subject to Proposition 218 requirements. Attachment 2 provides additional detail on the revenue loss implications of a SSC discount program based on various discount levels and eligibility levels. As a variation or supplement to an SSC discount, some agencies also have programs that aim to benefit residents who do not directly pay a bill (as only homeowners directly pay the SSC, on their property tax bills). I n such cases, reduced bills are provided for building owners providing housing to qualified low-income renters, or other housing providers such as homeless shelters. The revenue loss implications of an program extended to renters are yet to be quantified, and would be higher than shown in Attachment 2. 2a. Existing State Controller property tax postponement program There is an existing state program that allows eligible property owners to defer payment of their property tax. A customer applies to participate in the program through the State Controller. The customer must be lower income (less than $35,500 in 2017) and one of the following (1) 62 or older, (2) blind or(3) disabled. The deferred amount builds up over time, constitutes a lien against the property, and bears interest at a 7% rate. Based on support from the Administration Committee received on October 15, 2019, Central San proceeded to post a link to information about this program on the Central San webpage--(See: https://www.centralsan.org/rates-fees) 2b. Deferral program (administered by Central San) Similar to the above, except the customer applies for deferral through a specific program designed and administered by Central San. The program elements could be broader than allowed for by the State deferral program. Central San would then bill a lower SSC rate through the County(or could subsidize the deferred amount with other Central San revenues). The deferred amount would build December 19, 2019 Regular Board Meeting Agenda Packet- Page 226 of 260 Page 4 of 30 up over time, and would constitute a lien against the property, with a 6% interest rate assessed similar to the Alhambra Valley Assessment District (AVAD) program. The funding source in a given year could be ad valorem taxes or borrowed funds. Over time, the program would be expected to be essentially revenue neutral. 3. Third-party assistance (Central San referral to reverse mortgage provider) A reverse mortgage is a means by which a homeowner can draw down the equity in their home and receive a fixed monthly payment. The loan is not repayable until the death of the owner or until they move. A homeowner who is "house rich" and income poor(such as a senior citizen on a fixed income) could be given information about reverse mortgages. Central San would continue to bill the standard SSC. The customer would use proceeds from the reverse mortgage to pay their property tax bill including the SSC. While not a broad customer assistance program, this could be of benefit to certain individuals. 4. Third-party charitable organization pays the bill on behalf of the customer Customers are referred to a third party which provides funding to pay their utility bill. Such programs are more typically used where a customer is having trouble paying a particular monthly utility bill and is facing an impending shutoff. Such relief programs may not be as workable/relevant given Central San's once per year sewer service billing on the property tax bill. 5. Customer-funded contribution program This program would involve soliciting Central San's customers to fund a program to help their neighbors who need temporary or ongoing assistance in paying the SSC. As Central San does not directly bill most customers, a typical "bill insert" request as used by many utilities would not be applicable. Other communications, such as the Pipeline could be used. The amount collected would likely be limited. (Another major Bay Area agency indicated their donations were only on the order of a few thousand dollars annually.) 6. Targeted partnerships with or assistance to organizations supporting the finally constrained Some agencies have partnered with or supported organizations that assist the needy; this could be in addition to or in lieu of direct assistance (such as bill discounts)to needy individuals. Possibilities include providing wastewater related assistance for groups trying to assist vulnerable populations, providing rental space at the campus for groups working with financially constrained individuals (if such space became available), or(if legally permissible) direct funding or contributions to groups that do so. 7. Wait for a State (or Federally) mandated program The State of California is in the final stages of developing a drinking water customer assistance program. It will have a specified eligibility, funding mechanism, and funding distribution approach. The same may at some point be extended to wastewater. Central San could defer significant investment in creating a program and wait for the State to develop such programs. Similarly, there has been Federal legislation introduced recently(which did not pass)to establish similar national assistance programs. Another possibility was also discussed internally but is viewed as not generally practicable for various reasons. It is mentioned below to indicate to the Board that staff has considered the broadest range of potential alternatives: 8. Tiered Rate Structure Today's residential SSC is a flat per-unit fee based on Central San's cost of service study with assumptions for household density and average flows for single family and multi-family residences.A December 19, 2019 Regular Board Meeting Agenda Packet- Page 227 of 260 Page 5 of 30 tiered rate structure could be set up with lower rates for either small households or low flow households. This option could be costly to administer, would not necessarily be confined to low- income or residents in need of assistance and could result in higher rates for low income families with multiple dependents/higher flow. This option would also require a revised cost of service study and more staff time for administration in certifying household size and pulling residential water data. For these reasons, a tiered rate structure was eliminated as an alternative under consideration. ALTERNATIVES/CONSIDERATIONS The characteristics of customers who would be eligible for bill assistance would need to be determined. Potential eligibility requirements include one or more of the following: (1) low-income households; (2) households in crisis (due to an emergency or change in circumstance); (3) senior citizens; and (4) disabled individuals. Many utilities with customer assistance programs rely on the determinations made by others (utilities, or participation in government assistance programs), while some take on screening responsibilities. The type of customer assistance program would need to be agreed to. The extent of Central San's involvement (administrative effort, financial support, etc.) associated with the alternatives presented would vary significantly. The involvement of Central San in qualifying customers for eligibility would also need to be specified. The cost implications would depend on the selected eligibility requirements, assumed participation rates of the eligible population and, for discount programs, the size of the discount offered. A table is contained in Attachment 2 for the SSC discount program indicating that revenue loss could be up to $4 million for a 50% discount for customers at 150% of the federal poverty level, for owner-occupied properties. Designing and extending a program further to also benefit renter occupied properties would have a higher revenue loss impact. Further analysis and program development would be conducted if the Board expresses support for the further development of one or more alternatives. FINANCIAL IMPACTS The financial impacts to Central San would depend on the program design. No specific program is being recommended at this time, though "what-if analysis for a SSC discount program has been undertaken and the results are shown in Attachment 2. The direct cost of the discount program would be $2.8 million annually at a commonly seen discount level of 35% (EBMUD and SFPUC) , covering households at 150% of the federal poverty guideline. If limited to low-income seniors, the cost would be an estimated $700,980, while if it covered all all low-income customers, the cost would be $2.8 million assuming 100% of eligible households participated. Full cost implications would include the actual funding for a discount or other program, and administration costs for the program. Further financial impact analysis will be developed if the Board directs staff to further pursue a particular program alternative. COMMITTEE RECOMMENDATION This matter was reviewed by the Administration Committee on October 15, 2019. The Committee provided various feedback to staff which is documented in Attachment 3, which is an extract of the Committee minutes from that meeting. I n general, the Committee did not see an urgency to proceed on this matter at this time, other than informing customers of the availability of the State's property tax deferral program. The availability of that program has now been posted to the Central San website. The Committee did express support for a discussion of the alternatives available by the full Board. December 19, 2019 Regular Board Meeting Agenda Packet- Page 228 of 260 Page 6 of 30 RECOMMENDED BOARD ACTION Provide staff with feedback on whether to proceed with further specification of a customer assistance program along the lines of one of the alternatives discussed here, another program, or take no further action at this time. Strategic Plan re-In GOAL ONE: Provide Exceptional Customer Service Strategy 3- Maintain a strong reputation in the community GOAL TWO: Strive to Meet Regulatory Requirements Strategy 3- Comply with all federal, state, and local regulations related to District administration ATTACHMENTS: 1. Customer Assistance Program-Survey 2. Customer Assistance Program Alternatives 3. Extract of Minutes from 10-15-19 Admin Committee 4. Presentation December 19, 2019 Regular Board Meeting Agenda Packet- Page 229 of 260 Page 7 of 30 Attachment 1 Customer Assistance Program Material Who has them? About 30% of large utilities per EPA: Table 1.Customer Assistance Programs Offered by U.S.Drinking Water and Wastewater Utilities Number of Utilities Total Number of Type of Drinking Water and Wastewater Number of Utilities Found to Have One Programs' Identified Utilities Reviewed Reviewed or More Programs During Review Large Utilities (>1D0,0O0 people) 620 190 (30.6%) 308(84.4%) Medium Utilities(10,000-100,00{' people) 175 38 (21.7%) 57 (15.6%) 1 Of 795 utilities reviewed,228 utilities offer a total of 355 CAPS. 1 December 19, 2019 Regular Board Meeting Agenda Packet- Page 230 of 260 Page 8 of 30 In California, which water utilities have them? YyPe aFPrugam papnlatlort TB�pparary lYater Type of Utlrity Name of URIRy/AWq Sewed Blit Oiscuuot :Floxiele Terms : utteAne Rate Assistance Mteney GROOMla East Say Municipal U91ity District 35%sewer discount 1.400.000 a r Golden State Water Cornpany.Contral Basin East 44,466 • '17 1 Golden State Water Compaq.Soutflwesl 169173 • ;i�n� Califormai water Semce.Satcersfieid 246,371 4 ;n California Water Service,Bear Gukh 58242 • • Santa Clara valley Water DistdCt 30%sewer discount 2,000.00D • califw.a Water Semce.Chico 100.435 a Ib City ofChula%rim.Public ttrouDefyartment 30%sewer discount 173,55fi ■ Costa Mesa sanitary nisuict Other(see below) 112.900 ■ ElGolden State Water Company,Placemia 114,015 ■ CaliformaWak%r Service,Doming4et 144.052 ■ ■ California Water Service,East.Los Angeles 149.682 • • E1 00rado Irrrsaiion[h5tliCt $12.50 discount per month wastewater q112,000 • �= for low income inElk Grove Water District 36,000 ■ San Gabriel Valley Water Company,Fontana 209.035 ■ ;n K" Grendalewatee&Powef 515 off electric bill 201,893 ■ Caaforrda Water Service,Hefmm Rodoodo 95,454 • • v City o!Huntington Beach 201400 • Calilornla Water Service,NO City 14,441 ■ aj ISacramento County Water Agency 148.814 ■ inCardorrda Water Service.Uvermom 56,700 ■ ■ 2 December 19, 2019 Regular Board Meeting Agenda Packet- Page 231 of 260 Page 9 of 30 Papubdien 7004 ary Water Type m Utility Race of EltlRly/Amoy served BIII Disrouist Flsnlbk firms L3fellm Rah Rsalstanee Efficiency California Water Service,Marysville 12,017 i City of Modesto 25%low income/Sr.discount,or$15 monthly 212,000 i California American Water,Monterey 96,754 i • Nape Sanitation District 28%sewer discount 75,000 i L pall "IE Water Disuict 50%of monthly charge 115,000 i © City of Palo AltoUtEitles 25%gas/elect,20%storm drain 218,905 • • inCalifornia Water Service,Palos Yerdes 69,883 i i Cucamonga Valley Water District $10/month discount on water/wastewater 182,586 i Riverside Public Utilities $27 annual water discount,$168 electric 303,871 i i Western Municipal Water District Up to$150 annually off water/sewer 80o_OOU i �J City of Sacramento Up to$380 annual discount on 486,189 i water,sewer,garbage Sacra memm County Regional Sanitation District $90-$150 sewer discount 1,475,377 • L California Water Service,Salinas I17,681 • California Water Service,8ayshore 102,893 i i �J California American Water,Coronado 96,754 i i LA® San Francisco Water,Power,and Sewer 35%sewer discount 2,600,000 i I g�® San Jose Water Company 1591.water discount 995.000 • tri'1 Suburban water Systems,San Jose Ifil]s 300r00o • L City of Santa Ana Low income exemption from 5,5%utility tax 353,428 i California Water Service,Selma 24,480 i Golden State Watet Company,Simi VaHey 13,30° i raw wr PapulzKaa Temparary Water Ty"of Utility Race ul UUlfly/Agency saryed BIII Discount Flexible Terms L3fellm Rata Assistance Efficiency California Water Service,StockLon 185,346 • • Torrance Municipal Water Department 105,000 i Valencia Water Company IL&,361 i Vallejo Sanitation&Flood Contm]Dist ict 10%sewer discount 119,794 • yii■ California Water Service,Visalia 132,158 • • California Water Service,Westlake 19,434 Others: Marin-Sausilito Sanitary District 5%sewer discount City of Long Beach Exemption from 5%utility tax Costa Mesa Sanitary District Sewer Lateral Repair/Maintenance Assistance,and rents space to low income assistance organization City of Vacaville 1 $4 monthly water discount ► Contra Costa Water District 50%for daily service and demand charges for low income& disabled/senior 3 December 19, 2019 Regular Board Meeting Agenda Packet- Page 232 of 260 Page 10 of 30 Attachment 2 Range of Alternatives for Central San Customer Assistance Programs (Supplemental Information) 1. SSC Discount program (Paid by other funding sources) Description: A lower SSC is billed through the tax roll, or the normal amount is billed,then is "paid/credited" with other Central San revenues. Certain other California sewer service provider have discounts ranging from 5%(Sausalito-Marin City SD)to 35% (EBMUD,SFPUC). These agencies discount programs have varying characteristics beyond the discount amount including: • Funding amount: many agencies limit the amount of funding dedicated to the program; once the funding is utilized, the program is closed for the year. • Funding source: Cities sometimes use general fund revenues. Special purpose entities may use various types of non-rate revenue. • Eligibility criteria: Some agencies provide for all eligible low income customers. Some further limit to low income and senior or disabled. • Eligibility screening: Some agencies screen in house, others rely on customer participation in another income eligible program such as PG&E CARE, or a State (CalFresh) or Federal (Medicaid) means tested program. • Verification of Continued Eligibility and Changes in Property Ownership: This is a continuing responsibility. Failure to do so can result in continuation of discounts when no longer warranted. Potential Funding sources: • Non-Sewer service charge revenues such as Ad Valorem tax: $17.5 million in FY 2019-20 (of which $3 million is dedicated to debt service and the rest directed to CIP funding); Interest Income $2,085,900; Lease revenue $703,000. Other agency examples: Example: City of Vacaville-"The low income discount is funded by revenues not collected through water rates in accordance with State of California regulations. In the event this funding runs out before the end of the fiscal year(June 30),the program will be temporarily suspended until the start of the following fiscal year(July 1)when funding is approved. " Example: Cucamonga Valley Water District-"The Customer Assistance Program (CAP)assists eligible low-income households with their water utility costs.The CAP is not subsidized by other ratepayers; instead,the District has funded this program from unrestricted rental income that the District receives every month through the rental of cellular tower space." 1 December 19, 2019 Regular Board Meeting Agenda Packet- Page 233 of 260 Page 11 of 30 Concerns: • The District's legal counsel will provide commentary on potential proposition 218 issues. 2 December 19, 2019 Regular Board Meeting Agenda Packet- Page 234 of 260 Page 12 of 30 Financial and Other Analysis: Based on federal demographic and economic estimates relevant to Central San's service area, staff estimates that 9,173 owner occupied households in the service area currently receive some type of financial assistance due to low-income status (Supplemental Security Income, SNAP, other cash assistance) and that 13,458 owner occupied households have an annual household income below 150%of current federal poverty guidelines. As noted,these figures and the subsequent analysis reflect, not rented properties. If a discount program were structured in a manner to extend a SSC discount to renter occupied properties, the revenue loss impact would be higher. For comparison,the following chart is included to illustrate the current federal poverty guidelines for given household sizes at varying multiples of the poverty level. Additionally,the eligibility criteria (maximum household income)for select local, state, and federal assistance programs are provided as examples of some current household income eligibility levels. Size of Percent of Federal Poverty Guideline House- hold 100% 130% 133% 135% 138% 150% 200% 1 $12,490 $16,237 $16,612 $16,862 $17,236 $18,735 $24,980 2 $16,910 $21,983 $22,490 $22,829 $23,336 $25,365 $33,820 3 $21,330 $27,729 $28,369 $28,796 $29,435 $31,995 $42,660 4 $25,750 $33,475 $34,248 $34,763 $35,535 $38,625 $51,500 5 $30,170 $39,221 $40,126 $40,730 $41,635 $45,255 $60,340 6 $34,590 $44,967 $46,005 $46,697 $47,734 $51,885 $69,180 7 $39,010 $50,713 $51,883 $52,664 $53,834 $58,515 $78,020 8 $43,430 $56,459 $57,762 $58,631 $59,933 $65,145 $86,860 Maximum household income (relative to poverty guideline)for select assistance program eligibility: • Supplemental Nutrition Assistance (SNAP): 130% • Affordable Care Act(ACA) Medicaid Expansion: 133% • Medicaid Low Income Subsidy: 135% • Lifeline Program ($9.25+ phone service discount): 135% • Medicaid/Children's Health Insurance Program (CHIP): 138% • Low Income Energy Assistance (LIHEAP): 150% • PG&E California Alternate Rates for Energy(CARE) (30-35%off electric and gas): 200% The revenue impact to Central San of developing a low-income assistance program for its rate payers is primarily dependent on two factors: (1) the number of participating households and (2)the size of the discount offered. Based on current Sewer Service Charge (SSC) rates,for every 1%of discount offered the District would need to offset$6 for each household receiving the discount. The following table illustrates those required offsets with separate options based on (1) age of the householder, (2) household current assistance status, (3) household income, and (4) possible discount 3 December 19, 2019 Regular Board Meeting Agenda Packet- Page 235 of 260 Page 13 of 30 rates. The participation rate in these scenarios is assumed to be 100%, although a lower participation rate is more likely. 1-Year Financial Impact Households Currently Receiving Assistance Discounted Food Stamps/SNAP,SSI,Cash Public Households at<150%of Poverty Discount SSC Assistance Rate (FY2019-20) <65 65+ <65 65+ years old years old Total years old years old Total 5% $568 $184,080 $91,110 $275,190 $302,340 $101,400 $403,740 10% $538 $368,160 $182,220 $550,380 $604,680 $202,800 $807,480 15% $508 $552,240 $273,330 $825,570 $907,020 $304,200 $1,211,220 20% $478 $736,320 $364,440 $1,100,760 $1,209,360 $405,600 $1,614,960 25% $449 $920,400 $455,550 $1,375,950 $1,511,700 $507,000 $2,018,700 30% $419 $1,104,480 $546,660 $1,651,140 $1,814,040 $608,400 $2,422,440 35% $389 $1,288,560 $637,770 $1,926,330 $2,116,380 $709,800 $2,826,180 50% $299 $1,840,800 $911,100 $2,751,900 $3,023,400 $1,014,000 $4,037,400 As an example, if the District were to implement a (a) 35%discount to households where (b)the owner/occupant is 65 years of age or older with (c) household income less than 150% of the federal poverty guideline,the required revenue offset at 100% participation is estimated to be $709,800. Note that the cost for households "Currently Receiving Assistance" is lower than the threshold at 150%of Poverty level as it counts only households receiving either(1) food stamps/SNAP, (2) Supplemental Security Income (SSI), and (3) "cash public assistance". If the threshold was set at a higher income level such as those households participating in the PG&E CARE program (with incomes up to 200%of the federal poverty level), the financial impact to Central San for a given discount level would be higher. In addition to the required revenue offset,there would also be an administrative burden involved in establishing the program, conducting outreach to the current customer base, and determining/re- verifying program eligibility. These costs have not yet been determined as they are likely to vary greatly depending on the program alternative selected. To minimize the costs of the latter, relying on customers to demonstrate that they are participating in another income-qualified program would be preferred. 4 December 19, 2019 Regular Board Meeting Agenda Packet- Page 236 of 260 Page 14 of 30 2a. Existing Program-State Controller property tax postponement program Described in Position Paper. Some additional detail from the State's website is below. Property Tax Postponement Program The State,through the State Controller's Office,offers a Property Tax Postponement Program which allows homeowners who are seniors,are blind,or have a disability to defer current-year property taxes on their principal residence if they meet certain criteria including 40 percent equity in the home and an annual household income of$35,500 or less. https://www.sco.ca.gov/Fi les-ARD-Tax-Info/2018- 19%20PTP%20Application%20and%20lnstructions.pdf To qualify,you must meet all of the following criteria for every year in which postponement of property taxes is desired: • Be at least 62 years of age, or blind,or disabled; • Own and occupy the real property as your principal place of residence(mobile, manufactured,or modular homes,whether affixed or unaffixed;floating homes;and house boats are not eligible); • Have a total household income of$35,500 or less; • Have at least 40 percent equity in the property;and • Not have a reverse mortgage on the property. The interest rate for all taxes postponed under the PTP program is 7 percent per year. Interest on postponed property taxes is computed each month on a simple interest basis. Interest on the postponement account continues to accrue until all postponed property taxes plus interest are repaid to the State. Notice of Lien for Postponed Property Taxes To secure repayment of the postponed property taxes,SCO places a lien against the property. The lien remains in effect until the account is paid in full.A one-time recording fee will be added to your account to release the lien once the account is paid in full. Postponed property taxes and interest become immediately due and payable when you do any of the following: • Move from the property; • Sell or convey title of the property; • Die and do not have a spouse, registered domestic partner,or other qualified individual who continues to reside at the property; • Allow future property taxes or other senior liens to become delinquent;or• Refinance or obtain a reverse mortgage for the property. No repayment is required until one of the above events takes place. Requirements are subject to change without notice if the law is revised. 2b. Deferral program (Central San Administered) Described in Position Paper. Example of an alternative/deferred billing arrangement- EBMUD has a program aimed at multi- family residential buildings to keep the water flowing even though the owner hasn't paid the 5 December 19, 2019 Regular Board Meeting Agenda Packet- Page 237 of 260 Page 15 of 30 water bill. This resulted from 2010 legislation (SB1035) applicable to Municipal Utility Districts which allows liens on residential real property for delinquent water and wastewater charges. This authority gives the EBMUD an alternative to terminating service as a method of collecting revenue. 3. Third Party Assistance-Central San Referral to Reverse Mortgage provider. Described in Position Paper. 4. Third-party charitable organization pays the bill on behalf of the customer. Described in Position Paper. Additional examples of such programs, or entities assisting in the development of such programs is shown below. Example-"Dollar Energy Fund is a 501(c)(3)organization whose mission is to improve the quality of life for households experiencing hardships by providing utility assistance and other services that lead to self-sufficiency. For more than 36 years,we've served the limited-income community by providing$152 million in utility assistance grants to more than 550,000 limited-income families and individuals. Hundreds of modest programs from across the country rely on charitable donations or bill round-ups, but relatively few programs have been designed on a significant enough scale to help all their customers who are likely to need financial help on a long-term basis." Example: Project A.P.P.L.E. (Assisting Pasadena People with Limited Emergencies) is a donation-funded program that provides a one-time credit of up to$100 per year to help eligible low-income residential PWP electric customers keep their lights on. This program is made possible through the voluntary contributions of the business community, utility customers and city employees,who contribute through Paypal, check or on the utility bill. Example: EBMUD partners with several agencies and provides referrals to such agencies: Other agencies that can help Sometimes, even after EBMUD has done all it can do to EBMUD help,a customer still needs help with their bill.That is where our agency partnerships step in. •Dial 2-1-1 for California's 24-hour Hotline for Health and Human Services •Salvation Army 5I0-645-97I0 •Seasons of Sharing Alameda County SIO-272-3700 Contra Costa County 925-52I-5065 •St.Vincent DePaul 5I0-638-7600 6 December 19, 2019 Regular Board Meeting Agenda Packet- Page 238 of 260 Page 16 of 30 S. Customer funded "from the heart" contribution program. Described in Position Paper. Examples: • Riverside Public Utilities (RPU) established the Sharing Households Assist Riverside's Energy program (SHARE) in 1989 to provide low-income residents with utility bill assistance. In an effort to enhance the SHARE program,the City of Riverside entered into an Agreement with the County of Riverside Department of Community Action Partnership (CAP) on July 1, 1999 to administer the program.The program has effectively assisted over 95,000 low-income residential customers. Funded by one time, ongoing or round-up donations on monthly bills. • LADWP. Project Angel Program--United Way program funded with Customers and City employee donations. Serving our Seniors-Identify& assist seniors to plug into available programs. 6. Targeted Partnerships with or Assistance to Organizations Supporting the Financial Constrained Described in Position Paper. Examples: • Los Angeles Department of Sanitation provides free dumping of RV waste for the homeless individuals living in RVs throughout the city, and to prevent inappropriate dumping of this waste on streets in the city. • An organization operating in the Central San service territory has requested assistance in disposing of the wastewater from mobile showers for the homeless;this issue is being worked on presently; but more initiatives of this nature could be supported. • News story--"The Costa Mesa Sanitary District has opened its doors to a nonprofit serving Orange County's low-income residents — agreeing to lease part of its headquarters to the organization-Second Chance Orange County, according to district general manager Scott Carroll. "When we bought this building, we wanted to benefit the community, and Deb Johnson's organization does that," Carroll said, referring to the organization's founder and executive director. "Their mission statement is to get people a second chance to be contributors to society. ...That helps keep people off the streets of Costa Mesa. So there's definitely a nexus of why we would want to partner with her."The nonprofit will pay the district$530 a month to rent two previously vacant offices totaling 252 square feet, according to Carroll.The arrangement is on a month-to-month basis. Second Chance helps "low-income individuals recovering from drug/alcohol addiction or experiencing homelessness adjust back into society" by"providing free job skills training, interview skills, one-on-one coaching, mentoring and job placement." • Some utilities provide grants or other support of community organizations deemed worthy of support. As an example of a current pending matter, Central San staff submitted a recommendation to the Admin Committee/Board for Central San to pay the 7 December 19, 2019 Regular Board Meeting Agenda Packet- Page 239 of 260 Page 17 of 30 administrative costs related to employee charitable donations made through the workplace giving program. This would encourage further charitable giving by employees for organizations that include supporting local financially constrained persons. 7. Wait for a State (or Federally) Mandated Program Described in Position Paper. Legislation was introduced at the Federal level to assist with water and sewer affordability(Water Affordability Act of 2018-5.3015; which would have awarded grants to public water utility companies through a pilot program "Low Income Sewer and Water Assistance Program". This bill did not proceed last year, but similar legislation could be introduced and proceed in the future. The following programs were briefly explored internally, but are not viewed as viable due to a range of complications. 8. Tiered Rate Structure Described in Position Paper. 8 December 19, 2019 Regular Board Meeting Agenda Packet- Page 240 of 260 Page 18 of 30 Summary of Potential Customer Assistance Programs Alternative Admin Funding Legality Flexibility County Other Effort/Cost Availability Involvement 1. SSC Discount Medium Good Workable High No Navigate Prop 218 issues 2a. Property Tax Minimal Good Yes Specified No Deferral-State by State Controller 2b. Central San Medium Good Workable High Yes Cost/funding Administered source Deferral Program 3. Referral to None Good Yes Specified No Reverse Mortgage by Providers Providers 4.Third party Minimal Minimal Yes Specified No assistance programs by Providers 5. Customer Funded Low/ Minimal Yes Good No Better for Assistance Programs Medium temporary issues 6. Partnerships with Low/ Good Yes Yes No Organizations Medium 7. Wait for State or None Likely Good Yes Would be To be Federal Program specified determined State/ Federal Govt 9 December 19, 2019 Regular Board Meeting Agenda Packet- Page 241 of 260 Page 19 of 30 Attachment 3 Excerpt from Administration Committee Minutes October 15, 2019 Discussion re Customer Assistance Program Alternatives a. Discuss customer assistance program alternatives, as requested by Board of Directors at the April 18, 2019 meeting Mr. Bailey reminded the Committee that at the April 18, 2019 rate hearing several Board Members asked staff to bring information about potential options for providing customer assistance to fixed-income seniors and/or hardship cases with paying their annual sewer service charge. Mr. Leiber reviewed an array of potential options ranging from discount programs that would involve the use of Central San revenues and require significant setup and administrative effort, to simple options that would involve neither. Upon conclusion of his presentation, Mr. Leiber said staff was not recommending any particular option at this time but was simply bringing forth the information in response to the Board's request. Member McGill thanked staff for the comprehensive research and outstanding presentation and offered the following comments, concerns, and considerations: • The amount of staff time it would take to administer some of these types of customer assistance programs. • Ms. Barnett's input would be helpful as to (1) Central San customer desires on this topic, and (2) her sense as to the timing and likelihood of a state or federally mandated assistance program that would affect wastewater agencies. • How might implementation of a customer assistance program at Central San impact the City of Concord, both financially and politically? • If the decision were made to implement a customer assistance program involving the use of Central San revenues, the Contra Costa Taxpayers Association should be involved early in the process. • Mr. Alm's input would be helpful as to any Proposition 218 implications. • The simplest approach would be including a link on Central San's website to the State Controller's Office Property Tax Postponement Program, as Mt. View Sanitary District has done, which allows homeowners who are seniors, blind or have a disability to defer current-year property taxes on their principal residence if they meet certain criteria. Chair Williams said he was trying to reconcile whether customer assistance is a significant issue for Central San's ratepayers, given his recollection that so few Proposition 218 protests have been received for rate hearings in recent years and, of those, only a portion related to senior citizen/hardship requests. He also said there is an issue of fairness because others must make up the slack when discounts are provided. Page 1 of 3 December 19, 2019 Regular Board Meeting Agenda Packet- Page 242 of 260 Page 20 of 30 Attachment 3 Ms. Barnett framed the issue from the view of what is going on legislatively in Sacramento in terms of water. It would appear that the state wants to implement a blanket customer assistance program for water customers, and it is probably only a matter of time before wastewater customers are included. Also, she said it appears to make little difference whether an agency has a customer assistance program already in place. From a communications standpoint, Ms. Barnett said a customer assistance program is never a bad thing; however, extensive discussion about rates could open the door to comments that rates are too high, which can take a lot of time and effort to refute. While staff is prepared to carry out whatever the Board desires in this regard, she had no recommendation one way or the other. Ms. Gemmell commented regarding the City of Concord, stating that staff is currently reviewing treatment plant and recycled water costs to assure that the City is paying its share. She added that implementing a customer assistance program at Central San could potentially put pressure on the City to offer something similar to their customers. Chair Williams asked Mr. Alm about potential Proposition 218 issues. Mr. Alm said there is no case law on this topic, but Proposition 218 laws, in general, are becoming more stringent in terms of the process for setting rates. Because Central San is a single purpose agency, the underlying issue is if a customer assistance program is subsidizing a portion of your population and a significant portion of your revenue comes from the sewer service charge, then you must demonstrate that the source of funds is legitimate and not just being moved from one pot to another. Having said that, Mr. Alm opined that if the Board wishes to implement some type of customer assistance program, it could likely be structured to be at low risk of challenge to Central San. Chair Williams noted that the approach used by Mt. View Sanitary District (a link on its website to the state's Property Tax Postponement Program) seems to be the very least that could be done. Mr. Bailey noted that the District receives from Contra Costa County the entire amount of the sewer service charge billed on the property tax roll, the County is responsible for collecting any delinquencies. He asked if that has any bearing on Proposition 218. Mr. Alm said that he is unaware of any case law in that regard. He said he would be willing to present to the full Board the basics of how a customer assistance program would be affected by Proposition 218. The Committee Members'concluding remarks were as follows: Member McGill said, at a minimum, a link to the State Controller's Office Property Tax Postponement Program should be added to Central San's website. Other than that, he said he has no strong feeling one way or the other about a Page 2 of 3 December 19, 2019 Regular Board Meeting Agenda Packet- Page 243 of 260 Page 21 of 30 Attachment 3 customer assistance program. He expressed some concerns about it being a "slippery slope"and the amount of staff time that it could take to administer a program. He added that he never heard the issue of hardship raised during his 2018 Board campaign. Ultimately, he said he was unsure as to any next step. Chair Williams queried whether this is a solution in search of a problem, particularly for Central San's customer base. There has been so little customer feedback in terms of financial hardship that it does not seem to be a big issue. He thanked staff for the comprehensive presentation but said he was inclined to wait and see what develops legislatively with a potential state-mandated program. Member McGill suggested that Chair Williams emphasize this discussion at the November 7 Board meeting when the minutes of this meeting are reviewed to see if there is interest in a presentation to the full Board. Chair Williams concurred. COMMITTEE ACTION: Recommended including a link on Central San's website to the State Controller's Office Property Tax Postponement Program, and to determine at the November 7, 2019 Board meeting if the other Board Members wish to receive a similar presentation on this topic at a future meeting. Page 3 of 3 December 19, 2019 Regular Board Meeting Agenda Packet- Page 244 of 260 v ATTACHMENT 4 CUSTOMER ASSISTANCE PROGRAM r A ALTERNATIVES r. Phil Leiber Board of Directors December 19, 2019 �C 1111 f i 1�y I - December 1 1 r Board CENTRALSAN WHY CONSIDER A CUSTOMER ASSISTANCE PROGRAM? • Request to consider such programs raised at 4/18/2019 Board meeting • 30% of large utilities serving over 100,000 customers have some type of assistance program • Certain Central San customers have inquired about the availability of customer assistance programs • State moving toward "Low-Income Water Rate Assistance Program" • Need in Service territory---5.2% for individuals in the Central San service territory excluding wholesale areas of Clayton/Concord (or 7.4% including those areas as well). 9, 173 households receive means tested financial assistance. ,. , 2 A019 11- CENTRALSAN TYPES OF CUSTOMER ASSISTANCE PROGRAMS PER EPA 1 . Bill Discount- Along-term reduced bill. 2. Flexible Terms-Help customers stay current with bills by waiving penalties, fees, interest, and/or changing how they are billed over time (Not relevant to Central San billing model). 3. Lifeline Rate (Subsidized rate for basic allotment) . 4. Temporary Assistance (short-term or one-time basis to prevent disconnection of service or restore service after disconnection for households facing an unexpected hardship); 3 Arlo' ISSUES To ADDRESS • Funding sources and availability given Proposition 218 constraints • Eligibility definitions and administration issues; potentials recipients include one or move of the following: - Low-income households - Households in crisis (due to an emergency/change in circumstances). - Senior citizens - Disabled individuals. - Program set-up and administration costs - Timing 4 ' NLTERNATIVES "ANEW 1. Sewer Service Charge (SSC) Discount program • Lower SSC is billed on the tax roll. • Discounts elsewhere range from 5% (Marin Sausalito SD) to 35% (EBMUD and SF PUD). • The funding source could be other revenue sources not subject to Proposition 218 requirements . • Variations possible such as for building owners providing housing to qualified low-income renters, or other housing providers such as homeless shelters. 2a. State Controller property tax postponement program • Existing state program that allows eligible property owners to defer payment of their property tax. • Must be lower income (less than $35,500 in 2017) and one of the following: (1) 62 or older, (2) blind or (3) disabled. • The deferred amount builds up overtime, constitutes a lien against property, and bears interest at a 7% rate. • Central San could inform customers via the webpage and newsletter or upon inquiry about assistance programs. 2b. Deferral program (Central San Administered) • Like 2a above, but administered by Central San. • Could have broader eligibility. • Deferred amount builds up over time, constitutes a lien against the property, interest assessed like AVAD program. r ` 0 Funding source in a given year could be ad valorem taxes or borrowing. Over time, the program would be expected to be essentially revenue neutral. R z awraeber->'f4 %LTERNATIVES T __qW - 3. Third Party Assistance-Central San Referral to Reverse Mortgage provider. • Central San would continue to bill the standard SSC. • The customer would use proceeds from the reverse mortgage to pay their property tax bill including the sewer service charge. • While not a broad customer assistance program, this could be of benefit certain individuals. 4. Third-party charitable organization pays the bill on behalf of the customer. • Financially constrained customers are referred to a third party which provides funding to pay their utility bill. • More useful for temporary financial constraints, and monthly utility bills. S. Customer funded contribution program. • Solicit Central San's customers to fund a program to help their neighbors who need temporary or ongoing assistance in paying the SSC. • Communications method—Pipeline. A typical "bill insert" or check-off on bill form not applicable. • Limited funding available. •S 6 I %LTERNATIVES T --qw 6. Targeted Partnerships with or Assistance to Organizations Supporting the Needy • Partner with or support organizations that assist the needy • Could be in addition to or in lieu of direct assistance (such as bill discounts) to needy individuals. • Possibilities include providing wastewater related assistance for groups trying to assist vulnerable populations, providing rental space at the campus for groups assisting financially constrained persons, or direct funding or contributions to groups that do so. 7. Wait for a State (Or Federally) Mandated Program • The State of California is in the final stages of developing a drinking water customer assistance program. • Will have specified eligibility, funding mechanism, and funding distribution approach. • Could eventually be extended to wastewater. • Similarly, there has been Federal legislation introduced recently (which did not pass) to establish similar national assistance programs. WA SUMMARY Alternative Admin Funding Legality Flexibility County nt Other Effort/Cost Availability Involveme 1. SSC DiscountMedium Good Workable High No Navigate Prop 218 issues 2a.Property Tax Deferral- Minimal Good Yes Specified State ControllerState 2b. OM ITM. Medium Good Workable High Yes Cost/funding Administered Deferralsource Program 3. Referral to ReverseNone Good Yes Specified by • Mortgage ProvidersProviders 4.Third party assistanceMinimal Minimal Yes Specified by • programsProviders 5.Customer Funded •w/ Minimal Yes Good No Better for Assistance ProgramsMedium temporary 6. Partnerships withLow/ Good Yes Yes No OrganizationsMedium Ik 7.Wait for State or FederalNone Likely Good Yes Would •- To •- determined Programspecified Federal Govt "� �E-Mail Training November 8, 2018—Slide 8 CENTRAL SAN FEEDBACK REQUESTED A. Should staff further develop any of the above options? B. If so, what should program parameters be? C. Any additional information needed for consideration? n. i .�:, CENTRALSAN