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Home My WebLink AboutMinutes - City Council - 1967-06-07 147 City of Redding - Regular Adjourned Meeting Police Dept. & Council Chambers Bldg. Redding, California • June 7, 1967 1:00 P. M. The Pledge of Allegiance to the Flag was led by City Manager Cowden. The xneeting was called to order at 1:00 P. M. by Mayor Moty with the following Councilmen present: Chatfield, Denny, Doherty, and Moty Absent: Councilman Fulton Also present were City Manager Cowden, Assistant City Manager and Purchasing Director Stewart, City Attorney Murphy, Finance Director and Personnel Director Courtney, and Public Works Director Arness. BUDGET SESSIONS Council and staff budget sessions on the preliminary budget for 1967-68 .� . fiscal year were tentatively scheduled for June 21st and 22nd, 7 to 9 �+�`� P. M. These dateswill be confirmed at the regular Council meeting of June 19th. PERSONNEL SYSTEM STUDY SESSION Council tentatively set 7:00 P. M. , June 26th for a study session on l�'7� proposed resolution and ordinance re personnel system. This date will ��'� be confirmed at the meeting of June 19th. BUCKEYE COUNTY WATER DISTRICT - Proposed Water Rate Finance Director Courtney reviewed in detail his report to Council dated June 2, 1967 concerning the �method used in developing a proposed maxi- mum water rate to be charged within the Buckeye Service area for the five year period following assumption of said area by the City of Redding if the Buckeye dissolution election is successful. Mr. Courtney said �hat in presenting this rate he wished to emphasize one of the statements included in the text of his report; i. e. , "The proposed rate schedule will provide only for.minimal maintenance and upgrading at approximately the same proportionate financial level which the City of Redding presently applies to its own water utility system. " He fu�rthe.r stated that Council �_j?,` may elect to utilize the proposed water rate schedule as a guideline and ��y may wish to�impose an overlay as a safety factor. The proposed water rate schedule is double the present in-City water rate schedule with the exception that for quantities of water over 4, 000 cubic feet the rate is set at $ . 14 per hundred cubic feet, whereas the in-City rate is $ . 11 per hundred cubic feet. The proposed maximum rate is more than double the present Buckeye rate; however, the total amount the property owner will pay is approximately the same if you add in the ad valorem taxes which he presently pays to the District. Councilman Doherty inquired as to whether there is any factor in the computation for reserve for errors or omissions -- a contingency factor -- and Mr. Courtney said there is a built-in contingency factor of approxi- mately $10, 000. Councilman Denny asked if there was a definite contin- gency factor and Mr. Courtney said yes and, in addition, he felt there is a cushion in the customer account expense and administrative and general expense account. � Mr. Courtney said there are presently 89g customers in the system and, in answer to an inquiry of Mayor Moty as to whether the City's machine . ; 148 opera.tions could handle l, 000 more customers, Mr. Courtney replied that the City's system could absorb l, 000 more accounts without any p roblem. A lengthy discussion ensued regarding the City assuming the G. O. bonded indebtedness of the District for that portion of the District which is located within the City of Redding. This would amount to approximately $14, 000 as the portion located within the City of Redding represents approximately 8% of the total District. Therefore, the out- lay for that portion of the District amounts to $22, 500 (8% of $185, 000 present bonded indebtedness and 8% of $100, 000 estimated interconnec- tion cost. Councilman Denny expressed concern that the City is �committing itself to assuming this indebtedness in this instance whereas he feels certain there are areas in the EPUD in which a similar condition exists and yet the City has not assumed any bonded indebtedness of that District. It was pointed out that whenever an area annexes to the City of Redding it has been the policy of the City to assume the G. O. bonded indebtedness but not any assessment district bonded indebtedness and, in turn, the newly annexed area assumes the bonded indebtedness of the City of Redding. The Benton annexation is the only area of which this is not true. . . Councilman Chatfield said that the people in the incorporated area of the Buckeye District are a part of the City of Redding; they pay�taxes, get other services, and have assumed the bonded indebtedness of the City and therefore are entitled to the in-City water rate and the City should assume their portion of the bonded indebtedness. It was also pointed out that if this dissolution election is successful the City of Redding gets clear title to the distribution and transmission s.ystem, and this is a new system that has a long life expectancy and it is felt the cost of the system was at least as great as $22, 500. Mayor Moty commented that if the incorporated area of the Buckeye District would detach from the District now, it would cost the City approximately $80, 000 to run a wate r line out the re to s e rve them. Councilman Denny said he feels that Council is implying a policy that is not a policy of the City. He said he thinks there are some areas in the EPUD that would be happy to annex to the City of Redding but are not aware of this policy. It was pointed out that mere annexation . would not clear the way for the City to assume the G. O. bonded in- debtedness of the annexed,area, the area would have to detach itself from the EPUD and this detachment would have to be approved by L;AFCO and EPUD. Councilman Chatfield commented that the point in question has already been set out in the LAFCO Resolution which has been approved by Council. Mayor Moty said that perhaps it would be well for Council to reaffirm . its policy re absorbing G. O. bonded indebtedness of annexed areas. Councilman Doherty stated that the agreement provides that the City may make adjustments to the water rate in the event of contingencie,s that would not reasonably be foreseen and asked if this would cover inadequate information or errors in calculations by Mr. Courtney or Mr. Arness. Mr. Murphy replied that mechanical errors would not be covered; however, circumstances not reasonably forese.eable would be. . � In answer to an inquiry of Mayor Moty, Mr. Courtney said he had } allowed 3% for inflation of labor costs in developing the water rate. �' • A question arose as to whether the City would be required to reduce the rate if a surplus existed at the end of the first year's operation. ,___ __ . . _.__. _. � --_. _.. . . _ _._ __ ______ g. . __ _ ._,____- -____,_ __.. ___ - _.__ .__--.� - - ; Correction to Iv�inutes made at Council meetin of J`une 19, 1967, as follows: ' �'In answer to an inquiry of �ayor Moty, 1VIr. Courtney said he had � allowed 3�fo per year for inflation of labor costs in developing the water ; rate. 'i 149 Mr. Murphy explained that if, at the end of the first there there is a surplus of $10, OOOover the actual cost of operating the systanthis amount could be held in the Buckeye account and applied to subsequent Buckeye system operational losses or to system capital outlay. With respect to the proposed water rate, Mayor Moty suggested that perhaps the rate should be set at twice the in-City rate plus 10°jo for conti�ngency. Councilman Doherty said he thinks the rate should pro- vide for a reasonable margin of safety but pointed out that if the rate is set unreasonably high it will have an adverse effect on the dissolu- tion election. He said he did not know whether 10% or 20°jo was nec- essary to provide the necessary safety margin. Councilman Denny said that with the rate having been established with no system analysis and no evaluation upon which to base minimum service he feels the City must have ample contingency for safety to insure that the City is not exposing itself to any risks and getting involved in a lot of ligigation. Mr. Denny said perhaps it would be wise to set the rate even as high as four or five times the in-City rate if necessary in order to cover every possible contingency. Mayor Moty asked if in the fourth year an unforeseeable event occurred resulting in a deficit of $100, 000 in the system and an appeal was made to LAFCO for an increase in the water rate and LAFCO arbitrarily re- fused to grant the increase and, because the agreement would expire in another year it was felt it was not-worthwhile to go to Court, could the City at the beginning of the sixth year adjust the rate to recoup the loss. Mr. Murphy replied yes and added that two changes were made in the agreement to cover this. The Agreement has been amended so LAFCO cannot change the terms of the Agreement after June 12, 1967 on its own motion, and also the Agreement provides that if the remaining un- inco�rporated area is annexed to some other public entity or chooses to form a community services district and if the City has spent $100, 000. on the system, that sum is included in the cost of the system and must be paid by such public entity or district. This applies in any part_ of the five yea r pe riod. MOTION: Made by Councilman Chatfield, seconded by Councilman Dohe rty that the maximum water rate for the Buckeye Service Area be established at 2. 15 times the in-City water rate for the City of Redding. Voting was as follows: Ayes: Councilmen - Chatfield, Doherty, and Moty Noes: Councilmen - Denny Absent: Councilmen - Fulton LEGISLATION - AB 901 and AB 902 MOTION: Made by Councilman Doherty, seconded by Councilman Chatfield that action on this item be tabled until the regular Council meeting of June �� 19th and that the City Manager be instructed to obtain additional information re AB 901 and AB 902 when he is in Sacramento this week. The Vote: Unanimous Ayes ADJ OU RNM EN T There being no further business, at the hour of 3:00 P. M. , upon the motion of Councilman Doherty, seconded by Councilman Chatfield the meeting was adjourned. APPROVED: 4 � ATTEST: Ma or � . �� , �� ,�'<1�c ,/'�� /L��cs-a-, �City Cle rk ,% J