HomeMy WebLinkAboutF-1 Staff Report - 2nd Reading Ordinance No. 2021-02 Repeal Stranded Investment FundSECOND READING ORDINANCE
F-1
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: SERGIO GONZALEZ, CITY MANAGER
FROM: MANNY ROBLEDO, DIRECTOR OF UTILITIES
DATE: MAY 3, 2021
SUBJECT: SECOND READING OF AN ORDINANCE FOR REPEALING SECTION 78-40 OF
THE AZUSA MUNICIPAL CODE RELATING TO A RESERVE FOR STRANDED
INVESTMENT WITHIN THE ELECTRIC FUND.
BACKGROUND:
In 1997, the City Council adopted Resolution No. 97-C5 and Ordinance No. 97-01 establishing a Rate
Stabilization Fund for Stranded Investment within the Electric Fund for the purpose of buying down the
cost of long-term power resources that would be rendered uneconomic due to competition in the electricity
industry as a result of California deregulation at that time. After Azusa Light & Water (ALW) successfully
exited the San Juan coal-fired Generating Station project and paid off the bond financing of the Palo Verde
Nuclear Generating Station in 2017, ALW no longer has resources that are at risk of becoming
uneconomic, and the Rate Stabilization Fund for Stranded Investment is no longer required or advisable.
On April 5, 2021, Staff recommended the City Council make a finding that events have overtaken the
purpose of the Rate Stabilization Reserve Fund for Stranded Investment; adopt resolution No. 2021-C14
directing the Director of Administrative Services to transfer all monies from the Rate Stabilization Fund
for Stranded Investment to the Electric Fund Unrestricted Reserve; and adopt Ordinance No. 2021-02
repealing Section 78-40 of the Azusa Municipal Code.
On April 26, 2021, the City Council, by vote 4 to 1, approved the first reading of draft ordinance No.
2021-02 for repealing Section 78-40 of the Azusa Municipal Code.
RECOMMENDATION:
Staff recommends that the City Council take the following actions:
1) Read by title only, second reading and adoption, Ordinance No. 2021-02 for repealing section
78-40 of the Azusa Municipal Code:
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF AZUSA,
CALIFORNIA, REPEALING SECTION 78-40 OF THE AZUSA MUNICIPAL CODE
RELATING TO A RESERVE FOR STRANDED INVESTMENT WITHIN THE
ELECTRIC FUND
APPROVED
CITY COUNCIL
05/03/2021
Second Reading of Ordinance – Repeal Section 78-40 Rate Stabilization Fund for Stranded Investment
May 3, 2021
Page 2 of 2
ANALYSIS:
Attached to this Staff Report is the Ordinance for repealing section 78-40 of the Azusa Municipal Code.
If no further revisions to the Ordinance are required, City Council can move to adopt Ordinance No. 2021-
02.
FISCAL IMPACT:
There is no fiscal impact associated with the second reading of the Ordinance.
Prepared by: Reviewed by:
Danny Smith Manny Robledo
Utilities Admin & Finance Manager Director of Utilities
Fiscal Reviewed by: Reviewed by:
Talika M. Johnson Marco Martinez
Director of Administrative Services BB&K Attorney
Reviewed and Approved by:
Sergio Gonzalez
City Manager
Attachments:
1) Draft Ordinance No. 2021-02
ORDINANCE NO. 2021-02
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
AZUSA, CALIFORNIA, REPEALING SECTION 78-40 OF
THE AZUSA MUNICIPAL CODE RELATING TO A
RESERVE FOR STRANDED INVESTMENT WITHIN THE
ELECTRIC FUND
WHEREAS, in January 1997 the City Council adopted Ordinance No. 97-01 establishing a
Reserve for stranded investment within the Electric Fund; and
WHEREAS, the Reserve was needed at the time in order to mitigate financial impacts of
electricity retail market conditions; and
WHEREAS, under Section 78-40 of the Azusa Municipal Code, the City Council can make a
finding that the reasons for maintaining Rate Stabilization Fund for Stranded Investment are no
longer applicable and direct staff to transfer this special reserve fund into the Electric Fund’s
unrestricted reserves; and
WHEREAS, the City Council wishes to repeal and rescind Section 78-40 of the Azusa
Municipal Code, at the recommendation of staff, by reason of the fact that the power resources,
previously considered stranded assets under market condition in the mid 1990’s, are now economic
and market conditions have since stabilized, and the Reserve created by said section is no longer
needed.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY
ORDAIN AS FOLLOWS:
Section 1. Recitals. The City Council of the City of Azusa hereby finds and determines
that the forgoing Recitals of this Ordinance are true and correct and are
hereby incorporated into this Ordinance as fully set forth herein.
Section 2. Repealed. Section 78-40 of Chapter 78 of the Azusa Municipal Code,
entitled “Reserve for stranded investment,” is hereby repealed in its entirety
and is of no further force or effect.
Section 3. Reserved. Section 78-40 of Chapter 78 of the Azusa Municipal Code is
hereby reserved for future use.
Section 4. Severability. If any provision of this Ordinance or the application thereof to
any person or circumstance is held invalid, such invalidity shall not affect
other provisions or applications of this Ordinance which can be given effect
without the invalid provision or application, and to this end, the provisions of
this Ordinance are severable. The Utility Board of the City of Azusa hereby
declares that it would have adopted this Ordinance irrespective of the
invalidity of any particular portion thereof.
Attachment 1
Section 5. Signature and Attestation. In accordance with California Government Code
Section 36932, this Ordinance shall be signed by the Mayor of the City of
Azusa and attested to by the City Clerk of the City of Azusa.
Section 6. Publication; Effective Date. In accordance with California Government
Code Section 36933, within fifteen (15) days of the passage of this
Ordinance, the City Clerk of the City of Azusa shall cause this Ordinance to
be published, at least once, in a newspaper of general circulation published
and circulated in the City of Azusa, California. This Ordinance shall take
effect thirty (30) days after the date of adoption.
PASSED, APPROVED, and ADOPTED this ___ day of May, 2021.
___________________________________
Robert Gonzales, Mayor
ATTEST:
___________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I HEREBY CERTIFY that the foregoing Ordinance No. 2021-02, was duly introduced and
placed upon first reading at a regular meeting of the Azusa City Council on the 26th day of April,
2021 and that thereafter, said Ordinance No. 2021-02 was duly adopted and passed at a regular
meeting of the Azusa City Council on the ____ day of May, 2021 by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
___________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
APPROVED AS TO FORM:
___________________________________
Best, Best & Krieger, LLP
City Attorney