Loading...
HomeMy WebLinkAboutResolution No. 04-C38/A**1 eoml RESOLUTION NO.04- cis A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, ESTABLISHING A POLICY CONCERNING THE OBLIGATIONS OF THE CITY'S WATER UTILITY OPERATIONS TO COVER GENERAL FUND SUPPORT SERVICE COSTS AND OTHERWISE PAY ITS FAIR SHARE OF CAPITAL IMPROVEMENT COSTS FOR INFRASTRUCTURE IMPACTED BY UTILITY OPERATIONS. WHEREAS, the City Council of the City of Azusa serving as the City's Utility Board met on February 23, 2004, to discuss the City's General Fund support services costs related to the City's various utility operations; and WHEREAS, the City Council desires that the General Fund fully recover all direct and indirect support service costs and any and all other "franchise fees" or allocations authorized by law; and WHEREAS, the City Council desires that the methodology to allocate support service costs be consistent with the City's guiding principles that the allocations be administratively simple, fair, transparent and predictable; and WHEREAS, the City Council has determined that a combination of statutory franchise fees applicable to the water utility ("Water Utility"), compensation to the City for the use of City's water rights, interest income sharing with the General Fund and direct support service cost allocation reimbursements are consistent with the City's guiding principles; and WHEREAS, in August 2003 the City has entered into Series A Installment Sales Agreements ("Agreement") with the Financing Authority for Resource Efficiency of California ("FARECal") in connection with the issuance of Series A Certificate of Participation for the Water Utility; and WHEREAS, the Agreement established flow of revenue covenants in the use of Water Utility's GROSS REVENUES as such term is defined in the Agreement; and WHEREAS, the water fund transfers to the General Fund contemplated herein further incorporate by reference the principles outlined in the flow of revenue covenants of the Agreement, NOW THEREFORE, THE CITY COUNCIL DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. The City Council hereby authorizes the following allocation transfers from the Water Utility fund to the General Fund: 140061 IAOI� A. In accordance with the California Public Utilities Code provisions related to the establishment of franchise fees by general law cities, the Water Utility shall pay a franchise fee of two (2) percent on retail water sales to the General Fund. Such franchise fees shall be considered as Operation and Maintenance Expenses as such term is defined in the Agreement. B. As the custodian of City's water rights in the provision of water services, the Water Utility shall compensate the City for the use of City's water rights, inclusive of Azusa Agricultural Water Company's water rights owned by the City, but exclusive of the former Azusa Valley Water Company's water rights owned by the City. Such annual compensation shall be determined by multiplying the City's total acre feet of water rights by the weighted average cost per acre foot of replacement water as determined by the Utility. Such compensation shall be considered as Operation and Maintenance Expenses as such term is defined in the Agreement. C. For Fiscal Year 2004-05, the Water Utility shall contribute interest earned on those Water Utility reserve funds on a quarterly basis. As the Water Utility operations impacts the City's infrastructure and capital improvements the Water Utility shall contribute to a capital improvement fund established by Ordinance of the City Council. The capital improvement fund shall be used solely to finance those capital improvement items that are impacted by the Water Utility operation. The Water Utility shall contribute to this fund from interest earned on those Water Utility reserve funds that are invested. For Fiscal Year 2005-06, and each year thereafter, the contribution to the capital improvement fund shall be made within sixty (60) days of the close of each Fiscal Year, provided, however, that such contribution shall not exceed the Water Utility's net positive income for the Fiscal Year that has closed; if the Water Utility does not have a positive net income, then the Water Utility shall have no obligation to contribute the interest earnings to the capital improvement fund. Such interest transfer shall not be considered as Operation and Maintenance Expenses as such term is defined in the Agreements. D. In accordance with common practices related to direct cost recovery and court decisions, the Water Utility shall reimburse the General Fund for all costs for City support services directly provided to the Water Utility in accordance with the following two-step process: i. Step 1: A determination shall be made as to the total amount of all General Fund costs associated with general "City support services that are provided to all City departments. (General City support services shall include, but not be limited to, those departments like the City Administration, City Clerk's Office, Finance Department, Human Resources, and Information Technology). The total amount of General Fund costs associated with these general City support service AaWN look departments shall be made during the budget preparation process for the subsequent Fiscal Year. ii. Step 2: The percentage share of the Utility Department's full time equivalent (FTE) employees shall be determined as a percent of the total FTE employees for all departments of the City of Azusa. The General Fund support services cost determined in Step 1 shall then be multiplied by Utility Department's FTE percentage share to determine the support services cost allocation to the Utility Department. The Water Utility's share of this amount shall be sixty-five (65) percent of the allocation. Such cost reimbursements to the General Fund for all direct City support service shall be considered as Operation and Maintenance Expenses as such term is defined in the Agreements. E. Because the Water Utility may from time to time generate net positive income above the Water Utility's needs for financial reserves, capital improvement programs, transfers to the General Fund described above, the City Council finds that additional contributions from the Water Utility to the General Fund may be reasonable and fair. Within sixty (60) days after the audited annual financial statements for the Water Utility become available the City Council may adopt, upon a joint recommendation by the City Manager and the Director of Utilities, additional transfers from the Water Utility to the General Fund. Any additional transfers pursuant to this section shall be contributed to the capital improvement fund and shall be used solely to finance those capital improvement items that are impacted by the Water Utility operation. Such additional transfer shall not be considered as Operation and Maintenance Expenses as such term is defined in the Agreements. SECTION 2. This Resolution shall take effect upon its adoption by the City Council. PASSED, APPROVED AND ADOPTED this 24 ATTEST: Mendoza,Vera APPROVED AS TO FORM: By: _—�V,e:d Best Best & Krieger LLP City Attorney I HEREBY CERTIFY that the foregoing Resolution No. 04- c38 was duly adopted by the City Council of the City of Azusa, at a regular meeting thereof, held on the 24th day of May, 2004 by the following vote of the Board. AYES: COUNCILMEMBERS: HARDISON, STANFORD, CHAGNON, ROCHA, MADRID NOES: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: NONE 0 Mendoza,/