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  Consent-General Government   #   10.    
Board of Supervisors County Administrator  
Meeting Date: 08/01/2017  
Brief Title:    Initiate Prop 218 for NDM CSA Water Project
From: Patrick S. Blacklock, County Administrator
Staff Contact: Beth Gabor, Manager of Operations & Strategy, County Administrator's Office, x8042

Subject
Approve North Davis Meadows County Service Area initiation of Proposition 218 proceedings for water fee changes to support Water System Consolidation Project. (No general fund impact) (Blacklock/Gabor)
Recommended Action
  1. Initiate proceedings to consider proposed changes in the water fee for the North Davis County Service Area (CSA) to support the Water System Consolidation Project;
     
  2. Direct staff to mail notice of repeal of the May 31, 2016 water fee increase and a proposed new fee increase for service to property owners within the North Davis Meadows CSA at least 45 days before the public hearing, including notification of the opportunity to protest the proposed fee changes and the public hearing;
     
  3. Direct the Clerk of the Board of Supervisors to publish a notice pursuant to Section 6066 of the Government code;
     
  4. Set 9:00 a.m. on October 24, 2017, as the time and date of the public hearing to consider the proposed fee change and to receive and consider all public comment, including but not limited to, any protests against the proposed fee changes; and
     
  5. Direct staff to prepare a resolution adopting and levying the modified water fee for the North Davis Meadows CSA in the event the increase is not successfully protested.
Strategic Plan Goal(s)
Operational Excellence
Thriving Residents
Sustainable Environment
Reason for Recommended Action/Background
The recommended actions are required for the North Davis Meadows CSA to adopt a water fee change to cover the cost of providing potable (drinking) water service in the CSA.  Future water service to the community will be adversely impacted unless a fee increase occurs. Any change in the water fee is subject to Proposition 218, which requires the CSA to hold a public protest hearing prior to adopting the proposed fee increase. If more than 50% of the affected property owners submit written protests against the proposed fee increase, the increase cannot be adopted.

Background

Since 2010, the CSA has been working toward a permanent solution for the mitigation of water quality concerns in the community, most notably nitrate, hexavalent chromium, aluminum and iron in excess of maximum contaminant levels. After assessing a variety of options for providing a potable water supply that meets all drinking water standards, the County and CSA concluded consolidating with the City of Davis public water system was the most cost-effective method to comply with California drinking water regulations and ensure the health and safety of the residents of North Davis Meadows. On February 28, 2016, the Davis City Council directed their staff to provide a water service "will serve" letter to Yolo County for the North Davis Meadows CSA.

On May 31, 2016, a Proposition 218 hearing was held to increase the North Davis Meadows CSA water fee to repay, over 20 years, an anticipated State Revolving Fund (SRF) planning loan to cover the cost of design of the water consolidation project. The increased water fee was first collected in 2016-17 and will again be collected in 2017-18.

While design commenced in December of 2016, it was later discovered SRF planning loans must be repaid within 5 years. On behalf of the North Davis Meadows CSA, staff has changed course and begun the process of applying for a combined SRF planning and construction loan which can be repaid over 30 years. Staff has also obtained an interim loan from the County for the design work already underway by West Yost Associates (up to $430,000) to be repaid by 2020-21.

On June 1, 2017, West Yost Associates delivered 65% Plans, Specifications & Estimates for the project that estimate a total project cost of $7,222,590. Of that estimate, $6,618,690 is eligible for the 30-year SRF loan and $603,900 is ineligible. SRF loan ineligible costs will be financed through another County loan which must be repaid within 4 years, per government code (note: funds collected as a result of the May 2016 water fee increase will be dedicated to offsetting ineligible costs). Beyond these anticipated costs, the State requires x1.1 debt coverage (collection of 110% of the project cost in the event payments are missed) for their loan. Conservatively, interest for the SFR and County loans are estimated to be 2% (includes debt coverage) and 1.75% respectively. Final project cost estimates will be available in early September 2017 and will be outlined in the public hearing notice.  Attached, please find the draft notice to property owners of the proposed water fee increase and public hearing proceedings.

The public notice will be mailed to residents by September 8, 2017. On September 13, a CSA Advisory Committee meeting will be held to provide the community information about the project and to answer questions from residents.

Note: This project will result in water service from the City of Davis to 95 properties in the North Davis Meadow CSA, as well the City of Davis golf course club house.  The City of Davis will pay the cost to connect to the golf course club house.
Collaborations (including Board advisory groups and external partner agencies)
North Davis Meadows CSA Advisory Committee, City of Davis, California Water Resources Control Board, Financial Services, County Counsel.

Fiscal Information
Fiscal Impact of this Expenditure
Total cost of recommended action
Amount budgeted for expenditure
Additional expenditure authority needed $0
On-going commitment (annual cost)
Source of Funds for this Expenditure
General Fund $0
Attachments
Att. A. Draft Public Notice

Form Review
Inbox Reviewed By Date
Patrick Blacklock Patrick Blacklock 07/24/2017 01:57 PM
County Counsel Phil Pogledich 07/27/2017 10:34 AM
Form Started By: Beth Gabor Started On: 06/05/2017 04:18 PM
Final Approval Date: 07/27/2017
Level double AA conformance,
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