|Sewer Rate Adjustments
The Inland Empire Utilities Agency (IEUA) provides sewage treatment for seven regional contracting agencies, including the City of Chino Hills. The current sewer rates are the result of an action taken by the IEUA Board of Directors in 2015. The rates were adjusted in 2015 to $15.89, in 2016 to $17.14, in 2017 to $18.39, in 2018 to $19.59 and in 2019 to $20.00, which is the current rate. These charges were passed on to the homeowners and businesses connected to the sewer system.
In January 2019, IEUA contracted with Carollo Engineers, Inc. (Carollo) to conduct an update of the rate study performed in 2015. The scope of the study included a review and evaluation of the Wastewater, Water Resources, and Recycled Water Programs. The original intent of the study was to adopt new rates for the next five years, but staff recommended the pursuit of more in-depth flow and loads study for updating the Equivalent Dwelling Unit (EDU) rate assumption. As a result, IEUA only adopted two-year rates until the required study is complete.
At the November 20, 2019, IEUA Board of Directors meeting, the board approved a two-year rate plan (FY 2020/21 through FY 2021/22) for sewage treatment charges from the current fee of $20.00 to $20.60 effective July 1, 2020, and $21.22 effective July 1, 2021, which is a 3% increase each year over the two years. A Proposition 218 process is required to authorize the City of Chino Hills to pass these IEUA cost increases on to customers.
To avoid another costly Proposition 218 process, City staff is recommending the adoption of rates that reflect a 10% increase for FY 22/23 through FY 24/25 to ensure the Proposition 218 process covers the rates IEUA will adopt in the future. Only the IEUA Board approved rates will be passed through to our residents for the next five years assuming the Proposition 218 election passes. In the event it fails, the City will need to absorb these increases. The increases are reflected in the table below.
||Monthly EDU Rate
|July 1, 2020
|July 1, 2021
|July 1, 2022
|July 1, 2023
|July 1, 2024
Proposition 218, (California Constitution Articles XIII C and D), which was passed by the voters in November 1996 and became an Amendment to the California Constitution, requires that the City follow certain procedures with regard to sewer rate increases. The City must provide written notice to the affected property owner of record and may include tenants that are billed by the City for sewer services. Sewer rate increases are subject to a "majority protest" process that provides that if a majority of the parcels in the City protest the proposed rate increase, the City cannot impose the increase. The City currently provides sewer service to approximately 20,550 parcels and so it must receive approximately 10,276 or more protests from property owners to prevent the City from imposing a rate increase. There are situations where there may be multiple protests sent out regarding one parcel. For example, when there is more than one property owner or when there is a property owner and a tenant that is the sewer customer, only one protest will be counted per parcel.
Each time the City goes through the required Proposition 218 process, there are property owners and/or utility customers that allege that the City is using an inappropriate process regarding the protest ballot process. This is not accurate. The City strictly adheres to the voter approved process that was drafted by the Howard Jarvis Taxpayer Association and is set forth in Proposition 218.
The most current assessor's parcel roll from the San Bernardino County Assessor's office will be utilized for a direct mailing of the notice and ballot to each parcel owner. Additionally, to the extent a tenant rather than a property owner is the sewer customer, a notice and ballot will be sent to the tenant utilizing the sewer billing address that the City has on file. The notice states the date of the Public Hearing, May 12, 2020, at 7:00 p.m. The property owners and tenants have the ability to "protest" the proposed rate increase until the close of the public hearing. However, only one protest vote per parcel will be accepted. If a majority of the parcels file written protests with the City prior to the close of the public hearing, Proposition 218 states that the City cannot implement the proposed increase.
Proposition 218 requires that the City provide all properties receiving the service for which the fee is charged with a minimum of 45 days written notice prior to Council holding a public hearing on a proposed rate increase. If a majority of the parcels do not protest the proposed increase, the Council has the authority to implement the proposed rate increase. Proposition 218 also requires the notices be mailed by first class mail. If approved by Council, the notices and ballots will be mailed on March 27, 2020, and the 45 day requirement will begin.
On January 3, 2020, the City issued a Request for Proposals (RFP) for Proposition 218 Noticing services. On January 22, 2020, two proposals were received and evaluated by City staff based on their qualifications and experience, understanding of the project, ability to perform the services and proposed cost. Koppel & Gruber Public Finance (K & G) received the highest ranking, so staff checked their references and received positive feedback. Staff is recommending the use of K & G to assist staff in conducting a Proposition 218 majority protest process, prepare and mail the notices, as well as count the ballots. The not to exceed amount of $95,055 is to cover the City’s next three rate increases. The cost of the sewer rate increase Proposition 218 noticing totals $31,685, which will include K & G's services of $11,875 and $19,810 to cover the estimated printing and mailing costs (including postage) which K & G will also oversee. K & G has assisted the City with previous Proposition 218 proceedings, the most recent being in February 2018 for the water rate increase. Staff determined that K & G continues to be the most qualified consulting firm to prepare and conduct the Proposition 218 proceedings.
The tentative timetable for the proceedings is shown below:
|March 27, 2020
||Mail notices and protest forms to residents and ratepayers
|March 28 - May 11, 2020
||45 days requirement prior to public hearing
|May 12, 2020
||Public Hearing Date and Protest Tabulation; 1st Reading of Ordinance
|May 26, 2020
||2nd Reading of Ordinance
|May 27 - June 25, 2020
|June 25, 2020
||30-Day requirement ends
|July 1, 2020
||Rates become effective