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Council Meeting Date: . December 7, 1998
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City Clerk's Signature
Department ID Number: PW-W-98/99-03
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL ACTION;
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
SUBMITTED BY: RAY SILVER, City Administratorfkt-� 0�1
PREPARED BY: ROBERT F. BEARDSLEY, Director of Public Wor
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SHARI L. FREIDENRICH, City Treasure `
MICHAEL P. DOLDER, Fire Chiefj�,�
SUBJECT: APPROPRIATION OF FUNDS FOR PAYMENT OF INTEREST ON
WATER SERVICE SECURITY DEPOSIT REFUNDS
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Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue:
On September 8, 1998, the City adopted an ordinance amending the Huntington Beach
Municipal Code to provide for a waiver of the deposit based on a showing of creditworthiness
as defined by the City. The City Attorney had determined that the City's ordinance, requiring
a mandatory deposit, was contrary to the California Public Utilities Code which applies to all
residential owners applying for service after January 1, 1990.
Prior to that date, no waiver of deposit had been allowed. Consequently, residential
applicants who applied after December 31, 1989, and who now meet the creditworthiness
policy criteria are eligible to receive their deposit amount and up to three years' worth of
interest 'on that sum. The interest, approximately $160,000, represents an unabridged
expense',to the Water Fund.
Funding Source:
Unappropriated Water Fund Balance Reserves.
Recommended Action:
Motion to:
Approve the appropriation of $160,000 from the unappropriated Water Fund reserve balance
for the purpose of payment of interest on water service security deposit refunds.
6-9
REQUEST FOR COUNCIL ACTION
MEETING DATE: December 7, 1998 DEPARTMENT ID NUMBER:PW-W-
98/99-03
Alternative Action(s):
Do not approve the appropriation of funds and advise staff how to proceed.
Analysis:
Recently, the City was contacted by a new customer who requested that her deposit be
waived based on a showing of creditworthiness. After investigation into applicable laws, the
City Attorney determined that the Municipal Code must conform to the California Public
Utilities Code, which requires the agency to establish a creditworthiness policy for residential
owner applicants. The City Treasurer's office implemented a temporary policy of
creditworthiness on August 20, 1998, to allow for waivers of the security deposit. Prior to
that, no waiver of a deposit had been allowed. On September 8, 1998, the City Council
adopted an appropriate amendment to Chapter 14.12 of the Huntington Beach Municipal
Code.
The Municipal Code now allows for a waiver of the security deposit for water service based
on a showing of creditworthiness as defined by the City. This policy allows a deposit waiver
if the new residential applicant provides evidence that confirms that he/she has had no more
than one (1) late fee during the previous year of water service within the City of Huntington
Beach. If the applicant has moved from outside the City, evidence of no more than one late
fee within the last twelve months for their current utility must be provided.
Residential water customers who applied for service after December 31, 1989; and meet the
creditworthiness test are now due a refund of their deposits and interest on those deposits.
The City Treasurer is working with Information Systems and Administrative Services to
implement these refunds which will take the form of a credit on customer bills.
The City Attorney has determined that the City would be liable to pay interest for up to three
(3) years in the event of litigation and, therefore, staff recommends that interest be paid on
the security deposits that were collected contrary to the Public Utilities Code. Interest on
security deposits is recorded as revenue to the Water Fund. Therefore, funds must be
appropriated from the Water Fund reserves to cover this expense.
Environmental Status:
Not applicable.
Attachment(s):
DPRFND2 -2- 11/25/98 4:09 PM
Fiscal Impact Statement
ATTACHMENT 1
CITY OF HUNTINGTON BEACH
INTERDEPARTMENTAL COMMUNICA TION
To: Ray Silver, City Administrator
From: Dan T. Villella, Acting Deputy City Administrator/Administrative
Services
Subject: FIS 99-11 Appropriate funds for Payment of interest on
Water Service Account Deposits
Date: November 24, 1998
As required by Resolution 4832, a Fiscal Impact Statement has been
prepared for "Appropriate funds for Payment of interest on Water
Service Account Deposits".
If the City Council approves this action (total appropriation $160,000),
there will be no effect on the working capital or the estimated fund
balance of the Water Fund at September 30, 1999 because the
amount has been recorded as a liability at September 30, 1998.
Dan T. Villella, '
Acting Deputy City Administrator/Administrative Services
RCA ROUTING SHEET
INITIATING DEPARTMENT: Public Works
SUBJECT: Appropriate Funds for Payment of Interest on Water Service
Security Deposit Refunds
COUNCIL MEETING DATE: December 7, 1998
RCA ATTACHMENTS
STATUS
Ordinance (w/exhibits & legislative draft if applicable
Not Applicable
Resolution (w/exhibits & legislative draft if applicable)
Not Applicable
Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (w/exhibits if applicable)
(Signed in full by the City Attorney)
Not Applicable
Subleases, Third Party Agreements, etc.
Approved as to form by City Attome
Not Applicable
Certificates of Insurance (Approved by the City Attorney)
Not Applicable
Financial Impact Statement (Unbudget, over $5,000)
Attached
Bonds (If applicable)
Not Applicable
Staff Report If applicable
Not Applicable
Commission, Board or Committee Report (If applicable)
Not Applicable
Find in s/Conditions for Approval and/or Denial
Not Applicable
EXPLANATION FOR MFSSLNG ATTACHMENTS
REVIEWED
RETURNED
FO RIDED
Administrative Staff
Assistant City Administrator Initial
City Administrator Initial
City Clerk
EXPLANATION FOR RETURN OF ITEM
RCA ROUTING SHEET
INITIATING DEPARTMENT:
Police Department
SUBJECT:
Contractual Services for Violence Against Women Grant
COUNCIL MEETING DATE:
December 7, 1998
RCA ATTAC H M E NTS
STATUS
Ordinance (w/exhibits & legislative draft if applicable)
Not Applicable
Resolution (w/exhibits & legislative draft if applicable)
Attached
Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (w/exhibits if applicable)
(Signed in full by the City Attorne
Attached
Subleases, Third Party Agreements, etc
(Approved as to form by City Attorney)
Not Applicable
Certificates of Insurance (Approved by the City Attorney)
Not Applicable
Financial Impact Statement (Unbudget, over $5,000)
Not Applicable
Bonds (If applicable)
Not Applicable
Staff Report (If applicable)
Not Applicable
Commission, Board or Committee Report (If applicable)
Not Applicable
Findings/Conditions for Approval and/or Denial
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED
RETURNED
FOR RDED
Administrative Staff
Assistant City Administrator Initial
City Administrator Initial
[City Clerk
EXPLANATION FOR RETURN OF ITEM:
RCA Author: