HomeMy WebLinkAbout2005-057 Exemptions From Paying Irrigation Charges ORDINANCE NO. 2005 -57
AN ORDINANCE establishing terms and conditions for exemption from certain charges
for irrigation water service, amending section 7.24 100 of the Yakima
Municipal Code, and providing for an effective date
WHEREAS, RCW 35 92.010 authorizes cities to own and operate water utilities, and
to regulate and control the use, distribution, and price for water utility service; and
WHEREAS, Article IX, Section 1 of the City Charter of the City of Yakima authorizes
the City Council to provide by ordinance rules and regulations for the control, management
and operation of all public utilities owned and operated by the City; and
WHEREAS, the City Council finds and determines that customers who satisfy the
criteria for exemption set forth in this ordinance are not similarly situated to other irrigation
system customers because the customers who qualify for an exemption do not use, and
have only a limited ability to use, the irrigation system and because they have paid the base
irrigation charge which applies to persons who use the domestic water system for irrigation
purposes, and
WHEREAS, the City Council finds and determines that the rates and charges for
irrigation water service that are set forth in this ordinance are fair, just and reasonable, and
WHEREAS, the City Council finds and determines that adoption of this ordinance is in
the public interest; now, therefore,
BE IT ORDAINED BY THE CITY OF YAKIMA:
Section 1. Section 7 24 100 of the Yakima Municipal Code is revised to
read as follows
7.24 100 Annual rates and charges, exemption.
A. Annual charges shall be calculated as a function of the total square footage
( "TSF ") of each lot, tract, or parcel served. This annual charge is comprised of the
following components
Operation and Maintenance ( "O &M ") charge = $0 0137 x TSF, and
Capital Improvement Program ( "CIP ") charge = $0 0140 x TSF
B. An irrigation water service customer may request an exemption from payment
of the O &M component of the annual charges on the grounds that the customer
meets the criteria set forth in this subsection. Such request shall be made to the
division manager. The division manager shall render the customer a written
response regarding the request. To be eligible for the exemption, the customer must
demonstrate that it meets all of the following criteria:
(i) The customers parcel is not used primarily for residential purposes
(it) The surface of the customer's parcel is at least 95% impervious,
(iii) The customer has not used water from the irrigation system at any time
during the 12 months preceding the request;
(iv) The customer is capable of usinq water from the domestic water system to
meet the customer's irrigation needs, and
(v) The customer has paid the base irrigation charge established by section
7.56.060 of the Yakima Municipal Code, and
(vi) All charges imposed pursuant to Yakima Municipal Code chapters 7.24,
7.28, 7.50, 7.56, 7.58, and 7.60 for utility service to the customer's parcel
have been paid.
C. The division manager may revoke any exemption granted pursuant to
subsection B of this section if the division manager determines, after notice and an
opportunity for hearing, that the customer no longer meets any of the criteria set forth
in subsection B. The division manager may not grant any exemption from payment
of the Capital Improvement Program component of the annual charges established
by this section.
D. All moneys billed and collected pursuant to this section shall be deposited in
the irrigation operating fund pursuant to YMC Section 3.112.020
Section 2. If any section, subsection, paragraph, sentence, clause or
phrase of this ordinance is declared invalid or unconstitutional for any reason, such
decision shall not affect the validity of the remaining portions of this ordinance.
Section 3. This ordinance shall be in full force and effect 30 days after its
passage, approval, and publication as provided by law and by the City Charter;
provided, however, that this ordinance shall sunset and cease to be in effect one
year from the date of publication.
PASSED BY THE CITY COUNCIL at a regular meeting and signed nd approved this
18th day of October , 2005 / /,
`Yac.cJ� i-
Paul George, Mayor
ATTEST
City Clerk
Publication Date: 10 /21/05 (ordinance certification)
Effective Date 11 -20 -2005
10257391000731ETlET N22RC
Preston I Gates' Ellis w
PfiE s10 Ufvl
TO Dave Brown, Water/Irngation Division Manager
FROM: Liz Thomas
DATE: October 6, 2005
SUBJECT Irrigation System Charges Limited Exemption from Payment of O &M Charges
Background
You have asked whether the City of Yakima ( "City ") may establish rates and charges for its
irrigation system that authorizes the granting of an exemption from payment of the operations
and maintenance ( "O &M") component of the irrigation system charges established by section
7.24 100 of the Yakima Municipal Code ( "YMC ") 1 All customers would remain responsible for
payment of the Capital Improvement Program element of the charges.
To qualify for an exemption, the customer would have to demonstrate it met all of the following
criteria. These cntena are designed to ensure that only customers who have little realistic
likelihood of using irrigation system water can qualify for the exemption.
(i) The customer's parcel is not primarily used for residential purposes,
(ii) The surface of the customer's parcel is at least 95% impervious,
(iii) The customer has not used water from the irrigation system at any time during the 12
months preceding the request;
(iv) The customer is capable of using water from the domestic water system to meet the
customer's irrigation needs, and
(v) The customer has paid the base irrigation charge (which applies to persons who use
the domestic water system for irrigation purposes) established by YMC 7 56 060
1 YMC 7.24 100 provides:
Annual charges shall be calculated as a function of the total square footage ( "TSF ") of each lot, tract, or parcel served. This
annual charge is comprised of the following components:
Operation and Maintenance ( "O &M ") charge = $0.0137 x TSF, and
Capital Improvement Program ( "CIP ") charge = $0 0140 x TSF
All moneys billed and collected pursuant to this section shall be deposited in the irrigation operating fund pursuant to YMC
Section 3 112.020.
A LAW FIRM I A LIMITED LIABILITY PARTNERSHIP INCLUDING OTHER LIMITED LIABILITY ENTITIES
975 FOURTH AVFNUF SUITF 7900 SFATTI F WA 9R10A -1158 TFI 0061 673 -7580 FAX nos 673.7077 WWW PRFSTONGATFS COM
MEMORANDUM
October 6, 2005
Page 2
(vi) The utility billing account for the subject parcel must be in good standing.
Discussion
We have considered whether such an exemption would comply with applicable bond covenants
and whether it would satisfy the legal standards governing municipal utility rates and charges.
For the reasons discussed below, we believe that the exemption would not violate or lead to a
violation of bond covenants, and would otherwise satisfy applicable legal standards.
Bond Covenants. The City's covenants with the holders of the bonds that the City has issued to
finance the water /irrigation system require the City to collect revenues from the water /irrigation
system sufficient to cover all costs of the system, both capital and O &M. Under YMC 7 24 100,
the O &M component represents about 50% of the total charges for irrigation system customers
Both O &M charges and CIP charges are determined based on the total square footage of a
customer's lot. Thus, if customers who qualified for the exemption represented a large portion
of the total area served by the irrigation system, that could raise concerns about the City's ability
to collect revenues sufficient to cover system costs absent a significant rate increase for the
remaining customers. We understand, however, that relatively few customers will qualify for the
exemption. No single family or duplex homes can qualify Other customers can qualify only if
their lots are no more than 5% pervious and if they have the present capability (outdoor spigots,
etc ) to use domestic system water for irrigation purposes. It therefore seems unlikely that
creation of this exemption would lead to a failure to collect revenues to cover system costs.
Concerns about sufficiency could be made through a rate increase for remaining customers
Ratemaking standards. By creating an exemption available only to certain customers, the City
would essentially be creating a new customer class In any challenge, a court would consider
whether there is "a reasonable basis for the classification and whether the customers within the
class are treated equally " Silver Shores v Everett, 87 Wn.2d 618, 623 (1976). A customer
classification will be upheld if a city has "a rational basis for its different treatment of the two"
types of customers. Landmark Development, Inc. v City of Roy, 138 Wn.2d 561, 574-75 (1999)
Customers who qualify for the exemption share a number of characteristics not shared by other
irrigation system customers Those who qualify for an exemption do not use, and have only a
limited ability to use, the irrigation system. As a result, they do not burden the system or benefit
from it to the same extent as customers who do use the system. In addition, they have paid the
base irrigation charge that applies to persons who use the domestic water system for irrigation
purposes. Accordingly, the classification for purposes of the exemption should be found lawful
Conclusion
As described above, the proposed exemption appears to be quite limited and reasonable.
Accordingly, it should be found to be consistent with the City's bond covenants and with legal
standards governing utility rates
MEMORANDUM
October 6, 2005
Page 3
ET et
cc Nancy Neraas
Matt Wells
K:\25739 \00073\E\Er M22RB
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No i l
For Meeting Of 10/18/2005
ITEM TITLE Ordinance Providing for a Limited Exemption from Payment of Irrigation
Operation & Maintenance Charges
SUBMITTED BY Dave Brown, Water /Irrigation Manager
Dave Zabell, Assistant City Manager
CONTACT PERSON/TELEPHONE Dave Brown / 575 -6204
SUMMARY EXPLANATION The issue of a exemption from the Operation and Maintenance
portion of the irrigation rates for certain irrigation customers meeting certain criteria was
researched and studied at the request of a citizen and a Council Member
An ordinance establishing rates and charges for the irrigation system authorizing the granting
of an exemption from payment of the operations and maintenance component of the irrigation
system charges established by section 7.24 100 of the Yakima Municipal Code All customers
would remain responsible for payment of the Capital Improvement Program element of the
charges.
To qualify for an exemption, the customer would have to demonstrate it met all of the following
criteria. These criteria are designed to ensure that only customers who have little realistic
likelihood of using irrigation system water can qualify for the exemption.
(i) The customer's parcel is not primarily used for residential purposes,
(ii) The surface of the customer's parcel is at least 95% impervious,
(continued on next page)
Resolution _ Ordinance X Contract Other (Specify)
Funding Source
APPROVED FOR SUBMITTAL. C \��
_ ty Manager
STAFF RECOMMENDATION Staff respectfully requests City Council consider the
accompanying ordinance
BOARD /COMMISSION RECOMMENDATION:
COUNCIL ACTION Amended ordinance was passed. ORDYNANCE NO. 2005 -57
(continued from previous page)
(iii) The customer has not used water from the irrigation system at any time during the
12 months preceding the request;
(iv) The customer is capable of using water from the domestic water system to meet the
customer's irrigation needs, and
(v) The customer has paid the base irrigation charge (which applies to persons who
use the domestic water system for irrigation purposes) established by YMC
7 56 060
(vi) The utility billing account for the subject parcel must be in good standing.
As described in the attached memo from Liz Thomas, attorney with Preston Gates & Ellis, the
proposed exemption appears to be quite limited and reasonable Accordingly, it should be
found to be consistent with the City's bond covenants and with legal standards governing
utility rates
Relatively few customers will qualify for the exemption. No residential properties can qualify
Other customers can qualify only if their Tots are no more than 5% pervious and if they have
the present capability (outdoor spigots, etc.) to use domestic system water for irrigation
purposes It therefore seems unlikely that creation of this exemption would lead to a failure to
collect revenues to cover system operation and maintenance costs Concerns about
sufficiency could be made through a rate increase for remaining customers