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Wednesday, June 27, 2012

Council Affirms Intention to Form Community Facilities District for Sewer

• Will Commercial Property Owners Paying into the Process Provide Legal Basis to Force City’s Hand?

It was past the midnight hour when the Malibu City Council this week unanimously adopted a resolution declaring its intention to establish a Community Facilities District for a Civic Center sewer plan.
At a previous session, the council approved agreements with a bond counsel, legal specialists and banking and underwriting officers for financing a CFD for the proposed Civic Center wastewater treatment system.
At this week’s meeting, the council adopted the resolution, which language includes  “to incur bonded indebtedness within such a CFD to finance the design of the proposed Civic Center wastewater treatment plant phase one.”
Council members were told another $6 million is needed to complete preliminary work on the design phase of the project including an Environmental Impact Report.
Assistant City Manager Reva Feldman told the council what they approved early Tuesday morning did not authorize the issuance of any type of indebtedness nor the formation of a CFD.
“Final approval of a CFD will require additional city council action and a vote by properties within the proposed district and will be brought forward to council at a later date,” Feldman said.
This week’s action does not form the district, but declares the city’s intention to do so and will declare what the city’s intentions to do with the CFD. To use the CFD “to incur bonded indebtedness within such CFD to finance the design of the Civic Center Wastewater Treatment Plant Phase One.”
Feldman told council members the consultants had already helped determine the special tax that will be levied on the commercial properties in the CFD and mentioned city properties cannot be a part of a CFD.
The CFD, if it is approved by the commercial property owners’ votes, will allow in 90 days after the vote, the CFD to sell municipal bonds. At that point the city would receive back the money already invested by the municipality.
City officials indicated the properties in such a district would include at this time only the commercial properties in phase one.
Council members had previously declared their intentions to have the commercial property owners start paying for the costs of the design of the wastewater system since they will be the beneficiaries. This is the formal process to do this.
Feldman said the hope of municipal officials is to have the CFD election in August.
Later a benefits assessment district would be established. “The city can be part of the benefits assessment district,” Feldman said.
John Mazza, representing the Malibu Township Council, urged the council to reverse direction. “It is a big mistake to drop efforts [demonstrating] that septics work,” he said.
 Mazza said there was still $1.5 million the city has not accounted for being returned and must be a gift to the CFD.
Julie Eamer said the reason the city was formed was to stop the sewers. “Why do we have to go down this path?” she asked.
Councilmember Lou La Monte wanted to know what would happen to the $1.5 million mentioned by Mazza and was told by City Manager Jim Thorsen the money would eventually be returned to the city. Thorsen said the estimate for the total cost of the wastewater plant is currently considered to be $20 to $30 million.
Thorsen was also asked if the CFD did not get authorized what would happen. He said the design would stop and the Regional Board could assert their authority.
Council members cited the history of how the municipality got to this point with the Regional Water Quality Control Board as the enemy
“I don’t want to demonize the Regional Water Quality Control board, but they have never lost on this,” said Councilmember John Sibert.
Councilmember Joan House said, “If we could walk away form this we would. But we have been put in harm’s way.”
Councilmember Skylar Peak did not join the conversation. When the motion was made to approve the staff recommendation, the council voted unanimously.
In 2009, a previous council approved $2.6 million for an agreement with RMC Water and Environment to provide engineering and design services..
Of the total approved $102,800 was used toward stormwater design and engineering services for Legacy Park leaving over $2.5 million for the design and engineering of a wastewater treatment facility.
Feldman, in her staff report, noted the design costs have increased because of the apparent dispersal process being considered—lower aquifer injection.
“All of the design and engineering work that has been completed to date indicates that the city will be able to proceed with a lower aquifer injection process. Exploratory test well drilling and groundwater extraction was successfully completed. It is anticipated that this assessment will be successful and allow the city to continue the project by constructing and testing a full-size well, the installation of six adjacent monitoring wells, and the completion of a final model,” Feldman wrote, in her memo to council members. That was never discussed by the council
What Feldman told the council was the total of funds needed is $6 million including final design and engineering for $1.5 million and additional $1.9 million will be needed for the development of the EIR, final construction drawings, bid documents and all permits bringing the total to $6 million. The funds provided by the city are expected to be reimbursed by the CFD. 
Given the late hour, it was almost 2 a.m. when the agenda item to allocate $1.5 million to RMC Water and Environment to provide engineering and design services for the wastewater component was continued.
“I don’t see any reason to spend city money on it,” said Peak.
The amount was not included in the adopted budget for fiscal year 2011-2012.
Public Works Director Bob Brager, in a memo to council members, explained funding did not include design and engineering for a completely, new and different dispersal process (lower aquifer injection).
“In order for the city to remain in compliance with the terms of the MOU, and to proceed with the design of the overall centralized wastewater treatment facility, additional funds are needed,” he wrote.
The council decided they could wait until a later date in the summer before they would approve the allocation of another $1.5 million.
Brager, who did not speak to the council, noted in his memo the stop gap funds were being requested for the approval of the $1.5 million in order to keep on schedule and allow for enough time for the CFD to fully fund the project design.
Thorsen said there was some leeway if the city got behind by a month or so, but explained to council members beyond a short time frame more delays could jeopardize the process.
Members decided instead to see what happened to the CFD before they allocated any more money from city coffers.

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