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Tuesday, December 11 , 2018, 7:59 pm | Fair 54º


Lompoc To Consider Charging Utility Ratepayers, Airport Users To Fund Public Safety, Infrastructure

Lompoc City Council members will be asked Tuesday to approve complex reimbursement formulas for charging municipal utility ratepayers, broadband and airport users for the operational costs of other city departments. 
If approved, the city’s user-funded enterprise departments — water, wastewater, solid waste, electric, broadband and the Lompoc Airport — would be required to pay $4.35 million for indirect city services during the current two-year budget. 
The city’s 2015-17 budget incorporated the charges based upon an early version of a cost allocation formula, but council members will review the reimbursement cost study and methodology behind the new charges for the first time at Tuesday’s meeting.

City staff say the new charges are needed to ensure enterprise departments pay their fair share of costs for public safety, street maintenance, and capital improvements and replacement costs for City Hall and other city facilities. 

“What this is doing is showing what the fair amount is that ratepayers and other enterprise fund users should be paying for the services they are receiving,” said Brad Wilkie, the city’s management services director. 
At least two council members are questioning the effect the new charges would have on the city’s municipal utilities, still in the midst of a five-year schedule of approved rate increases for water, wastewater and solid waste.
“My biggest concern is the effect on the rates, especially the utility rates, that will be imposed,” Councilman Dirk Starbuck said.

“We finally got to the place where we could put funds in our reserves for infrastructure repair and I’m not sure if that will be the case if we siphon more money out of the enterprise funds.”
Councilman Jim Mosby said he has concerns about the methodology used to establish the new charges, as well as the effect on utility ratepayers in the future. 
“It’s critical for the elected body to understand that any general fund budget increase can and will affect rates the enterprise funds, including utilities, are charging,” Mosby said. 
“This ties future utility rate increases to the size of the city budget, not to the services provided. It’s a way to balance the city’s budget on the backs of the ratepayers.”
According to Melinda Wall, financial services manager, the proposed reimbursement formulas are consistent with voter-approved ballot measures that require voter approval of property-related fees and limit fees governments can charge without obtaining voter approval.
“We wanted to make sure the charges we are charging are both defendable and supportable. We wanted to reaffirm the way we are doing this is correct and honest.”  
Wall said the need for future utility rate increases “would have to be analyzed based on operating costs, debt service costs, and needed future capital projects.”
The new costs the departments and utilities would be required to reimburse the city for include: 
»  Public Safety: Each department would pay a percentage of the city’s public safety budget based upon the market value of the properties within the department. 
»  Government Facilities: Enterprise funds would be charged for a portion of the capital improvement and future replacement costs for City Hall, a city storage yard on North V Street and the Corporate Yard on West Laurel Avenue.
» Right of Way Maintenance: Charges would be based on the wear and tear of city streets caused by each department’s vehicles and the location and placement of underground pipes, conduits and cables. 
According to city staff, three utility departments — solid waste, water and wastewater — have paid a general fund support fee since 1997 that amounted to 5 percent of each department’s budget. The new reimbursement formulas will result in a reduction of fees paid to the general fund by the solid waste and water departments, but will increase fees paid by wastewater. 
The remaining enterprise departments, including the electric utility, have never paid general fund support fees. 
All enterprise departments will continue to pay an existing and separate overhead allocation fee for administrative services such as payroll, billing, purchasing and legal services provided by City Hall staff. 
The proposed reimbursement formulas were developed by HF&H Consultants, a Walnut Creek firm that specializes in cost allocation and rate setting plans for governmental entities. 

The council meeting begins at 6:30 p.m. Tuesday in council chambers at 100 Civic Center Plaza.
In other business, the council will be asked to approve funds for repair of a failed pump at the Aquatic Center, a new roof for the Cypress Art Gallery and a new entry door at City Hall.

Noozhawk contributing writer Carol Benham is a longtime local journalist who lives in Lompoc. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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