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11-01-90 SewerREGULAR BOARD MEETING AGENDA ITEM NO. 3 SEWER CONNECTION FEE REFUND APPROVE REFUND FOR 104 SEWER UNITS ASSIGNED TO LAKEVIEW DEVELOPMENT CORP. IN THE AMOUNT OF $2067634.00 (WHICH INCLUDES INTEREST) BOARD MEETING: NOVEMBER 1, 1990 Presented by John Weidman: The record will show that Nat Sinclair has disqualified himself in proceedings on this matter for reasons of conflict. I've satisfied myself from looking at the files that they are the ones who paid the money and they should be returned the money. I think the interest, I thought it was a little bit higher, because I think Bob Eppler discovered that one of the deposits was made 7-months earlier than he had normally thought, and of a substantial amount, and I thought--I'm surprised the figure isn't here, but I thought it was somewhere between 203 or 206. FISCHER: I've got the figures. WEIDMAN: Oh, Barrie's got it, OK. FISCHER: The amount due to be returned would be, as of November 1st, would be $206,634, and change--that being comprised of the initial deposit of $138,320 for the deposit on sewer units and an amount of $57,936 in interest for a period just short of 7-years. Then, an amount of $7,540 for first year deposit of sewer fees for a period of 6-years, amounts to $2,838 in interest and $7,540 in deposit--comes up to a total of $206,634.00. ST054586 PAGE - 2 WEIDMAN: This is pursuant to a policy adopted by the Board in 1980. You would be following that policy. MASON: And, what happens to the sewer units that are returned? WEIDMAN: Revert back to us. MASON: Into which? WEIDMAN: We haven't determined what category it is, and that might take some doing, but the main thing is, they are new sewer units. MASON: They are there; Discussion? WEIDMAN: We ought to study where they should go. PIERINI: Is this money been held in a special account? -- Segregated account? FISCHER: It has not been~ segregated. It is in now in our deposit account. PIERINI: I am sure staff has a copy of this. I have some questions on it. WEIDMAN: I don't have a problem. PIERINI: This is a large amount of money, and my questions are directed because of the impact of this on the District and also--do we have a receipt? Normally, when you go in and pay you get a receipt that has a check number on it. Has that been provided? Or, I am not aware of it..or? WEIDMAN: I don't know that. MASON: I would think it would be in our records that year, that it was posted. ST054587 PAGE - 3 FISCHER: Its in the history of this particular account. PIERINI: Do we have a copy of that available to the Board? FISCHER: I don't have it right here, but I can get if for you. PIERINI: Then, it says paid 7/24/84 by M. Petrigalo, Receipt No. 12171--that's who paid it, I guess. WEIDMAN: Yes. PIERINI: Now, he was a principal in Lakeview Development Corp? WEIDMAN: He was the Vice-President of the Corporation authorized to sign and draw on the loan and progress account of the Corporation. PIERINI: Now, when was the--now that check apparently was for $7,575 in 7/24/84, correct? FISCHER: Yes. PIERINI: When was the balance paid? FISCHER: The deposit, the actual deposit on the units of $138,320, was paid November 8, 1983. PIERINI: So, my question is--Why did they pay $138, 8-months prior to giving us the deposit? It seems it should be the other way around. FISCHER: They take the $7,500, which is the first year's sewer service charges on these units. We always get the deposit as soon as the units are allocated, when the people come in to actually take out the permits, we ask them for the first year's sewer service charges as a deposit, so they are not always asked and the huge majority of these cases, this first year deposit of ST054588 PAGE - 4 FISCHER: (CONTINUED) service charges is not paid when the deposit on the units themselves are paid. PIERINI: Now, you keep referring to it as a deposit, but was actually a payment in full? FISCHER: Well, the deposit, the $138,000--Yes, you can call it a payment in full for the connection fee, but until they actually come in to take out the permit, it is called a deposit and it is retained in a customer deposit account until either the project is completed or in a case like this, where it has to be refunded and it is refunded out of a customer deposit account. MASON: It's similar, is it not, to what's happening now with all the residential allocations--where they have 30 days, if they are awarded an allocation, they have to come in and pay their $6,000, but they don't pay their connection fees in that first year fee, until they actually come in and make a hookup? FISCHER: No, they pay the connection fee deposit. They pay a depsit on their connection fee, OK? And, when they come in and complete the paperwork with the plans, and things of that nature, then we ask for a deposit of their first year's sewer service charges--and back in 1984, I haven't computered it, but it was quite a bit lower than it is now. PIERINI: My understanding was, that for example, the way this ST054589 PIERINI (CONTINUED): PAGE - 5 last system worked--they came in with their plans, already approved. MASON: No. PIERINI: Not plans--at TRPA level approval--not final approval, at TRPA level approval. MASON: No, the City gave an allocation, or the County, then you went immediately to the sewer District, then you went to TRPA. PIERINI: OK. MASON: Then, once those were approved, you bring back your full set and then pay up the rest. PIERINI: You did not collect the $6,000 plus the one year's service fee? at one time? FISCHER: Yes, that's what we did right here--back in 1984 when you are talking about $6,000--back then, it was $1,330 per unit or $3,990. PIERINI: No, you didn't, because there are two different dates. FISCHER: That's right. The one on the $1,330 per unit was collected prior to the first year service charge. PIERINI: OK, so they came in-- FISCHER: Since the allocation was secured, and I don't know how, the allocation was received or anything else...As soon as Lakeview Corp. was told that they had 104 sewer units, they had to come in and give us the deposit for ST054590 PAGE - 6 FISCHER: (CONTINUEDk the connection fee. PIERINI: OK. FISCHER: And, that occurred on November 8, 1983. And, then they came back with their plans and paperwork on July 24, 1984 and we asked them for the additional $7,540. PIERINI: So, um, so they continued to pay their service charges? FISCHER: No, they never have hooked up. We don't begin paying service charges till they actually hook up to the system. PIERINI: Well, they paid the first year in advance, tho, you said. FISCHER: That's right. We asked them for it in advance. PIERINI: So, they paid the first year--for service. FISCHER: They paid a deposit on that. I, I may be confusing you by referring to these things as deposit. We ask.. PIERINI: You're not confusing me, but I think we have an ordinance in effect that, for example, there has been a certain amount of sewer units taken out of service, and the people that own those sewer units have continued to pay service charges on those units, even though they aren't in service--Am I correct on that or not? FISCHER: In some cases, you are correct, yes. That's after they have been in use on the system, tho. PIERINI: Right. Don't we have a mechanism, tho, for when they are not in use on the system--which is the case on ST054591 PAGE - 7 PIERINI: (CONTINUED) these, and they are still paying? But, they were in use previously--that, I thought there was something in one of the ordinances that those units reverted back to the District if they discontinued paying service charges. WEIDMAN: That applied to the previously hooked up units that were then taken out of service; there was some change. FISCHER: These have never been hooked to the system. Our ordinance reads, once we come out and inspect the lateral and say OK, you've got a valid hookup--you can begin using it at any time--now, you start paying service charges. MASON: And then from that point, in order to keep them active, they are to keep paying? FISCHER: Yes. But, where they have never been hooked up to the system, we do not regularly charge them service charges. This is a large project, but we have probably 200 sewer units sitting there that have never been connected to the system. PIERINI: Because, for example, they have taken out a building permit for some reason or another, they have applied for an extension through the appropriate authority--either the County or the City Building Department and they have been provided with extensions year after year, for example, is that a scenario, that's? ST054592 PAGE - 8 FISCHER: That could be the case. Some of them have been held up for legality, legal reasons, and things like that. I cannot give you the details on all of them. PIERINI: Just without seeing the receipt or a cancelled check, you know, I mean, we have nothing before us. Um, it just gives me problems, you know, approving $200,000.00, unless I see something there and from who it was made out who it was made to. I am sure we gave them a receipt when they gave us a check. FISCHER: There could very possibly be a stub in our records that was completed to use to put into the computer. MASON: Yes, Carol? SWAIN: I am sure there would be a copy of the application which has all that information on it. PIERINI: This is the application, Carol, but there are two or three different, at leasst two different payments that accompanied this application. Those payments are not documented on this application separately. FISCHER: Well, when I print out a history of this account on the computer, those two different items will show up on that. PIERINI: But, don't we know, I mean, you know if somebody gives us a check for $138,000 and we don't make a receipt out? FISCHER: Yes, we do. PIERINI: So, we should have that. ST054593 PAGE - 9 FISCHER: Yes. We wouldn't have the receipt. MASON/PIERINI: You should have a copy. FISCHER: If we have, now bear in mind, that this is 7-years old now--we could very well have our cash board for that date that would indicate $138,000 was paid. PIERINI: We give them a receipt, and it is a duplicate copy, a triplicate? FISCHER: It is a peg-board system. PIERINI: Right, right, so we have that somewhere? FISCHER: And it would show up, if we still have, like I said, if we have 7-year old records and I have... PIERINI: Well, we are required to keep at least 7-years, I am sure, in terms of internal revenue code. FISCHER: I don't know about that, PIERINI: Yeah. FISCHER: I'll have them look for it, OK? PIERINI: I would be just reluctant to approving this much, I mean, this is a very sensitive issue--a member of the board--this Board of Directors, we are approving $200,000 without a receipt, I mean I would like to see something documented before us, before we just go along on this. MASON: Can we, can you look that up, and we can defer this. FISCHER: I can go back to the old records, yeah, and I'll have a history of this printed out on the computer. MASON: Diane was working at the counter at that time. Were, ST054594 PAGE -10 MASON: (CONTINUED) they--uh, they keep these, don't they, Diane? GILBERT: I think Carol probably was. MASON: Oh, Carol was.. SWAIIN: It would be on the cash receipt board. We can look for that. If not, a hard copy, then probably in the microfisch. PIERINI: Yeah, I'd feel a lot more comfortable here, in proceeding on this issue, and here is a by-product question--Why aren't we getting a refund then on the water connection? FISCHER: At that time we did not collect the water connection fees until they actually hooked up. ONYSKO: Barrie, do you have any idea how much money the District is liable for--for similar situations? FISCHER: I couldn't give you an accurate-- ONYSKO: There is no way of counting how many units? FISCHER: Oh yeah, we can go back and count those--the ones that I described that we are holding. ONYSKO: About how many do you think there are? Does this represent more than half of them? FISCHER: I would imagine that this comes probably pretty close between 40% and 50% of our total deposits. If I remember correctly, I think we have a figure of $230,000 some dollars. ONYSKO: And what is the interest we pay on this? ST054595 PAGE - 11 FISCHER: 6% ONYSKO: Shouldn't we be making an effort to get those off the books? FISCHER: That would be a policy decision of the Board. Right now, our ordinances and that the way they are set up, they are allowed to continue to sit there. PIERINI: Yes, I think we'll have to address this on a different form. At some point here, I mean, we have to either, somebody, I mean we are reserving this capacity, we're not receiving any income for reserving it, so we'll have to make it mainly part of an ordinance similar to our other one--that mandates that these sewer service charges continue. Or, if we don't want them to continue, I am not sure why other people should be continuing to pay on other ones. What difference does it make whether they are in-service or not in-service prior to the issuance of the permit. I mean, I think we ought to be consistent on that and have the staff look into amending that ordinance to reflect these kind of scenarios--especially--since we have .... FISCHER: I think staff would welcome an action like that, because some of these that we've got, they've paid $50.00 back in 1973. PIERINI: Yeah, I think we have to address it, one way or the other. MASON: Would you put that on the Finance Commmittee's next agenda? ST054596 PAGE - 12 MASON: (CONTINUED) Are there any other questions? Thank-you, Barrie. If not, then we... ONYSKO: Move to table it? MASON: OK, I can accept that. PIERINI: I'll second. MASON: Please vote. Motion carries 3 to 1;--3 and 1 abstaintion, I should say. ST054597