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HomeMy WebLinkAbout05/04/01 B A K E R S E L D OFFICE OF THE CITY MANAGER MEMORANDUM May 4, 2001 TO: Honorable Mayor and City Council FROM: Alan Tandy, City Manager /~--~7' /-'~', SUBJECT: General Information 1. The signed City Center DDA was returned to us early this week - a few days later than originally expected. Our attorneys still have to discuss technical language issues with their attorneys - overall, however, there are no significant problems. 2. Thanks to the Kern County Board of Supervisors for voting in the $200,000 to help l, with the City Center Project! In the newspaper articles, reference was made to a Federal Aviation Administration grant funds increasing which could reimburse part of our $2.5 million commitment to the terminal. I checked and that is accurate - although final numbers will not be known until September or October. 3. There is a nice article in the latest edition of "Our World" regarding the Kugel, a copy of which is attached. 4. A memo is enclosed from the Public Works Department regarding the Proposition 218 refuse fee hearing. The date of the hearing is June 13, 2001, and all notices will be mailed on or before May 4th. 5. The Request for Proposal (RFP) for the I nternet Portal Project co-sponsoredby the City, County, Kern COG and Kern Superintendent of Schools is recommended to be cancelled by consent of all the partner agencies. The reason is County budget restrictions and the cost of contracting for that service. The partnership of agencies is still planning to proceed with the portal using in-house staff to perform the technical work. The plan is to phase the project over time as discretionary funds become available. 6. Attached is a response from staff regarding a request for annexation of property. It is a large piece off Rosedale Highway and at this point is only being considered. Honorable Mayor and City Council May 4, 2001 Page 2 7. Public Works has provided a listing of proposed median island enhancement and street maintenance projects. This pertains to the interim budget recently adopted for these two categories. Please review the memo and let me know your thoughts. 8. Tuesday, May 8th will be the second of six Travelin Tunes concerts taking place at Martin Luther King Park at 7:00pm. The band T.O.S.B will be performing old school music until 8:30pm. 9. Enclosed you will find Development Services first run at Ward populations based on new census data. It is preliminary as precinct level data and building permit counts are not yet in. If first numbers match to these, the Council guidelines would require lowering the Ward 7 population and increasing Ward 3. 10. Development Services reports that the landscape ordinance will not be going to Council May 16th. The Planning Commission had some changes and continued the matter to their May 17th meeting. Plans are to have it on the Council agenda in June. 11. Code Enforcement provided a memo regarding the fire of the Old House Restaurant located on the northwest corner of Calloway and Meacham. They indicate it may have been burned to a point where it might not be economically feasible for rehabilitation. 12. The Electrical Energy Task Force met this week and shared information from recent meetings attended by staff. Attached are several documents, which provide some background information. 13. Responses to Council requests are enclosed, as follows: Councilmember Benham · Sidewalk maintenance at the Southeast corner of 19th and D Streets. · Issues presented by Old Town Kern merchants regarding the expansion of skateboard restrictions in their area. · Request for dumpsters in the alley on Wall Street be removed for the next Downtown Street Faire. · Response from the City Attorney's office regarding the issue of concentration of "half-way houses" in Wards 2 and 3. Councilmember Carson · Response from the City Attorney's office regarding the request for staff to re- address a PAC member's request for reimbursement. Councilmember Couch · Approvals from all the environmental agencies regarding the Kern River Freeway. Honorable Mayor and City Council May 4, 2001 Page 3 · Traffic analysis of Brimhall Road between Coffee and Calloway to determine if it should be upgraded from a collector to an arterial. · Response to citizen questions regarding high speed rail. · Letter of support to the California High Speed Rail Authority. Councilmember Hanson · Staff estimate to construct a wall in the outer median island along New Stine Road from Demaret Avenue to Sundale Avenue. · Status of undergrounding and removal of PG&E lines on Stockdale Highway at Gosford Road. Vice Mayor Salvaggio , Cleanup of debris at the northeast corner of South H Street and Wilson Road (County area). · Follow-up regarding the unimproved gap on Akers Road. · Sewer user charges 10. A Council referral asked if there was an issue with the ^ME Church. Like the other property owners, there has been contact and information exchange. All issues have not yet been worked out in final form - concepts of what they want to do have been agreed to. Ray Olmscheid will be down next week to continue discussions with them. cc: Department Heads Pam McCarthy, City Clerk Trudy Slater, Administrative Analyst 05/03/01 TH~ 15:41 FAX 661 868 3190 Kern CA0 [~001 Kern County'Administrative Office County Administr~Uve Center 1115 Trux~n Avenue, fifth Floor * Bakersfield, CA 93301-463g SCOT[ E. JONES Telephone 661-868-3198 * FAX 661.868.3190 * TTY Relay 800-735-2929 Count),Adminis~raave Officer May 3, 2001 . 'Alan Tandy, City Manager City of Bakersfield 1501 Truxtun Avenue Bakersfield~CA 93301 Dear ~ In response to the CitY's re. quest that the County assist in the City's proposed baseball stadium's construction cost, the Board of Supervisors approved a $200,000 contribution from Community Development Block Grant (CDBG) funds. Although these funds cannot be used directly for the baseball stadium project, the Board approved making ~em available to the City for its use in offsetting thc cost of another project. The Board's' approval of this contribution is contingent on the following requirements: 1. That the City approves constructing a baseball stadium; 2. That the funds are used for a project that meets all of the laws, rogulations, and requirements related to the expenditure of CDBG funds; and 3. That both the Board of Supervisors and thc City Council approve the project for which the funds are to be expended. I look forward to working with you to identify a suitable, CDBG project. Sincerely, Scott E. lon~ County Administrative Officer .qF_J/ACK/stadcdbgat cc: David Price, rtl', Resource Management Agency March/April 2001 Volume 2, Issue 16 FAMILY FOUNDATION, INC. The Mission of the Hogan Family Foundation is to promote a greater understanding of the KUGEL COMES TO BAKERSFIELD importance of travel and tourism within our society and the world viewed by more than 100,000 The sphere is Labrador Light as a whole by creating and travelers annually. On Friday, Granite and weighs 17,500 operating educational, Marchl6, Ed, Lynn and Chris pounds. The base stone is humanitarian, and civic-minded Hogan presided over a dedica- Belfast Black Granite and programs that encourage tion ceremony at the Amtrak weighs 10,934 pounds~ The meaningful communication Station alongwith Mayor Kugel spins on a very thin film between persons of all cultures. Harvey Hall and members of of water - only eight thou- the Bakersfield City Council. sands of an inch. A water jet rotates the sphere on an axis The Kugel is a polished sphere that approximates the earth's Kugel Comes to 1 of granite, depicting a world tilt. The sculpture is interac- Bakersfield The Hogan Family Foundation globe. It revolves 360 degrees five in that even a small child have presented a gift of a in all directions and actually can rotate the globe. Angel Flight Penguin 1 "Kugel" to the citizens of floats on a thin film of water, Classic Bakersfield, California in rec- creating a monumental design '~ . LMU Program 2 ognition of the importance of feature that commands atten-_ ,. : ~ travel and tourism to our tion. "Kugel" is the German Students for Habitat for 3 world. This impressive water word for sphere or ball, aptly Humanity sculpture has a permanent describing the sculpture that Garden Stones are Hot! 3 home at the entrance to the was custom made in Germany. new Amtrak Station in It has a diameter of 180 centi- UK to US Travel 4 Bakersfield where it will be meters or 5 feet, 10 7/8 inches. (Continued on page 2) ANGEL FLIGHT ANNUAL PENGUIN CLASSIC Larry Coulson Education Coordinator In March, Ed, Lynn and Chris Hogan, accom- programs. Ed Hogan even participated in the LACoulson@HoganFoundation.org panied by foundation representatives Christina "Penguin Walk" to raise money for the event, Hunter and Dale Cowgill, flew to Virginia walking a brisk 2 miles along the beach with a Marianne Coulson Beach, Virginia to show then support for Angel backdrop of the crashing waves of the Adantic Education Coordinator Mcoulson@HoganFoundation. org Flight America. The annual fundraiser known Ocean and temperatures in the high 30's. as the Penguin Classic takes place each year on Dale N. Cowgill the Boardwalk in frigid temperatures and in- ' ~-"~¢-' Public Affairs/Development Coordinator dudes a mulhtude of entertaining events. DNCowgill @ HoganFoundation. org Elaine M. Hague Impressive ice carvings lined the Boardwalk Docent Program Coordinator along with the World's Largest Snow Cone and EMHague@HoganFoundation. org intricate sandcastles of Angel Flight planes. Christina V. Hunter Cheerleaders from local high schools showed Program Director their support for the event while then energy CVHunter@HoganFoundation.org provided warmth for others. A very profes- sional magic show also drew large crowds for Kevln A. Laack Research and University Programs what proves to be a very successful event each KALaack@HoganFoundation. org year and helps raise money to support AFA (Continued on page 3) 0u -' Ma h/Ap r WOrld : rc ril I Marketing Travel and Tourism Management at LMU The Ed and Lynn Hogan Pro- chosen field. To receive a copy gram's current status and to gram in Travel and Tourism at of the brochure, please call the continue planning for its future Loyola Marymount University Foundation offices at (805) 744- success. recently passed another mile- 6226. stone with the publication of its As the Program's inaugural class first promotional brochure. This prepares to embark on their stud- full-color, 16-page piece intro- les in the fall, the Board and the duces prospective students and LMU leadership are focusing not other interested parties to all only on the upcoming academic aspects of the Program including year but also on years to come. its mission, curriculum, faculty One of the major tasks at hand director, scholarship opportuni- is funding a merit-based scholar- ties, and advisory board. Readers ship program for the best and also receive an overview of the the brightest of the Program's travel industry's diverse range students. The Board hopes that of exciting career opportunities. $155,000 will be distributed in the form Of scholarships to Through this four-year Program, worthy Travel and Tourism business students can earn a Management students each year. Bachelor of Business Administra- Corporate sponsors are already · tion (B.B.A.) degree with a con- LMU Program Brochure being solicited. Prospective centration in Travel and Tourism donors are encouraged to call 'lglaria-gementT"N~-fi-b-fiTih'T~s-TtU¥ o-n--xbTil-67-20i)'~TXhT-Bo-fiTd~f'--- ~h-CFiSWn-d~~fi~e~a-t '(80'5) dents may earn a minor in Travel Advisors for the Ed and Lynn 744-6226 for more information. and Tourism Management along Hogan Program in Travel and with a Bachelor's degree in their Tourism met to assess the Pro- ("Kugel" continued from page 1) ness of how travel can bring people Price, former Mayor of Bakersfield, The Kugel was chosen by the Ho- together from all parts of the world who was instrumental in bringing gans as a symbol of the emerging and also serve to remind people the Kugel to Bakersfield. City global society and the impact of that travel and tourism is the great- Council woman, Sue Benham, as travel on world peace and prosper- est peacetime economic engine that well as Pat DeMond and Bruce ity. "We hope the Kugel will help the world has ever known," said Freeman of Castle and Cooke were to create a greater sense of aware- Ed Hogan. "My wife Lynn and I, present. City Public Works direc- and my daughter Chris, consider it tot, Arnold Ramming, was the MC an honor to dedicate this beautiful for the ceremony and entertain- and important sculpture to the citi- ment was provided by representa- zens of Bakersfield. It will stand rives of the South Valley Sound as a legacy to the travel and tour- Chorus, part of the international ism industry which has given so women's singing group, "Sweet much to the world." Adelines." Foundation representa- tives, Christina Hunter and Dale The Hogans feel an affinity for the Cowgill, also attended the event citizens of Bakersfield since their that received local media coverage decision to locate an office for in the Bakersfield area. their Pleasant Holidays business in Lynn, Chris and Ed Hogan the city a few years ago. Also at- tending the ceremony were Bob t Our World Volume 2, Issue 16 HOGAN ENTREPRENEURIAL LEADERSHIP STUDENTS TO BUILD HABITAT HOUSE Twenty students from the new Gonzaga University Hogan on Feb. 24 and will participate again on April 7." Entrepreneurial Leadership Program will take part in building a Habitat for Humanity house from 8:30 a.m.-3:30 p.m., Satur- The Hogan Family Foundation sponsors the entrepreneurial day, April 7, at the site located at 523 S. Haven St., in Spokane, leadership program at GU, a focused course of study for tal- ;Washington. Paul Bullet, Director of the program and the ented students majoring in business, engineering, and the arts Kinsey M. Robinson Professor in the Gonzaga University and sciences. By nurturing future entrepreneurs, the Hogan School of Business Administration, said there exists a popular family hopes to inspire in Gonzaga's students, and the business notion that entrepreneurs do not care about the Common good world, the values of innovation, leadership and lifelong educa- and are concerned only about amassing their own personal tion. For more information, call Anna Kleppert, the Hogan fortune. "One of the goals of the Hogan Program is to dispel student coordinator of the event, at (509) 323-4915. More :this common perception of entrepreneurs and to develop entre- information about the Hogan Entrepreneurial Leadership Pro- preneurial leaders for the common good," Bullet said. "Our gram can be found at the website www.gonzagaentrepreneur. Hogan students initiated this Habitat project and participated com. ("PenguinClassic" continuedfrompageThel) day was capped off with an ~~-~~~~~~~ emotiohal banquet and awards ~ ceremony celebrating the many he- Gardens of the World roes of this worthy organization Remembrance Stones are Hot! that provides charitable medical air~ transportation for Virginia and the · nation. The Hogan Family was As the Foundation continues in its efforts to' with the f'mst annual raise community awareness of the Gardens of for.their the World within the W'esfli/lie dedication and contribution to the O~,~_//Oaks Communities, the fundraising efforts are mission of Angel Flight. During the past year the Hogan Angel proving to be very successful. To date, we have raised over $40,000 with the sale of personal- Flight Program has donated more ized stones and garden bench dedications. .-~ than $325,000 in airline tickets and transported over 350 patients and Th ff, t tm th th u f al _~Q~ ee or con' ueswi eobjec'veo - their escorts. The Foundation lowing the citizens of the area to feel like they Angel Flight Bear serves as a safety net for the group, delights AFA patient providing commercial air transpor- are a part of this very special place. The funds .  raised will be used to provide special programs tation when there is no alternative, within the park following the Grand Opening The evening also saluted several of the volunteer pilots who in early October of this year. The deadline · donate their time and airplanes to assist with the transportation ~ for stones orders is May 15, so call now for ~ of th'ese in medical need and unable to afford the high cost of your personalized stone or bench. travel. Congressman Ed Schrock of Virginia was the guest speaker at ' ~' ~ ~:_i ~! ¢"~ ~ ~ the event and spoke eloqukntly about his commitment to ,~ i~~~ support the mission of AFA and bring the attention of the federal government to the effort. Board Members of AFA~n~' ~'~ and Mercy Medical Airlift all attended banquet and gave their -'x~ ~ i~ financial support by bidding on a variety of auction items, including a trip to Hawaii donated by Pleasant Holidays. The effort to raise funds, as always, included the sale of the Angel ~Q[5~ Flight bears, an adorable stuffed pilot bear complete with gog- ~ Patron at Westlake Village street fair gles and a leather flight jacket. The bears sell for $20 and are available through the AFA web site, w ww.angelflightbears.org. NON PROFIT ORG. U.S. POSTAGE PAID Thousand Oaks, CA Permit #858 The Hogan Family Foundation 2426 Townsgate Road, Suite 700 Westlake Village, CA 91361 Phone: (805) 744-6226 Fax~ (805)"744-6209 www.hoganfoundation.org Mr. Alan ~Tandy City Of Bakersfield 1501 Truxtun Ave Bakersfield CA 93301-5201 lhh.,Ih,,Ihlh,,,,,Ihhh,,hllh,,,,,lllh~~~~ MAY =2 C!TY MANAGEW$ OFFICE -. tiK to ti'Iii. Travel Did you know. I ~,~l~-'~? ' ~~ " The United States has vast landscapes, intere~fng site? O_. and entertainment opportunities. It's no wonder why v~e~ ~ ..Acc0rding to the TIA's/atest-: Americans .10ye to travel to other parts o'f the country. ~ '~ forecasts, total U.S. resident person-trips However, that's just one piece of the puzzle. Travel .by _'~ are projected to reach nearly foreigners to the Unit-ed States, particularly the.United ~ Kingdom, contributes greatly to our t0uris~m revenue, ff-~: ...Business travelTncreased 2.3 percent According'the UK-Office of'National-Statistics 2000' 0~ during I YgY, while pleasure travel rose Report, the United Stat~s is the flUmber destination f6r a::i O. 3 percent? · ' ' 10ng-haul destinations, or non-Europe_an destinations,' for British travelers. As'a matter of fact, 4.3 million Brit- ish visitors came to the united States in 19~9. Mo~e ~then ...International travelers to the United half visited for holiday purposes, xehile others'came tO ~n States totaled nearly 47. 0 million during . visit friends and family. Other ~op travel destinatibns for I~ ! 999 ? This represented an increase of !. UK residents include Africa and the Middle East, the .~ percent from ! 998. Caribbean, Canada and-Australia/New Zealand. While in the United States, the number one activity for - e~.. ...In 1999, U.S. resident traveler spending ~No~--toQBritish travelerS~uri~fising,tendS.~gn ~id_ei~_-g. t4h.et° be visiting tyPjcal-Bk4_tishtheme o~ amusementclimate.. ~~ increased ·increasean estimated 5. ! percent to parks.' Other top activities include sightseeing-in dries, :~ $445.6 billion ?. Gsitin historical sites, and enjoyin sun and water sorts ~g ........ g _ - _.p -~i ... The forecast for_the 2000 report is ex- Iri-i999 iilone, ~he:UK-travel masrk~t in. the;U.S.:g~ne~?ated' 'tJ: pected to even faster (+6.7%)? ove~$5 _billibn i_n spending in-the u:s, with~approxi-~ .- niately_77%_of British travelers ~S~ repeat visitors; the ~ ~ Information for UK tourism article and '~idyou :~sfima~t~d oatconie for 2000 looks just as promising. - - 0 Know" obtained from www. tia. org** _RECEIVED B A K E R S F I E L D iI~A¥-IL~I]I]I PUBLIC WORKS DEPARTMENT C~TY MANAGER'S OF~i MEMORANDUM TO: Alan Tandy, City Manager FROM: (~acques LaRochelle, Interim Public Works Director H DATE: (j April 30, 2001 SUBJECT: PROPOSITION 218 REFUSE FEE HEARING NOTICE Owners of single family homes, duplexes, triplexes, and fourplexes billed on the tax roll will be mailed a notice of a public hearing to be held on June 13, 2001 to consider the proposed increase in the refuse fee of 3.23%. The notices will be mailed via first class postage, as required by law, on or before May 4, 2001. The proposed increases are as follows: Present Rate Proposed Increase Single family homes $139.50/yr $144.00/yr $ 4.50/yr Duplexes $252.48/yr $260.64/yr $ 8.16/yr Triplexes $378.72/yr $390.96/yr $12.24/yr Fourplexes $504.96/yr $521.28/yr $16.32/yr The estimated number of first class notices that will be sent out are broken down as follows: Number of Owners Single family 60,310 Duplexes 1,282 Triplexes 499 Fou rplexes 1,182 Total 63,273 Only the owners of record, as identified by the Kern County Assessor's Office, will receive a notice, since they are the only ones the City is required to provide notice to. In addition, the hearing will be posted in the Bakersfield Californian, which is also required by law. Mjh:\S:~RESIDENTIAL~P ROP218_00*01~Prop218.ATmemo ALAN CHRISTENSEN COUNTY OF KERN ASST. CiTY MANAGER COUNTY ADMINISTRATIVE OFFIi INFORMATION TECHNOLOGY SERVICES DI¥=l-$iO'l'q 1215 Truxtun Avenue 0 ] I:~-~2` P~,~ 2~ Janette D. Pel,, Manager Bakersfield, California 93301 . ' ~ . ~ Information Technology Services 661-868-2000 Phone .,. Scott E. Jones 661-868-2100 Fax County Administrative Officer 800~735-2929 TTY Relay County Administrative Office May 8, 2001 Board of Supervisors County of Kem 1115 Truxtun Ave. "' ~-- Bakersfield, CA 93301 PROPOSED PROJECT FOR DEVELOPING AND MAINTAINING AN INTERNET INFORMATION PORTAL FOR PUBLIC AGENCIES IN KERN COUNTY BACKGROUND On February 20, 2001, the Board approved the Memorandum of Understanding (MOU) for the Internet Information and Technology Program. This MOLl is a partnership between the County of Kern, City. of · Bakersfield, Kern Superintendent of Schools, and Kern Council of Governments. Additionally on that date, the Board approved the issuance of a joint Request for Proposal (RFP) for the design of with thePartnerS listed above. ' ·' .... -:" ...... "':" .... ~'::'~'??'~'?'~"~-~:?~??.'!' ~''. The key elements of the MOU are: 1) mutual interest in developing andmaintaining an Intemet information .... and technology program for public agencies in Kern County; 2) development of a program that will benefit the citizens of Kern County by improving the efficiency of local government and enhancing the economic competitiveness of the region; 3) recognition that public agencies maintain diverse information data bases providing varying public services and that the citizens of Kern County can benefit from a coordinated Internet program; 4) recognition that each agency has individually developed separate Internet sites for public access; and 5) confirmation of the mutual objective of the partners to develop a program that improves ' and enhances local agency services offered to the citizens of Kern County. The RFP for the Internet Portal was issued on February 21, 2001. A pre-proposal meeting was held on March 9, 2001. Due to the volume of questions during this meeting, the Portal committee realized an addendum to the RFP clarifying the scope of work and provider experience requirements was necessary. The addendum modified the scope of work into phases so Providers could cost the project based on components. Since there was no predefined budget for this project, the committee believed a phased approach would provide some flexibility to the Portal implementation if budget became an issue. R F RRAL At the March 19, 2001 joint Board of Supervisors/Bakersfield City Council·meeting, a letter was delivered to the City and County expressing concerns regarding the RFP process for the Portal project. ;A r~ferral was made to the City Attorney, County Counsel, and City and County staff to issue a joint response to the concerns expressed relative to commercial advertising. This project has been on hold since this date awaiting staff response. The addendum has been drafted, RFP modified, and all pre-proposal questions have been answered but none of this information has been issued to the Providers. RESPONSE Both the City Attorney and County Counsel have concluded that the Government Code does not preclude either the City or County from placing advertising and commercial links on a web site (Attachm.e..nt A and B). Thus this issue is a policy issue, not a legal one. The problem with opening up the Portal to include commercial links, is that it would have to be made available to all interested advertisers and the Agencies would not be able to legally exert any control over questionable or inappropriate content. Even though advertising and commercial links are legal, it is recommended that a cautious approach be instituted for the Kern Government Services Internet Portal regarding their use. The Internet is relatively new and many of these legal issues have yet to be resolved. It is recommended that the City Attorney and County Counsel continue to monitor the legal issues and opinions regarding advertising and commercial link usage on the Internet. CONSIDERATIONS Several developments have occurred since the Kern Government Services Internet Portal Request For Information (issued September 28, 2000) and the Request for Proposal (issued February 21,2001) were developed and released. County staff has received training in Web development. County staff have successfully redesigned and implemented a new County home page. It is more service oriented, easier to navigate, and presents a more professional look and feel. Additionally, several online applications have been developed: 1) Online Job Application - allows potential employees the ability to fill out and submit job applications online; 2) Event Calendar - provides the public with a list of countywide eventS. ~'Information includes: dates, times, detail information, locations, links to event related sites, direCtions~:and ~ps'~i'the event;-: 3) Capital and Major. Maintenance Project.TraCMng System -:alloWS "C6~;~Bqfi~ifi~i:bj ~ct 71!75! information with budgets exceeding $10,000 for the following project cate~isries!',~'~5~ biiilding,' .... ..' parking lot, curb and gutter, demolition, drainage and flood, Park'and ian~lseiiP¢}:"and roads. The public can wew projects by status, supervisorial district, and/or responsible department; and 4) Emergency Medical Services System - allows the County to monitor the activity and staffing levels of each of the county's five hospital emergency departments in order to efficiently direct emergency vehicles. Hospital staff enter a variety of information online. This information is processed and made available immediately to the County and other users of the system. City staff and staff from the Superintendent of Schools have also been exhibiting their skills in Internet development. ' When the Portal RFP was released, no agency had a predefined budget for this project. In light of the energy %risis and the County's serious budget problems, funding for this project has come into jeopardy. PROPOSED ALTERNATIVE The Portal Committee is recommending that the first phase of the Kern Government Services Internet Portal be developed with in-house staff. The initial phase would consist of: 1) a search engine that would regularly crawl the Web sites of the 4 respective agencies and build an index of every word on every page on each agency's site. The indexing would assign high_e_r r. glevance to words that were identified as "keywords". 2) a front-end Portal site that would include: a) a search function that would allow users to enter keywords and search across all 4 agencies. Results would be displayed in order by relevance. b) pages organized by categories/services (rather than by organizational structure) so that a user could choose a category/service and display relevant pages from any of the 4 agencies. This phase will require 2 FTE's (1 County staff and 1 City staff) part-time for 3 weeks, appro/[]mately $2000 annually for the search engine, and $100 annually for the web site address. The web site address · would be KERNGOV (.org, .com, .gov). The City and Kern County have adequate equipment to host the Portal. The Portal would serve as a single Internet location where the public can go to get services and information from the participating agencies. This alternative would satisfy the immediate desire for a government Portal and provide the Portal committee the opportunity to receive feedback from the citizens of Kern County. A new RFP can be issued with a clearer definition of what the citizens want in order to expand the Portal in the future. CANCELLATION OF RFP Because funding could very well become an issue with this project moving forward, the Po~-tal committee recommends canceling the RFP at this time and proceeding with in-house development using existing staff. Vendors spend a considerable amount of time and money responding to RFP's. Ail parties involved would be better served by discontinuing this process now. We realize that many vendors have already invested time into responding to this RFP. However, we believe a prudent course of action would be to suspend the RFP process and proceed with the initial phase &the portal project and not move forward now but wait until the fiscal climate improves. Therefore, IT IS RECOMMENDED that your Board approve the concept of the County of Kern, City of Bakersfield, Superintendent of Schools and Kern Council of Governments developing the initial phase of the · . Kern Government.Internet'Portal with in-house staff; cancel the Kern Government Services Internet ReqiieSt For' Pr6~'Sai;'reeeive and file legal opinions regarding Advertising and Commercial Links oh Internet Portal Web Site from the City Attorney and County Counsel. Sincerely yours, Janette D. Pell, Director Attachments cc: County Administrative Officer County Counsel City Council City Attorney Kern Council of GOvernments Superintendent of Schools · G:~B o ard_ltrs~Bd_ltrs-2001 \porte050801 .doc Attachment "A" CITY ATTORNEY Bari. J. Thiltgen ASSISTANT CITY ATTORNEY Robert M. Shcrfy DEPUTY CITY ATTORNEYS Alan D. Dan/el Allen M. Shaw Walter H. Pon-, Jr. Michael G. Allford Cad Hemandezln CITY OF BAKERSFIELD Janice Scanlan V'~ginia Genna~o OFFICEOFTIIECITYATI'ORNEY .' :: Andrew C. Thomson 1501 TRUXT[JN AVENUE BAKERSFIELD, CA 93301 Lod A. Aguilar TELEPHONE: 661-326-3721 FACSIMILE: 661-852-2020 April 4, 2001 Kirk Perkins, Deputy County Counsel Kern County Counsel 1115 Truxtun Avenue, 4t~ Floor :' Bakersfield, California 93301 RE: Internet Portal Dear Mr. Perkins: ' 'En'~!6~ h~i:~ith',~: Please*'fi:nd]ifi':!i!~/i!~f?~hleiM~'~andu~iwiqibh~ 0ur,0ffi~i!i~ remren~a.,maa~r: :a !s m~un~e~tanmng mat ~un~:!~':amgmg:g lmm ~ver,,me~o. ~:. which Will include the'memo"from the'"~fino: ~ufiseIFa~'~ll as thi~m~m0 ~fi~bfic~':"0"~' :~:e:'::;[~;~ Should you.have any questions ~n~ming the foregoing, please do not hesitate to contact me at your convenience. i Ve~ truly yours, W Cit~ . Depu WHP:alj Enclosure cc: w/encls. Alan Ghdstensen, Assistant City Manager Bob Trammell, MIS Director S:~COU~lL~effem~Pe~l~.lnte ~etPodalMemo.~ - i Q MEMORANDUM April 4, 2001 TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS FROM: BART J. THILTGEN, CITY ATTORNEY A~OR wALTER H. PORR, JR., DEPUTY CITY NEY Subject: INTERNET PORTAL COUNCIL REFERRAL NO. WF0018787 ! 001 (WARD 4) Council Member Couch requested staff work with County Counsel regarding the issue of commercial sites on the internet portal and file a joint report .' As per the` request Of Council Member Couch,.we haVe metwith representatives::of~.~;;~.?.:.~i?:~i:ii:~,:~.: ,.i the Coun[y,.including the. CouniY CoUnsel's .,Office;~:ab~;~i~ii~'~i:~il.~i'R~ ~.! ......... analYsis' s~t fqrth ::h'er...e. in;'~.wh, lie i~based ,upo ndifferenti'st~~(j~6~i~~~~i~~ reaches the same conclus~on'reached b the Court Staffbas~u on-the? ......... At the outset, we would observe that the City's involvement in commercial. advertising can be cbntemplated in two forms. The first form is the City's direct advertising of itself in the market place. The second form is the City's activity in the market place aS a potential source through which others might advertise~ As to the first, Government Code sections 40100, et seq, allow 'the City to "appropriate a sum for a city publicity or advertising fund." The City Charter likewise provides for advertising activity. City Charterl section 13 states: The City may appropriate money for any or all of the following purposes: reception and entertainment of public guests, assistance of public celebrations held by the City, largely to aide or carry on the work of inducing immigration to the City; and generally, for the purpose of advertisinq the City.. (Emphasis added.) Thus, the City may directly engage in advertising itself in the market place. S:~CO U NCIL\Re ferrals\lntemetPortal.~:l HONORABLE MAYOR AND CITY COUNCIL MEMBERS April 4, 2001 Page 2 As to the second form, there are no Government Code, or other Code,..,orovisions which speak to this issue. However, under the extremely broad grant of privileges and powers found in Article 3, Section 12.of the City Charter, it seems clear that the City has the ability to cont"act with those engaged in advertising [heir businesses to provide for such advertising through City resources. However, it must be noted thai should the City engage 'in the provision of commercial advertising on.City property (i.e., on a City-owned or controlled website), that any such provision would have ..to be open to the public in general.and on the same terms _. and Conditions. In other words, because the City would be engaged in a Governmental · function, observation, of First Amendment, Due Process and Equal pr'Otection guarantees would be required. . Thus, if the internet portal is deemed to be City and/or County property or to be controlled by the City. and/or County, then the opening up of the portal to commercial advertisers would have to be even-handed. Legally, the City COuld not refuse some commercial advertisements while accepting others on the basis of content of the message/businessbeing advertised. In other words, the City could not refuse to allow advertisements of an adult-related business and/or re~tdct advertisements t°. Only certain'.:.,: ,:il. ':~' ~r' types of businesses'if[tallowed anv,buSinessto- ' ' rfi_~"'~; .'::; ~: ~." ;':'-:~.~g~' .:~;~ ~.-';'--: ~'-',~ ~. BJT/WHP:alj cc: Alan Tandy, City Manager S:~COU NCIL~Re ferrals\lntemetPodal.wpd Attachment "B" OFFICE OF COUNTY COUNSEL COUNTY OF KERN MEMORANDUM B. C. Barmann, Sr. Kirk B. Peri, ins, Deputy County Counsel General Government Section CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION TO: Members, Board of Supervisors FROM: B.C. Barmann, County'Counsel/ By Kirk B. Perkins, Deputy /~ ~'"- --- DATE: May 8, 2001 SUBJECT: Advertising and Commercial Links on Internet Portal Web Site On March 19 at the Joint Special Meeting, your Board referred to our office the question of whether it is legal .for the County to allow advertising or links to commercial .~,,:. ~:i,~;:?sites on.the InternetPortal ;web~Site..which:iis currently being proposed for..joint.,:~:-~::?~,~ 'devel°pment bY the. C'°u'n~;'ti~'~"(~i~:'~f B~kersfield,' the Kern CounCil of Governmbnts- ,. and the Superintendent of Schools. CONCLUSION Sections 26100 et seq. of the Government Code allow counties to engage in advertising activities intended to promote the county and its resources, and to sell advertising space on county property. It is, therefore, our opinion that the County may legally advertise and use links to commercial sites on a County owned or controlled web site such as the proposed Internet portal. However, prior to taking any such actions, your Board should adopt an ordinance providing for and regulating such an activity as required by Government Code section 26109. DISCUSSION California Government Code sections 26100 - 26110, title 3, division 2, part 2, chapter 11 addresses the issue of advertising by counties. These sections allow coUnties to levy special taxes and expend funds to promote the county and advertise the facilities, activities and resources available to the public within the county. Government Code section 26109 permits a board of supervisors "by ordinance" to "provide for and regulate the sale of advertising space on county real or personal property, for the sole purpose of raising revenue for the county." In addition, Government Code section 26110 allows a board of supervisors "by ordinance" to "provide for the ... commercial uses of county property," including "[t]he licensing, for a fee or other consideration, of the private commercial use of a county name, logo, or other intellectual property," provided the board has first consulted with a "licensing agent" to "develop a viable marketing plan." The complete texts of these sections are attached. It is our understanding that the County, along with the other three agencies involved in the project, will own the portal web site. We believe that allowing advertising or commercial links on the portal web site would constitute a "sale of advertising space on county real or personal property" under section 26109. Section 26109 was enacted in 1982, before the advent of the Internet, but it is our opinion that the phrase "real or personal property" was intended to be read very broadly and that a web site comes within the definition of "personal property". If the section applies, then it req-uires an ordinance providing for and regulating the sale of such advertising. Section 26109 by its terms applies to the sale of advertising "for the sole purpose of raising revenue for the county." The issue raised by eGovEdge involves a link to the Bakersfield.com site. Allowing such a link would not have as its "sole" (or even primary) purpose the raising of revenue for the County. Therefore, it could be argued that this takes the use of Sucha hyperlink~Outside the scope of' section :26109. However, because there is no'CaseilaW'Or~Other~authoritY.'On thisiS~uel, our ?. ...... -:.~. recommendation':W°Uldlb~ thatiif~thleiii~o°cii~tY.:i~ere!;going~'~.t0?all°~!~d~rtiSing~b'r commercial iink§"ibn its'W~b'~i{~i!:~'h~e~:';Bb'~i~i6f SUl~rVisors~..~hObld ::.~'~'~t :ari~, ~di'nance' permitting the sale='0r:use 0f'h~p'~tlinks'0d Cob'nty web sites: BY sO d0in{i;~. there wOuld be no question as to the propriety of the use of such a hyperlink. We must also ask the question of whether or not the sale or use of hyperlinks on a County web site constitutes a "commercial use of county property" under Government Code section 26110. Section 26110(b)(1) provides that a county board of supervisors "may, by ordinance, provide" for the "commercial uses" of county property, including the "licensing, for a fee or other consideration, of the private commercial use of a county name, logo, or other intellectual property" only after developing a marketing plan. It could be argued that selling or allowing the use of hyperlinks on a County web site constitutes the "licensing" for "commercial use" of "intellectual property" (i.e., the web site itself). If so, then the County would be required to first develop a marketing plan under section 26110(a). Our view is that section 26110(b)(1) does not apply to business hyperlinks on a web site. The County would not be giving businesses a license to use the entire Web site for their own purposes; rather, the hyperlinks simply form a part of the web site. As noted above, the sale or use of hyperlinks is more analogous to advertising-bd,~ounty property, and is completely unlike the other licensing arrangements contemplated by section 26110(b)(1). 2 Government Code section 26110(b)(2) permits "[t]he donation of facilities ..., messages, or broadcasts which publicize acknowledgment of a sponsor's financial assistance," provided the "marketing plan" provisions of section 26110(a) have been followed. Permitting a business to have a hyperlink on aCounty web site comes close to falling within this provision in that it is possible to argue that it would be the provision of "facilities, messages, or broadcasts" that publicize a sponsor. However, in our instance the web site will not "publicize acknowledgment" of any "financial assistance." For this reason, we believe the section does not apply. In addition to the legal issues discussed above, there is also a very difficult policy issue involved. If the County allows even one private commercial enterprise to advertise or include a link on a County web site, there will undoubtedly be requests from others to also advertise and/or include links to their sites. Drafting a policy which treats everyone fairly and even-handedly, and still gives the County discretion in deciding whom it will allow to advertise on its site will be a challenge. There are also possible _:- constitutional first amendment issues that could arise once the County begins allowing commercial advertising in that the County may not legally control the conten~ of such advertising, unless proscribed by the Penal Code or other laws. The County has historically resisted allowing any commercial advertising on County property in large part because of these difficult policy and first amendment issues. In conclusion, it is our opinion that Government Code sections 26100 et seq. do authorize the County the allow advertising on a County web site. However, prior to taking any such actions, the Board of Supervisors should adopt an ordinance providing .i for and regulating such an activity as required by Government Code section 26109. KBP:kbp fl62508 01.1010 cc20011669 cc: Janette Pell, Director Information Technology Services 3 B A K E R S F I E L-D May 3, 2001 Alan Tandy · City Manager Michael W. Ki'anyak F.K.M. Associates, LLC 5400 Rosedale Highway Bakersfield, CA 93308 Dear Mr. Kranyak; We are pleased that you are interested in discussing annexation to the City of Bakersfield. We know there are numerous advantages to your property being in the City limits. The following are highlighted service advantages that would impact your property if you were to annex: 1. Street Improvements - Improvements on Mohawk Street and Rosedale Highway would be necessary for your development. We estimate the cost to be about $1,500,000. With City Council approval, City staff would recommend fronting the cost of improvement and construct them as a City capital project. The transportation impact fees generated by your development, paid in full by you at a later date, would reimburse us for a portion of the cost. 2. Sewer Service - The City would be willing to pay, upon City Council approval, to construct a trunk line extension to the north side of Rosedale Highway. This improvement is estimated at $75,000. The remaining cost of sewer improvements would be the responsibility of the owner/developer. 3. Water Improvements - The City would consider installing a water main on Rosedale Highway from the railroad tracks to Mohawk Street at our cost. Again, the construction contract for the improvements would first need to be approved by the City Council. The property owner would install the remaining water system, excluding water wells, and the City would issue a main line refund contract, less the cost for fire flow facilities. The refund contract would extend for 40 years at zero interest.' All other water fees would remain intact. 4. Street Lights - The cost street light operations and maintenance are absorbed by they City. If developing in the unincorporated county, lighting district assessments would be required. The above mentioned benefits along with-other advantages would obviously provide added value to your property, and City staff would recommend the financial incentives to the City Council. We look forward to further pursing the possibilities. Perhaps a meeting with City staff would be helpful. Please give me a call at (661) 326-3751 if you have any questions or would like to arrange a meeting. Sincerely, ALAN CHRISTENSEN Assistant City Manager cc: Alan Tandy, City Manager Jack Hardisty, Development Services Director Gene Bogart, Water Resources Manager Jack LaRochelle, Interim Public Works Director City of Bakersfield · City Manager's Office ° 1501 Truxtun Avenue Bakersfield · California · 93301 (661) 326-3751 · Fax (661) 852-2050 '~'Ow - 3 200t B A K E R S F I E L D ~c:"r¥.~,,-., ........ PUBLIC WORKS DEPARTMENT TO: ^/ALAN TANDY, CITY MANAGER . ...../~ f/~J~CQUES R. LaROCHELLE, FROM:,,~. INTERIM PUBLIC WORKS DIRECTOR DATE: t.,/ April 30, 2001 SUBJECT: Median Island Enhancement Projects Street Maintenance Projects At the City Council meeting March 28th, Council voted additional appropriations for median enhancement and road maintenance projects. Staff is recommending that the following median islands be enhanced with these additional funds: 1 .) Stockdale Highway from Ashe Road to 1000 feet west of California Avenue (Ward 5) 2.) White Lane from Wilson Road to Stine Road (Ward 6) 3.) South H Street from Ming Avenue to La France Street (Ward 7) 4.) Columbus from Panorama Drive to Christmas Tree Lane (Ward 3) The curbing for the median islands for numbers 1 .) And 2.) above is being reconstructed this Summer with Federal funds as part of an intersection widening/resurfacing project through KernCOG. These Federal funds may currently be used only for roadway maintenance and improvements; median island enhancement is not an allowed expenditure. For the road maintenance funds, staff recommends utilizing these funds for work on local streets throughout the City utilizing cape and chip seals to extend the amount of streets that could be included in the project. The' attached listing shows streets that are currently proposed for sealing based on the Pavement Management System and observations of Streets Division personnel. The column displaying "dig outs" indicates streets that require additional reConstructive work in small isolated areas prior to sealing. :. cc: Theodore D. Wright, Civil Engineer IV S:\TE D~2001memo\04300 la5.wpd Street Limits Ward From: To: T Street 1st 2nd 1 dig outs Kern Street Pamela East End 1 Lois Lane S.Union Pamela 1 Pamela St Lois Ln Pacheco 1 Arena Way Cantleberry. East End 1 Cantleberry Lane Belle Terrace North End 1 'N' Street California ~,ve 4th 1 'T' Street California Ave 4th 1 Sunset Ave 'C' St Oak St 1 R St 23rd 24th 2 V Street 3rd Bill 2 Valleyview Eastview Incline 3 Fairway St Andrews Greenfair 3 dig outs Fai~ Oaks Oak Tree Royal Oak · 3 dig outs Del Monte Hinsdale Ridgemoor 3 Camino Del Oeste Kroll Way Las Cruces 5 Capella Court West End Edmonton .. 5 Via Carisma De Colores Las Cruces 5 Camino Del Oeste El Verano Calle Espada 5 Calle Hija Ming North End 5 Calle Corta West End East End 5 Calle Castana Calle Nobleza North End 5 Westdumfries Glenellen East End 5 Pheasant Quailwood Sad~lleback 5 Hasti-Acres Emerson Winners 5 Glencliffe Eastlome . Shetland 5 Las Cruces El Tovar Montalvo , 5 Las Cruces Camino Del Oeste Puerta Oeste 5 QuailwOod Quailridge, .. Skeet 5 Redwing Quailwood Saddleback 5 Dovewood White Alum 6 dig outs Cibola Cibola Court Jerome 6 Curry Court South End Ginger 6 Durrwood Durrwood Lane Dayton 6 Hachita Wilcox East End 6 Socorro Jerome Lily 6 Osborne Russell Fairview 7 dig outs Marcy Fairview Faith 7 dig outs Lenz Court Russell WestEnd 7 dig outs Patti Court West End Hughes Lane " 7 dig outs Teal Hughes El Alisal 7 dig outs Tricia West End Hughes Lane 7 dig outs Evelyn Ivan Merrimac 7 El Potrero South End White 7 dig outs Debby Faith Faxon 7 dig outs Bryn Mawr Drive Acacia Radcliffe 2,3 S:\TED\2001 sprd\sealstreets2.wb3 MEMORANDUM May 1,2001 TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS FROM: JACK HARDISTY, DEVELOPMENT SERVICES DIRECt,,. SUBJECT: WARD POPULATIONS At the last City Council meeting, I was asked if we have census counts for the wards. We have received enough information to determine the 2000 populations of each of the wards. It has not yet been rendered to precincts. I can report this much to you, the City's total population was 247,057. Removing Palm/Olive's population of 3,259 would give us a population of 243,790. The optimum population of each ward would be 34,828. The census indicates the following ward populations: Ward Population 1 33,210 2 34,671 3 31,061. 4 34,414 5 31,764 6 38,456 7 40,222 We expect to receive the state's population estimate sometime in early May. When that arrives we will use it to update the ward populations. Staff is updating the ward reapportionment computer program. I expect we would be able to start working on reapportionment by the middle of June. JH:pah RECE~V~-.D cc: Alan Tandy, City Manager p:~corres~, ~,~ , 2001 CITY MANAGER'S MEMORANDUM May 4, 2001 TO: Alan Tandy, City Manager FROM: Randy Fidler, Chief Code Enforcement Officer~,,~~ SUBJECT: Restaurant Fire at Northwest Comer of Calloway and Meacham The Old House Restaurant which was under construction and progressing very slowly, has burned to the point where it might not be economically feasible for rehabilitation. I am having the owner install a fence around the property for the protection of the residents in the area. I know the residents were not happy about the time frame of the project and had already voiced their concerns with their council member. I was beginning to address this issue when the fire occurred. The fire will probably make matters worse and I have talked to Dennis about the possibility of a summary abatement. We have been in contact with the owner and he is waiting for information from the insurance company. This can sometimes be a problem if the arson investigator believes arson is involved. I will let you know how it is progressing. BAKERSFIELD CITY MANAGER'S OFFICE MEMORANDUM May 4~ 2001 TO: Alan Tandy, City Manager FROM: John W. Stins~ssistant City Manager SUBJECT: Electrical Energy Task Force Update The Electrical Energy Task Force met this week and shared information from recent meetings attended by staff. Assignments were made to collect information regarding baseline usage and to obtain information from other cities such as San Diego and Riverside regarding municipal electrical utilities and electrical energy options. Copies of materials from the American Public Power Association meeting have been distributed to the task force members. Research into several power generation technologies which can be used to generate power for our own electrical loads are being researched and will be looked into by the task force. A meeting of the task force has been set for next Tuesday at 9:00 a.m. in the Risk Management Conference Room with Mary Jane Wilson to explore various electrical oppommities available to the city. Attached are several documents regarding the formation of a public power utility, which provide some background information. Additional materials regarding this topic are being copied and will be sent to the Council next week. S:'~IOHI~I Meano Templa~.wpd WALLACE L. DUNCAN DUNCAN, WEINBERG, GENZER & PEMBROKE, P.C. The Steps In Forming a Public Power Utility: Study, Strategy, Implementation AMERICAN PUBLIC POWER ASSOCIATION CONFERENCE ON TAKING CHARGE: COMMUNITY OPTIONS TO PROTECT ELECTRIC CONSUMERS COSPONSORED BY THE CONSUMER FEDERATION OF AMERICA THE LEAGUE OF CALIFORNIA CITIES AND. THE CALIFORNIA MUNICIPAL UTILITIES ASSOCIATION April 23-24, 2001 Sacramento Hilton-Arden West Sacramento, California The Steps In Forming a Public Power Utility: Study, Strategy. Implementation by Wallace L. Duncan Duncan, Weinberg, Genzer & Pembroke, P.C. Obviously, based upon the impressive turnout at this conference and others I have attended in other parts of the Country, there is enormous interest in and curiosity about public power and about the municipalization of utility facilities in communities throughout the United States. The focus of this Conference is to identify various ways in which a community and the responsible public officials in that community can protect electric consumers in this period of widespread change in the electric power industry. This panel will focus on one of the options open to responsible public officials to protect electric consumers in the community -- the establishment of a municipally-owned electric utility and the construction or acquisition of the electric facilities necessary to serve the community. Of all of the options open to a community to protect electric consumers, the formation and establishment of a municipal utility is the most direct, the most drastic, the most expensive, the most controversial and possibly the most challenging option available. For the most part, the more than 2000 existing municipal systems in the United States, including those few that have been formed in the last twenty years, are tremendously successful. Operating on a not-for-profit basis with access to preference power and the availability of low cost municipal bond financing, publicly-owned systems, as a rule, provide reliable and efficient service at rates which are dramatically lower than those offered by their investor-owned counterparts. Given the track record of publicly-owned electric systems and the obvious advantages to electric consumers located in municipal electric service areas, we must ask the obvious question: Why are so few new municipal electric utilities formed? In 1996, Coopers & Lybrand performed a comPrehensive study of electric municipalization and published its findings which showed that, despite the incentives for municipalization provided by the Energy Policy Act of 1992 and implementation of the Federal Energy Regulatory Commission's Open Access Transmission Policy, only two new municipal utilities have been formed since 1992 (Broken Bow, Oklahoma and Bozruh, Connecticut. The Coopers & Lybrand study examined dozens of current or past efforts at municipalization and documented the defeat of many of those proposals. Municipalization efforts in New York State demonstrate that, while interest in municipalization is abundant and strong, few communities ever succeed in their effort to municipalize their local electric systems. Our Firm has performed a dozen leghl feasibility studies /'or communities in New York State and for the County of Westchester. And, there are currently twenty-four active municipalization efforts in progress in New York alone. Yet, in the past 50 years, despite the availability of low-cost preference power from the Niagara Power Project and the existence of favorable State laws governing the subjects of municipalization and condemnation, only two communities have succeeded in forming new publicly-owned systems. In 1977, the City of Sherrill, New York, acquired the electric distribution system of Sherrill- Kenwood Power and Light, negotiated an interconnection agreement with Niagara Mohawk Power Corporation and secured an allocation of preference power from the Power Authority of the State of New York to serve its entire load and immediately decreased its electric rates by over 20%. Today, Sherrill's rates are almost half the rates paid by neighboring consumers who' are served by Niagara Mohawk. The Town of Massena, New York (frequently the Poster Child for public power formation), successfully condemned the electric distribution system of Niagara Mohawk in Massena and three neighboring communities and commenced operations in 1981. It took Massena ten years and almost three million in litigation costs before it succeeded. But today, aided by a generous allocation of Niagara Project power from the New York Power Authority, Massena sells power to its 15,000 constituents at rates that are less, by almost half, than those offered by Niagara Mohawk Power Corporation in neighboring communities. Given the enormous success of those communities that have succeeded at municipalization, one would think that more communities would follow the example. History teaches, however, that this simply has not happened and the defeat or failure of many other attempts tends to show why so few communities ever succeed in forming a new municipal utility. Having been through the municipalization process a dozen times or more, including the successful efforts by Sherrill and Massena, New York, I feel strongly that the success or failure of the effort depends heavily on the understanding, by responsible public officials, of the'entire process of municipalization and a full understanding of the legal, financial and economic consequences and opportunities inherent in the takeover of the electric system in the community. In the final analysis, it will be the understanding, by responsible public officials, of the process and a strong commitment to follow through with each step in the municipalization process if the municipalization project is to succeed. Cathy Fogel, Gene Carton and I are here to work you through the steps toward municipalization and give you a broad overview of the process and some observations on the pitfalls which have led to the failure of past efforts at municipalization. Plantine the Seek The impetus for municipalization may come from several sources. In most cases, the idea is generated by a proactive Mayor, City Counsel or Town Board looking for constructive ways to enhance and improve the community or bring economic benefits to the constituency. Frequently, the initial interest is sponsored by individuals, special interest groups or by grass roots organizations within the community which petitions or urge local officials to conduct an investigation o£the alternatives for essential public services, including public utility service. In New York, the availability of low cost preference power initially sparked interest in municipalization. In Massena, for example, a grass roots effort led, ironically, by the local chapter of the International Brotherhood of Electric Workers, led the Massena Village and Town Boards to conduct a feasibility study on municipalization. In California, the current spate of interest in municipalization stems from the quantum increases in the electric rates of the three investor-owned utilities, their failure to plan and build adequate resources, the failing reliability of power supply, an ill-conceived electric industry restructuring plan, and the recent bankruptcy of Pacific Gas and Electric Company and financial plight o£both Southern California Edison and San Diego Gas & Electric Company. I am personally aware of over thirty communities in California which are currently in the process of examining alternatives, including some form of municipalization.. The Feasibility Study Irrespective of how the matter of municipalization becomes an issue in the community, it is incumbent on responsible public officials to address the matter expeditiously and with the assistance of qualified professional consultants to guide the community through the municipalization thicket. I am firmly of the view that the success or failure of a municipalization effort will hinge to a great extent, on the strength or weakness of the initial feasibility study. If responsible public officials decide to proceed with an investigation of municipal utility ownership, they should immediately seek the necessary authorization and funding for a comprehensive feasibility study. Since municipalization is an interdisciplinary effort, we would strongly recommend that the feasibility study include the study of the engineering, legal and financial aspects of municipalization and that, if the engineering, legal and financial studies are separately commissioned and authorized, that they be conducted in the same time frame and that adequate provision is made to ensure that the community's engineering, legal and financial Consultants consult and work closely with one another and that they coordinate the preparation of their findings and conclusions. Although we strongly recommend that the feasibility study include engineering, · legal and financial considerations in a single document, I have set forth the basic requirements for each aspect of the study separately. A. Engineering Study The engineering study should be conducted and prepared by a qualified electric engineering firm, preferable one that is fully familiar with the utility facilities and operatiOn of the incumbent utility. Since the engineering firm will likely be called upon to furnish expert witnesses and qualified appraisers to assist and testify in any subsequent regulatory or condemnation proceedings, the selection of the engineering consultant should be made with this requirement in mind. At a minimum, the engineering study should include a full analysis of the following subjects: 1. Identification of facilities to be acquired or constructed as part of the - establishment of a new municipal electric utility This portion of the engineering study will identify the existing facilities of the incumbent utility which must be acquired by negotiation or purchase. A full inventorY of the existing system should be included, together with the best information available as to the depreciated net book value of the facilities on the books of the incumbent utility. To a large extent, these records are publicly available from the local tax records or from the State public utilties commission and Federal Energy Regulatory Commission. Since the incumbent utility's net book value of its facilities will be an important factor in the acquisition or condemnation of facilities, it is essential that these records be complete and fully analyzed in the engineering study. 2. Reconfiguration of the system The engineering consultant must determine and study the alternatives for severing the distribution system to be acquired from the incumbent utility and provides an identification of points of interconnection with the existing transmission grid. As part of this analysis, the engineering consultant should determine whether there are alternatives for interconnecting the new system with alternative resources or suppliers and establishing a transmission path which avoids the use of the transmission system of the incumbent utility. If the new system can be severed from the incumbent utility and interconnected with alternative transmission facilities, the new municipal system may be able to avoid the payment of large amounts of stranded costs, at least under the FERC's stranded cost regulations. The engineering consultant must also identify how power will be metered and delivered at points of interconnection with other utilities and what substation and protective devices must be installed at the points ofinterconnection. 3. Power supply The engineering study should include a comprehensive study of the power supply alternatives available, both short-term and long-term, to the new municipal system. The availability of adequate supplies of electric power at competitive rates is essential to determining whether the project is economically feasible. With the FERC's Open-Access Transmission Policy, a new municipality may look to power suppliers in a broad geographical area in determining both short-term and long-term power supply opportunities. While access to transmission is now generally available under Federal law, the price of transmission must be examined and studied by the engineering consultant in determining the total delivered cost of available resources. As part of this study, the engineering consultant should also identify whether there is any preference power available from Federally-owned or licensed hydroelectric facilities. The engineering study should include an estimate of the cost of power supply and transmission for at least a ten year 15eriod and a projection of the rates which, must be charged by the new municipal system to cover its embedded costs, operating costs and power supply costs. The resulting rate must then be compared with the existing and projected rates offered by the incumbent utility. 4. Appraisal report An essential part of the engineering study will be a qualified appraisal of the facilities to be acquired or built by the new municipal system in establishing its utility. As discussed below, the appraisal and estimate of the cost of acquisition is based on a complex set of assumptions which must be assessed and applied by a qualified appraiser. Since the condemnation laws do not prescribe the methodology for determining just compensation (see discussion below), the appraiser must use a number of different appraisal methods or techniques to arrive at a reliable estimate of the value of the facilities to be acquired or built. In the case of new facilities to be built by the new municipal, the engineering consultant must determine the projected costs of construction. In the case of existing facilities to be acquired by purchase or condemnation, the appraiser must start with the original cost-less depreciation of the facilities per the incumbent utility's books. This will establish the minimum values to the incumbent utility. The appraiser must then apply other appraisal methodologies, including an examination of comparable sales (if any), the application of capitalization of earnings tests, a determination of the "going concern" value, and value of the facilities based on a Reproduction Cost New-less deprecation ("RCNL") method. Generally, the application of the RCNL method will provide the highest value of the facilities to be acquired and establish the outer limit of the exposure to the costs of the acquiring utility. Having examined all indicia of value, the appraiser must then provide his best estimate of the value of the facilities for purposes of formulating an offer to the incumbent utility and for condemnation purposes. In later determining whether to proceed with the acquisition or condemnation, reasponsible public officials must rely on the appraisal report and must know the worst case scenario respecting the potential costs of acquisition. In most cases, the range of values in the appraisal report will show a cross-over point at which the' acquisition becomes economically infeasible. For example, the low end of the appraisal based on OCNLD will almost always show that the acquisition is economically feasible, whereas the application of RCNLD will almost always show that the project is infeasible. In deciding to proceed, responsible public officials must be comfortable with the appraiser's best judgment as to what intermediate value will be acceptable to the seller or awarded by the condemnation authority. 5. Determination of stranded cost Under both Federal law and most state laws, a public utility is entitled to recover its stranded costs from customers that cease to take service from that utility after the utility has invested in facilities to provide utility services. Cathy Fogel will discuss and summarize the current rules respecting the recovery of stranded costs. Suffice it to say here that, while there are some well-established exceptions to the rule, a community which establishes a new utility and ceases to take service form the incumbent utility will be responsible for paying the resulting stranded costs as determined by the state public utilities commission or the FERC. These costs are subject to formulas and can be fairly easily estimated in the feasibility study stage of the project. The FERC and some state commission's have also provided procedures for determining what stranded costs are recoverable by the incumbent utility before the customers leave the system. In all events, stranded costs are an important factor in the acquisition and start-up costs of anew municipal system and:they:must be included in the engineering study and factored into the cost of municipalization. 6. Severance costs In condemnation, the incumbent utility is entitled to the award of reasonable severance costs, i.e., those costs which are necessary to reconfigure the utility's system once the new utility's facilities are severed from the original system. Severance costs may also be awarded for the value of facilities which are not acquired by the new utility, but which are no longer used or useful to the incumbent utility. For example, a substation or utility service center or office building that is not acquired by the municipal utility and is no longer useful to the company because of its location may be included in the incumbent utilities' claim for severance damages. -11: includes not only an examination of the state laws applicable to utility formation and operation, including applicable condemnation laws, it also includes the regulatory procedures and laws, both / state and Federal, which will be implicated in the formation of the new municipal utility. While, in most cases, the City Attorney's office can provide valuable and essential advice in the early stages of the process, most City Attorney's offices are not equipped to perform a comprehensive legal feasibility study which includes all of the subjects identified below. Since the engineering study will be driven, in many respects, by the legal requirements under state, Federal and local law, it is essential that a competent legal consultant be engaged to work directly with the engineer to establish, from the outset, the parameters of the engineering study. A comprehensive legal feasibility study should include the following subjects: 1. Identification of all applicable state and local laws governing the establishment and operation of municipal electric utilities The legal study' should analyze the applicable eminent domain laws and a summary and analysis of all precedent thereunder. The legal study should identify the form of resolution or referenda necessary to authorize the commencement of the acquisition process, together with a specific timeline for notices and public hearings required before the resolution or referendum is adopted by the City Council or submitted to the electorate. 2. Identification of state and Federal stranded cost recovery rules As I have said, the incumbent utility will be entitled, under both Federal and some state laws, to recover those costs which are stranded as a result of the customers leaving the utility's service area and ceasing to take service from that utility. The legal study should identify any applicable laws and regulations pertaining to the recovery of stranded costs and any exceptions thereto. The legal consultant should work closely with the engineering consultant to - 12 - identify and quantify potential stranded costs and to identify alternatives for possibly avoiding the imposition of such costs. 3. Analysis of transmission access The legal study should include an analysis of the applicable Federal laws, regulations and precedent respecting transmission access and transmission costs. While transmission access is generally assured under the FERC's Open Access Transmission Policy, the legal consultant must examine recent precedent and conditions on the system to which the new system will be interconnected. The legal study should identify the procedures required for seeking transmission access and the elements which must bc addressed in the interconnection agreement with the transmitting utility. 4. Rights to preference power and legal aspects of bulk power supply aca_uisition Working with the engineering consultant, the legal consultant should examine the potential for securing available supplies of preference power from Federally-owned or licensed hydroelectric facilities. The legal study should also include a description of the legal alternatives for contracting for power supply resources on a short and long-term basis. While the contracting requirements for power supply are relatively straightforward in most cases, in states like California and New York, in which the electric industry has been restructured, the matter of buying and selling power and getting it delivered is subject to new and complex rules and regulations under both state and Federal laws. These matters should be addressed in detail in the legal study. 5. Principles of valuation Working with the engineering appraiser, the legal consultant must identify and I · discuss the principles of valuation for purposes of negotiation or condemnation and assist the appraiser in determining the reasonable values of the system or the probable outcome of a condemnation proceeding. As part of the legal study, the legal consultant must identify and provide the appraiser with all precedent under the condemnation laws and any comparable sales of utility assets which have been the subject of regulatory approvals or procedures. 6. Regulatory_ jurisdiction, approvals and proceedings While publicly-owned systems are generally unregulated by both state and Federal regulatory agencies, some states do regulate some aspects of municipal utility operations. Some states require approval of the acquisition by the state public utility commission or, as in New York, a certification by the New York Public Service Commission that the acquisition price is not excessive and that the public interest is served by the acquisition. Some states regulate the rates and service provided by municipal utilities. New York, for example, regulates the electric rates of municipal electric utilities except to the extent that the utility purchases power from the New York Power Authority. Since regulation, in any form, affects utility operations and earnings, the legal consultant must provide a comprehensive summary and analysis of the laws which will apply to or impinge upon the operation of the new utility. 7. Form of utility_ structure While the form or structure for the governance of municipal utilities is established under some local or state laws, the community generally has considerable latitude in establishing the governance infrastructure of the municipal utility. To the extent that alternatives are provided, the community must decide whether to establish a separate, stand-alone governing structure (e,g., independent or quasi-independent utility commission) or to allow the utility to be governed directly by the City Council, Town Board or other political entity within the community. - 14- We believe that utility operations by municipal utilities should be as independent as possible and recommend the establishment of a separate, independent or quasi-independent . commission as a means of depoliticizing the operation of the utility. In all events, the legal study should identify the alternatives open to the community for establishing a governance structure which is consistent with state and local laws. 8. Laws applicable to municipal utility financing Generally, municipal utility financing is accomplished through the issuance of tax- exempt revenue bonds or general obligation bonds. At some point during the municipal utility project, the community must engage the services of bond counsel to work with the financial consultant and cognizant public officials to ensure that the community has adequate authority to issue revenue bonds, general obligation bonds or bond anticipation notes. In some states (e.g., New York), municipal utilities may finance only with general obligation bonds unless revenue bond financing is specifically authorized 'by the Legislature. In many states, municipalities are subject to constitutional debt limitations which, depending on the level of outstanding indebtedness, could limit the ability to finance the acquisition of utility facilities and the establishment of a new municipal utility. The legal study should identify and analyze all applicable laws, regulations and limitations on the use and issuance of tax-exempt bond financing and, in consultation with the financial consultant, identify the source of funds available for the project. C. Financial Feasibility_ Study The third major component of the feasibility study is the financial feasibliy component. Obviously, no municipalization project can succeed unless adequate funding is identified and determined to be available as needed to finance the project. We recommend that a competent financial consultant should be engaged from the outset to assist the engineering consultant and the legal consultant in d?termini-ng whether the project, overall, is feasible. Although Gene Carron will have much more to say on the subject of the role of the financial consultant, the financial feasibility should be included in the initial feasibility study and should, in my opinion, address the following matters: 1. State and Federal laws respecting the issuance of tax-exempt bond financing The financial consultant should summarize and describe the laws, principally the Internal Revenue Code and regulations thereunder, which govern the issuance of tax-exempt bonds and the use of the proceeds from those bonds. There are notable restrictions on the use of tax-exempt bonds for utility operations, including the so-called "private-use" rules promulgated by the IRS. Working with the engineering consultant, the financial consultant must examine the facilities to be acquired and the method proposed for operating those facilities in order to determine whether such facilities will qualify forfunding with tax-exempt bond financing. 2. Constitutional Debt limitations The financial consultant must identify any applicable constitutional debt limitations which might impinge upon or limit the community's ability to finance the municipalization project. The report should include a summary of the outstanding indebtedness of the community and an analysis of the remaining borrowing available under any existing debt limitations. 3. Alternatives for financing start-up costs Pending a determination of the final costs of the acquisition or the award in condemnation, the community may incur considerable costs related to the project which cannot be deferred until final financing.' In some states, the municipal law provides for the issuance of bond anticipation notes to provide funding for start up expenses, study costs and consulting fees. The issuance of bond anticipation notes accommodates up-front financing as an alternative to financing the project out of general funds or tax revenues. When the project is finally financed, the bond anticipation notes are retired with the proceeds for the tax-exempt bonds issued to finance the project. The financial consultant should identify whether such alternative financing is available and determine whether there are any applicable restrictions on the use of proceeds from such financing. 4. Projection of financing costs It is the function of the financial consultant to estimate the debt service costs associate with the issuance of notes and bonds issued to finance the project. The debt service ~costs are a major component in the utility's operating budget and must be accurately estimated to complete the feasibility study. The financial consultant must identify all available sources of funding for the project and assist the community in selecting the most feasible and economic means of funding. General Observation Respecting Feasibility Study Since the Feasibility Study is the lease document upon which responsible public officials and the electorate must make an informed decision on the municipalization proposal, the community should be prepared to devote the time and resources to ensure that the Feasibility Study is as thorough and comprehensive as possible. An adequate and defendable Feasibility Study is not inexpensive and a thorough analyses can not be made under unrealistic time limits. Those communities which have elected to cut corners by failing to commission and fund a thorough and professional Feasibility Study or imposing unrealistic deadlines on its completion are among the communities which have failed to implement their project. I should also point out that, when a community engages its Engineering, Legal and Financial consultants, it should make sure that these consultants are available to discuss and defend this work product throughout the entire municipalization process, including the public hearings required in the resolution/referendum process. The incumbent utility will undoubtedly hire a team of experts to develop a rebuttal position and debunk the findings in the Feasibility Study. To cite an example, Niagara Mohawk spent over $3 million on experts and attorneys to defend the loss of a distribution system which had a net book value of only $1.8 million. It is essential that, in presenting its case for municipalization to its constituency, that the sponsoring community have worthy experts to answer questions from the public and respond to the arguments and points made by the incumbent utility and its experts. Step 2. Implementation - The Resolution/Referendum Process Assuming that the Feasibility Study shows that the Project is economically feasible and desirable, responsible public officials (usually the City Council or Town Board) must make a threshold decision whether to attempt to implement the proposal and go forward with an offer to 15urchase and, if necessary, condemnation of the facilities of the incumbent utility. The procedures for implementation vary according to the requirements of state and local statutes. Time and space does not permit a detailed description of the state and local laws which are applicable in all jurisdictions. Generally speaking, however, the process is initiated by resolution, or the functional equivalent under local law, adopted by the City Council or Town Board. The resolution establishes and presents a proposal to the community for public ownership and operation of the electric distribution system and related facilities within and for the community. Again speaking generally, the resolution usually calls for notice and public hearings to advise the electorate of the proposal and of the results of the feasibility study. Since the acquisition will usually call for the issuance of revenue or general obligation bonds which must be authorized by the voters in a general or special election held after'adequate notice and the completion of the public hearing process, a general referendum is generally required. " Public Hearings While the requirements related to the conduct of public hearings will vary from state to state and community to community, it is essential that the electorate have an adequate opportunity to participate and to learn both the upside and the downside risks of municipalization. While some local laws require only informal public hearings with no public debate of issues, the majority encourage or require a full explication of issues and promote the presentation of diverse views, including those of the incumbent utility. In the case of Massena, New York, and a later municipalization effort by Westchester County to municipalize the Con Ed system serving the County, cognizant officials sponsored a series of public debates between the consultants of the Town and County and those of the incumbent utility. The public debate vehicle was particularly effective in informing the electorate and providing them with sufficient information to make an informed choice in casting a vote in the referendum process. In the case of Massena, the referendum was overwhelmingly enacted while, in Westchester County, the measure was narrowly defeated aider a series of debates held throughout the County. The Advocacy Role From a tactical standpoint, the question is frequently asked whether responsible public officials and the City Council or Town Board should openly endorse, support and advocate the municipalization through the referendum process. Based on our experience, we advise our clients to adopt a politically neutral stance once the Feasibility Study is completed and accepted by the City Council or Town Board. Having authorized and funded the Feasibility Study, the elected officials of the community, including the City Council or Town Board should adopt a neutral stance and allow the results of the Feasibility Study to speak for itself and make the engineering, legal and financial consultants available to defend their findings and conclusions and respond to questions by the public or attacks by the incumbent utility and the opposition to the project. In this manner, the municipalization project becomes less politicized and the focus tums to educating the voters of the community to the end that they can make an informed choice. During the resolution/referendum process, it can be anticipated that the incumbent utility Will engage in a massive public relations effort to defeat the municipalization. The utility will use all available media resources (newspaper advertising, radio, TV, Intemet and door to door canvassing and tracting) to defeat the proposal. While individuals and grass roots organizations and special interest groups may take an active role in supporting municipalization, it is important that public officials and the governing body of the community avoid taking an advocacy role in this process. In our opinion, cognizant public officials have fulfilled their obligation to their constituency when they provide a comprehensive Feasiblity Study and make their consultants available to defend the findings and conclusion contained in the Feasibility Study. This is precisely the position adopted by public officials in Massena and Sherrill, New York and the result supports the conclusion that public officials are well advised to take a neutral role once the Feasiblity Study is accepted and presented to the electorate. Step 3. The Referendum Having satisfied the public notice and public hearing requirements under state and local law, the referendum must be submitted to the public in a special or general election. Care must be taken to conform the wording of the referendum to comply with all statutory requirements and to strictly observe the public notice and timing requirements for getting the referendum on the ballot. It is difficult enough to obtain passage of a referendum the first time it is on the ballot. If a successful referendum is set aside for some failure to meet the specific statutory requirements under the municipal law or public utility law, public support is eroded and the delay will afford the incumbent utility and project opponents the time to regroup and launch another campaign to defeat the referendum on the second vote. In Massena, the initial referendum which was passed by a 2/1 majority, was set aside by the New York courts in litigation filed by "taxpayers," but sponsored and financed by Niagara Mohawk, for deficiencies in the wording of the referendum. Remarkably, on the second attempt, the referendum was passed by a 3/1 margin despite a massive public relations blitz by Niagara Mohawk. Step 4. Offer to Purchase 'Most condemnation laws require that the condemning authority make a good faith attempt to acquire the facilities to be condemned by offer and negotiation prior to eXercising the power of eminent domain. Whether required or not, it makes good sense to formulate a good faith offer to purchase, the facilities of the incumbent utility prior to invoking the jurisdiction of the condemnation court or Commissioners of Appraisal. In developing a viable offer, the community should rely on the judgment of is engineering, legal and financial consultants to formulate an offer which fairly compensates the utility for the loss of its facilities, the costs of reconfiguring its system, and any recoverable stranded costs. In formulating the offer, the consultants should start with the OCLD value of the facilities and add amounts for severance damages, stranded costs and possibly going concern value. An additional amount attributed to "litigation risk" or "litigation cost avoidance" might be added to sweeten the offer. It is important that the offer be high enough to avoid immediate rejection and to invite a counteroffer, but low enough to ensure that the project remains within the range of feasibility and is defendable in response to questions raised by the electorate. The offer, even if made a on a confidential basis, will almost certainly establish the floor for the reward in condemnation if the negotiations are not successful. As mentioned above, there are procedures under Federal and some state laws for seeking a pre-acquisition determination of recoverable stranded costs before the facilities are acquired. If stranded costs appear to be a major component in the costs of establishing the system, cognizant officials may elect to seek an early determination by the FERC and/or the State Commission of the amount of stranded costs which are recoverable. Once determined, these costs should be included in the offer. Step 5. Regulatory Approvals I am not aware of any state law which gives the state public utilities commission the authority to approve or disapprove the exercise of the power of eminent domain by a municipality seeking to acquire utility facilities. However, some states require that the public utilities commission ~approve the voluntary sale of facilities by a jurisdictional utility to ensure that the utility receives the full value of its facilities before disposition. New York, for example, requires that the value of the facilities to be sold or condemned be first determined by the Public Service Commission of New York. The Commission has the authority to approve or disapprove the sale of utility facilities by a regulated utility. However, if the facilities are subsequently condemned, the PSC determination'of value is not binding on the condemnation court or the Commissioners of Appraisal. If the acquisition involves the purchase of transmission facilities which are subject to regulation by the FERC, the FERC must approve the sale of such facilities. Step 6, Condemnation If the negotiated acquisition fails, the community must proceed to file a petition for condemnation pursuant to the state condemnation laws. While every state extends the authority to public agencies and municipalities to condemn property, including utility property, the procedures and standards for condemnation are widely disparate. Generally, the petition in condemnation is lodged with the state court having jurisdiction in the district or venue in which the property is located. Many state condemnation laws provide for the Court to conduct the trial, with or without a jury at the choice of the parties, or by Commissioners of Appraisal appointed by the court. In one respect, there is consistency and uniformity in all state and federal condemnation cases -- the standard for the award, by Constitutional mandate, is "just compensation." The Supreme Court has long since determined that, without a Constitutional ~mendment, neither Congress nor a state legislature may prescribe the method for determining what is "just compensation" for a public taking in a condemnation case.x/ 1/ In United States v. New River Collieries Co., 262 U.S. 341, 43 S. Ct. 565, 67 L. Ed. 1014 (1923), the Supreme Court stated "The ascertainment of compensation is a judicial function, and no power exists in any other department of the Government to declare what the compensation shall be or to prescribe any binding rule in that regard." 262 U.S. at 343-44, 43 S. Ct. 567, 67L. Ed. 1014 (citing Monongahela Navigation Co. v. United States, 148 U.S. 312, 327 (1892)). Similarly, Monongahela Navigation Co. held that neither Congress nor the state legislatures (in this case Pennsylvania) could prescribe the method of just compensation: The legislature may determine what private property is needed for public purposes -- that is a question of a political and legislative character; but when the taking has been ordered, then the question of compensation is judicial. It does not rest with the public, taking the property, through Congress or the legislature, its representative, to say what compensation shall be paid, or even what shall be the rule of compensation I have set forth below a brief description of the various methods used for valuing utility facilities in condemnation cases.-~ Suffice it to say here that the condemnation tribunal is required to receive and admit all competent evidence or indicia respecting the value of the condemned facilities. This evidence is generally adduced through a series of expert witnesses qualified to appraise and assess the value of utility properties and to show the comparability and relevance of sales of utility properties by other utilities. Generally, the condemnor will begin with a showing of the net depreciated costs of the condemned facilities and add components for severance damages. The stranded cost component will later be determined by the FERC or the state public utilities commission and it is not a factor in the condemnation case. The condemnee's experts can be expected to rely on a Reproduction Cost New Less Depreciation (RCNLD) methodology which inevitably ascribes the highest value to the condemned facilities. To the extent that comparable sales have occurred, either party may rely upon comparable sales to support their valuation determination. In the final analysis, it is for the condemnation court, jury or Commissioners of Appraisal to sort through the various indicia of value in the record and come to a determination of what is the "just compensation" required to be paid by the condemnor for the facilities designated in the Petition in Condemnation. As with all lower court determinations, the award in condemnation, whether by the court itself or by Commissioners of Appraisal, is subject to review by the appellate courts under applicable appellate procedures. 2/ With acknowledgment and thanks to John W. Wilson of J.W. Wilson & Associates (Washington, D.C.) who prepared and published a thoughtful analysis of this subject entitled "Condemnation Value In Utility Municipalization," a copy of which is attached to my remarks with the permission of Dr. Wilson. - 24 - Valuation Techniques There are a number of valuation techniques used by utility experts and appraisers to value utility properties for the purpose ofratemaking, utility sales and condemnation. Neither time nor space on this panel permits a full discussion of these techniques and I am only marginally qualified to discuss them in any event. To provide an overview of these techniques and to facilitate an understanding of the complexities of utility valuation, I have attached a thoughtful analysis prepared by Dr. John Wilson of J.W. Wilson & Associates, Washington, D.C. Dr. Wilson begins this discussion with an analysis of the purposes and objectives of valuation for purposes of condemnation. He then discusses the regulatory value of facilities, the Income Approach (Capitalization of Earnings), Capital Stock Value, 1R. eproduction Cost New Loss Depreciation and Original Cost, Comparable Sales, Going Concern Value and Severance Damages. -' Step 7. Interim or Temporary Possession Some, but not all, condemnation laws permit the condemnor to take interim or temporary possession of the condemned facilities during the pendency of the condemnation case. Interim or temporary possession is usually the subject of a separate or collateral proceeding initiated upon a petition filed by the condemnor with the condemnation court. In that proceeding, the condemnor must demonstrate its capability to operate the facilities in a safe and reliable manner and show that appropriate arrangements have been made respecting the severance of the system and that interconnections are properly in place by agreement or by order of cognizant regulatory agencies. The condemnor may also be required to post a bond, deposit funds in escrow, or demonstrate its ability to pay the amount awarded in condemnation at the conclusion of the case. Taking interim or temporary possession of the facilities prior to the conclusion of the condemnation award puts the condemnor at risk if the condemnation award is extraordinahly high and renders the project economically infeasible since interim or temporary possession will make it extremely difficult to return the property to the condemnor after taking possession and ' OPerating the facilities. Step 8. Vesting of Title and Commencement of Operations With few exceptions, the title of condemned property will vest in the condemnor when the final award is paid to the condemnor. Some state condemnation laws do provide for a Declaration of Taking procedure under which title to the facilities vests immediately in the condemning authority. In a minority of states, title to the condemned property vests in the condemnor with the filing of the Petition in Condemnation whether or not the condemnor takes immediate possession of the condemned facilities. The immediate vesting of title does complicate matters if, upon a final award, the condemnor .elects not to go forward with the acquisition and seeks to return title to the facilities to the owner. If that does occur, the condemnor, at a minimum, will be expected to reimburse the condemnee for its costs of defending and prosecuting the condemnation case. Once the condemnation process is initiated, the condemnor must simultaneously prepare to take possession of the system and commence operations. During this period, there are a number of important tasks which must be completed before utility operations may commence, including: - Establishment of utility infrastructure, governance, staffing, arrangements for interim financing, purchase of equipment and materials and arrangements for office space, warehousing and service center facilities. Negotiation of all necessary transmission interconnection and power supply contracts or the initiation of proceedings before the FERC to secure transmission rights if they are .not provided on a voluntary basis. Negotiation with the incumbent utility to establish a tentative or target date for the turnover of facilities and the commencement of operations to ensure a seamless transition to public ownership. These negotiations should address the terms and conditions under which the system will remain interconnected (if that is the case) metering, the transfer of customer and system records and diagrams, and the implementation of"Borderline Agreements" and operating agreements to ensure that the separate systems continue to function in a safe and reliable manner. - Installation of all metering, substation and other facilities necessary to accomplish the separation of the systems once operations commence. - Securing all necessary regulatory approvals from cognizant state or federal regulatory agencies. - Arrangements for the issuance and sale of general obligation bonds, revenue bonds, or commercial paper to ensure that funding is available and in place at the time a final award in condemnation is issued. In this phase of the Project, the community may wish to consider implementing utility operation on a transitional basis by engaging the services of a qualified engineering consultant to staffthe utility, recruit and train permanent staff, and address any operational problems which develop during start-up A transition plan worked well for Massena, New York which contracted with its engineering consultant to provide experienced management and operational personnel for approximately one year while permanent staff, including a General Manager, was recruited, trained and became familiar with the system. Conclusion . There you have it -- the eight easy steps to transition from private to public ownership of your local electric utility. As easy as it may sound, the municipalization of an electric utility is not for the faint-hearted or the uncommitted. Regardless of the size of the system, the takeover of utility facilities from the incumbent utility will be expensive, time consuming, controversial and frustrating. Responsible public officials considering a municipalization project should be prepared to "go to War" with the incumbent utility which will oppose and attack the project on every front and will devote resources far beyond the real value of the facilities or system in question. This is a Holy War with the investor-owned segment of the industry and its opposition to public ownership is a deep seated matter of principle that defies rational analysis. Those few hearty and relentless communities that have survived the Holy War and succeeded in implementing their municipalization project now enjoy enormous benefits and 'can take pride that the ratepayers in the community now enjoy substantial and ever-increasing savings as a result of these efforts. In closing, I do want to point out that the current restructuring of the electric power industry will probably change the landscape and the role of public power. I am optimistic that publicly-owned electric systems will survive and thrive in the new competitive market paradigm and that nascent publicly-owned systems will find the road to municipalization smoother and paved with benefits. In California, we have seen the role of the investor-owned change dramatically with the divestiture of a large portion of their thermal generation resources and even their transmission systems. With PG&E in bankruptcy and Edison teetering on the brink, it is not inconceivable that these large utilities will eventually divest themselves of, or lose, their distribution systems as well. These developments should, and obviously have, inspired responsible public officials to take a hard look at municipalization and public ownership. Even a cursory comparison of the rates and service provided by publicly-owned electric systems in California with those now offered by the investor-owned utilities should inspire serious and thoughtful consideration of public ownership. Thank you. ATTACHMENT CONDEMNATION VALUE IN UTILITY MUNICIPALIZATION by J. W. WILSON & ASSOCIATES, INC. ECONOMIC COUNSEL the CORCORAN BUILDING · fOURTH fLOOR 2715 '"M" STREET. N.W. · WASHINGTON. D.C. 20007 CONDEMNATION VALUE IN UTILITY MUNICIPALIZATION by Dr. John W. Wilson Condenmation value is the market value of property -- the price that would be established by willing sellers and willing buyers in a free market. The purpose of condemation is to make the seller whole for the property that is being con- demned. That is, a proper condemnation value is equal to the value which the seller would derive from the property if no condemnation occurred. It Would, of course, be improper to establish a condemnation price that would enrich the seller by more than he would get if no condemnation occurred. The private owners of utility property are authorized to charge rates for utility service that permit them to recover prudent and useful investments that they have made in that property, and provide them with a fair return on the unrecovered portion of their utility property investments. When utility property is taken by condemnation, the utility no longer has the ability to recover either its remaining investment in the property or a return on the unrecovered part of that investment through rates. Since the objective of valuation for condemnation purposes is to compensate the owner whose property_ is being taken on a "make whole" basis, investment recovery and dollar remm amounts are critical in determining an appropriate condemnation value for utility property. While distinct, the methods of rate base and property condemnation valuation, properly applied, should be consistent with each other so that where utility property is taken through condem- nation, the property owners are made whole for the economic value of their property (i.e., what they would have derived from the property absent condemnation). A lower compensation level would be confiscatory. Likewise, an excessive value for condemnation purposes would provide compensation above the mount achievable by the owners were they to retain the property and employ it in the most profitable manner possible. It can be easily seen that under certain specified conditions the two distinct Valuation concepts that are relevant for regulation and condemnation purposes can yield the same result. For example, assume that for rate case purposes it has been determined that certain utility property has an original cost of $1,000,000. Further assume that for rate case purposes this property is depreciated by $200,000 each year for five years to provide for the recovery of the owners' capital investment, and that a fair remm of 15 percent is allowed to be earned each year on the undepreciated net plant balance to compensate the property owners for the use of their capital prior to its recovery. Under these assumptions, the proceeds that the owners will receive (i.e., the remm of his investment through depreciation plus a 15 percent profit on the net balance) are as follows: Rate of Rate D, eaoreciation Total Year Remm Base Profit ,,uiowance Cash Flow 1 .15 x $1,000,000 = $150,000 $ 200,000 $ 350,000 2 .15 x $ 800,000 = $120,000 $ 200,000 $ 320,000 3 .15 x $ 600,000 = $ 90,000 $ 200,000 $ 290,000 4 .15 x $ 400,000 = $ 60,000 $ 200,000 $ 260,000 5 .15 x$ 200,000= $ 30,000 $ 200,000 $ 230,000 Total $450,000 $1,000,000 $1,450,000 What would willing buyers pay and what would willing sellers accept in a free market for the exchange of this property and the associated cash flow.9 The answer depends on the cost or "time value" of money to each party and the extent to which each party expects the actual income stream from this property to track the results shown above. If both buyers and sellers have a 15 percent money cost and both expect that the portrayed income stream will actually occur, buyers would be willing to purchase the' property' and associated capital recovery and profit rights for any price up to $1,000,000 -- but no more. Similarly, sellers would be willing to relinquish the property and associated capital recovery and profit rights for a price of at least $1,000,000 or more. This can be seen mathe- matically by discounting the expected cash flow to its present value at the assumed 15 percent cost of money: $350,000 + $320,000 + $290,000 + $260,000 + $230,000 1.15 (1.15)2 (1.15)3 (1.15)4 (1.15)5 = $304,348 + $241,966 + $190,680 + $148,656 + $114,350 = $1,000,000. Under these assumptions, at any price less than $1,000,000 sellers would be better offkeeping the property (because a present value of $1,000,000 would be -3- realized by keeping it), and at any price above $1,000,000, the cost to buyers would exceed the property's economic value to them (because $1,000,000 is the full present value that they would get as a result of acquiring it). Therefore, $1,000,000 is the only market price at which this transaction would occur between willing buyers and willing sellers. And, given these assumptions, this $1,000,000 market price would also be equal to the property's rate case value. Frequently, of course, the expectations and discount rates of buyers and sellers may differ and, when that occurs, there will either be some range of possible prices at which a mutually agreeable transaction may occur, or there will be no overlap of acceptable prices and therefore no possibility of a mutually acceptable sale. Using this same example and assuming that both parties expectations remain the same but that the buyers' discount rate is 12 percent while the sellers' discount rate remains at 15 percent, willing buyers and willing sellers may arrive at a mutually agreeable transaction at any price in the range of $1,000,000 (the sellers' minimum) and $1,069,761 (the buyers' new maximum given his lower discount rate): $350,000 + $320,000 + $290,000 + $260,000 + $230,000 1.12 (1.12)2 (1.12)3 (1.12)4 (1.12)5 = $312,500 + $255,102 + $206,416 + $165,235 + $130,508 = $1,069,761. As this illustration shows, the rate case value of utility property and its market value will be equal only if the expected rate of return on the property's undepreciated balance is equal to the cost of money and if full capital cost recovery (through allowed depreciation) is expected. If the expected return exceeds the cost of money, market value will exceed rate case value. If the expected return is less than the cost of money, market value will be less than rate case value. Likewise, if it is expected that less than 100 percent of the property's full cost or book value will be recovered (for example, if it is expected that regulators may determine that some portion of the property's cost is excessive and should not be recoverable through rates), then the market value of the property will be less than full book value. The fact that market value will be below book value when investors expect less than full cost recovery, or when they expect earnings rates below the cost of money, is evident in unregulated as well as regulated industries. The reason is that investors do not expect net revenues to be sufficient to recover the full original cost of plant investments and to also provide a remm that is equal to the cost of money on the unrecovered plant balance. Under these conditions, willing buyers and willing sellers exchange property and associated interests in profits and cash flows at market prices that are below book value. On the other hand, in situations where investors expect revenues to be sufficient to recover the total cost of their investments and to provide a rate of -5- return on the unrecovered balance in excess of the cost of capital, willing buyers and willing sellers will set market prices in excess of net book value. For example, say that a business has a net plant value of $1,000,000 that is depreciated at $200,000 per year and, because of a legal product monopoly gained through patented inventions, it is expected that profits will amount to 30 percent of net plant even though money costs and investors' discount rates are 'only half that amount. In that case the market value will be: $500,000 + $440,000 + $380,000 + $320,000 + $260,000 = 1.15 (1.15)2 (1.15)3 (1.15)4 (1.15)~ $434,783 + $332,703 + $249,856 + $182,961 + $129,266 = $1,329,569. This is in contrast to a market value of $890,144 if full capital recovery and only a 10 percent profit rate are expected.~ This method of market value determination, which is sometimes referred to as an "income approach", should be the analytical cornerstone in estimating the fair level of compensation to be paid in cases of utility property condemnation. $300,000 + $280,000 + $260,000 + $240,000 + $220,000 = 1.15 '(1.15)2 (1.15)3 (1.15)" (1.15)5 $260,870 + 211,720 + $170,954 + $137,221 + $109,379 = $890,144. The Income Approach In order to estimate the income or earnings value of property, it is necessary to estimate the cash flow (i.e., profit and capital cost recovery) that the property in question would generate if retained by the original owner as well as the appro- priate discount rate to be used in converting this cash flow to its present value. In most instances involving the condemnation of utility property, full capital cost recovery should be assumed ~, and the appropriate discount rate should be set equal to the utility' s current cost of capital. It is generally reasonable to assume full capital cost recovery (through depreciation) because, absent condemnation, that value would normally be 'realized by the' seller werehe:to retain and continue to operate the utility business. The current cost of capital to the seller is the appropriate discount rate because that is the property owner's value of money. It reflects the property owner's carrying cost (i.e., the discount that he must absorb as a result) of receiving cash in the future rather than at the present time. Consequently, this is the proper rate to use in converting the seller's future cash flow to a present value. An exception to this general rule occurs where a regulatory authority has properly determined to disallow certain plant cost recovery for ratemaking purposes. In that event, the assumption of full capital cost recovery for condemnation purposes would lead to compensation in excess of the full economic value of the property to the seller. By knowing or estimating the seller's discount rate and the cash flow that he would obtain were he to retain the property, one can directly estimate the value of the property to the seller. For example, if plant cost recovery will amount to $100,000 per year for five years and profit will amount to 15 percent of the unrecovered plant balance in each year while the discount rate is 12 percent, the full present value of the property to the seller is: $100,000 + .15($500,000) + $100,000 + .15($400,000) + 1.12 (1.12)2 $100,000 + .15($~00,000) + $100,000 + .15($200,000) + (1.12)3 (1.12)4 $100,000 +.15($100,000) = $534,880.59. (1.12)5 That is the full income .value of the property to the seller because it is the full present value that he would derive from the property if he were to retain ownership of it. Compensation in excess of this amount, as a result of condem- nation, would provide the seller with a greater value than he would receive by retaining the property. By the same token, compensation of a lesser amount would deprive the seller of value that he would obtain absent condenmation. Under a reasonable willing seller test, $534~880.59 is an appropriate price in this hypothetical illustration. A rational seller in a free market would willingly accept this price because he would be no better off by declining it. Put another way, assuming that, absent the property's sale, the owner's best option woUld be to retain it and ultimately obtain a cash.flow with a present value of $534,880.59, it would be irrational for him to refuse a $534,881 sale price. Retaining the property would be of less value. There are, of course, some obvious exceptions to this general nde of rationality, but they do not constitute a reasonable basis for authorizing a higher condemnation price. For example, a utility may fear competitive market entry and therefore decline a fair price, or even take a loss, in order to prevent the estab- lishment of a rival municipally-owned distribution system within its monopolized service area. Such a utility may, in its own self interest, decline a purchase price well in excess of the full earnings value of the property in question simply to preserve its monopoly. A utility might fear that the establishment of a competitive electric utility system in one community could serve as a performance yardstick that would be used by another community to measure and evaluate the utility's own comparative performance. That,..in turn, might ultimately encourage other communities to establish their own independent electric utility systems instead of extending the existing utility's franchises. Facing such circumstances, a utility may be unwilling to accept any reasonable buy-out offer in an effort to preserve its monopoly. But the private value that a condemnee might derive from blocking a condemnation that Could challenge its monopoly is not a reasonable economic basis for establishing a fair condemnation price. It maY also be "rational" for a seller to refuse a price that is equal in value to what he would derive by retaining the property if, as a result of such refusal, the -9- buyer could be forced to offer a higher price. In many condemnation cases involving utility property the buyer has no practical option but to acquire the necessary property from an existing owner or to forego the purpose of the acquisition entirely. In such cases, the seller's refusal to accept a price equal to his value in retaining the property could conceivably force the price up to the buyer's value of acquiring it. Thus a rancher might "rationally", and in his own self interest, refuse a fair price for his ranch land if his refusal could force the State to pay him a much higher price -- say, 'equal to the full economic value of the highway which the State seeks to build. To preclude potential abuses of this type, value in condemnation is properly established based:on'what, the value of the property would be to the seller absent condemnation. That value can be measured directly in terms of the present value of the capital recovery and profit that the owner would derive from its existing electric utility distribution system were it to continue to own and operate that This is called the income method of property valuation, and it is the most system. economically sound approach to use. There are two basic variations of the income method of property valuation: marginal cost analysis and fully distributed average cost analysis. Valuation based on fully distributed average costs, often overstates the value of the system to the owner. This is so because, when a portion of a system is removed, the owner will experience "incremental" or "marginal" cost reductions rather than average cost reductions. Thus, the elimination of a portion of a distribution system will often mean that a vertically integrated utility owner can make incremental reductions in its energy generation. This will be accomplished by cutting back the operations of less efficient generating plants that axe more costly than average to operate. Likewise, it will mean that the future construction of some mount of costly new generation capacity, rather than the lower average cost of existing plants, will be postponable or avoidable. When marginal costs, rather than fully distributed average costs, are assigned to the condemned portion of a system, the resulting rate of return is often below the fully distributed rate of return, and below the utility's cost of capital to the owner. Capital Stock Value An alternative approach to determining the market value of a fu-m' s property and business would be to compare the market value of its capital stock with the book value of the enterprise. Theoretically, the market value of the common stock of a company should reflect the full value that willing buyers and willing sellers place on the entire enterprise, including not only the fu'm's plant value but the full present value of all expected capital recovery, profits and business operations. It should be kept in mind, however, that at least in spot circumstances, current stock prices may give a temporarily distorted view of a company's actual worth. This is so because stock price fluctuations may occur in response to social, political or economic events that have little to do with the -11- inherent value of a business. Over a long enough period, however, and especially if a larger group of comparable businesses are examined, the actual relationship between the market value and book value of common stock will provide useful guidance in determining whether and to what extem a business should be expected to have a going concern value in excess of the book value of its assets. Comparisons of the market and book values of utility stocks show that willing buyers and willing sellers have generally valued utility assets at prices that are somewhat above their net book value. ~o NewAnd Ori inalCost Estimating reproduction cost new less depreciation (RCNLD) is an alternative method of condemnation valuation in unique situations where condemned property has no quantifiable economic data (such as income, comparable sales, or original cost) from which to calculate a fair market value. The RCNLD approach has been recognized as an appropriate approach, for example, in cases involving churches or schools which are not generally Sold in competitive markets and which are not constructed for the primary purpose of producing income. ~ It has also been used from time to time in some jurisdictions as one approach to valuing certain public utility property where superior economic i!~ 3.~/ See O. 744 of an Acre of Land, v. State, 251 A.2d 341, 342 (Del. Super. 1969). valuation data are not available. In such cases, it is generally recognized that RCNLD is deemed to measure the upper limits of probable value. 4_/ Where accurate and valid property records are available, the net book value of Property (i.e., oriQnal cost less depreciation or "0CLD") can be readily ascertained by deducting accrued depreciation from the original recorded cost of acquiring, building, installing and improving the property. Comparable Sales Another method of determining a fair market value is to examine .comparable sales. Unfortunately, other than stockmarket transactions, there are relatively few examples of comparable sales of utility property. Consequently, market value determinations based on direct evidence of comparable property sales have not been common in condemnation cases involVing the taking of utility property, simply because such properly is not commonly bought and sold in free markets. While direct evidence of comparable market transactions is limited and therefore should not be controlling, there are examples of utility property sales between willing market participants which confh'm that the market value of utility ~-/ See Wilmington Housing Authority v. Numbers 312-314 E. Eighth St., 55 Del. 253, 191 A.2d 5 (Super Ct. 1963); and Wilmington Housing Author~ty v. Greater St. John Baptist Church, 291 A.2d (Del. Super. Ct. 1972). property is typically below RCNLD and is in the range of income value. Since willing sellers and willing buyers will establish a market price for a transaction that reflects their respective views of the economic value of the property to be ex- ' changed,-and since a privately owned utility's Profit and cash flow from utility property are determined through the regulatory process on the basis of the pro- perty's rate base value, it is not at all surprising that the market value, net book value and income value of Utility property often tend to be related. Goine Concern Value "Going concern value" can be def'med as the mount by which the value of an operating utility plant with customers and an established revenue base differs from the value of an exactly similar plant ready to. operate, but so situated that the acquisition of customers and revenue is a matter of time. s_j According to this definition, "going concern value" is the amount by which the value of a going concern differs from the value of the concem's physical assets alone. It has been said that this distinction involves "an attempt to divide a thing which is, in its nature, practically indivisible [because] the value of the plant and business is an indivisible gross amount." 6_/ It may be added that this is especially tree with respect to public utility property since the allowed earnings of the business are s_./ See Howard A. Kashman, "Going Concern Value of a Public Utility in Condemnation by a Municipality," Arizona Law Review, Volume 6, page 92, 1964. ~ Appleton Water Works v. l!~ailroad Commission, 154 Wis~ 121, 142 N.W. 476 (1913); } cited in Kashman, 9P. cit:, page 93. - 14- determined by multiplying the fair rate of remm times the value of the utility rate base, which is largely comprised of the depreciated original cost of the public utility plant. While it is often presumed that the value of a going concern will exceed the value of the concern's plant alone and that a willing buyer would therefore be inclined to pay more for a live and deVeloped business, that is not always the case. For example, if potential buyers perceive that a fu-m' s assets are being deployed poorly, the breakup asset value of an enterprise may exceed its value as a going concern. While that is not the typical case, there are some businesses today with net book values in excess of their market values, and there have been a number of recent acquisitions, and reorganizations specifically because going concerns were perceived to be less valuable than the break-up value of their assets. Going concern value is fully encompassed in the income approach discussed above. Under that approach, the projected profit and cash flow values are those that would be generated by a going concern. If alternative valuation methods are used which do not, in themselves, include the full value of a going concern, an increment may be appropriate to reflect the cost of rights of way, records, maps, procedures and other documentation that is essential for a going utility concern. Severance Damages In addition to the value of the condemned property to the seller absent a taking, the determination of appropriate compensation in condemnation requires that consideration be given to the actual and consequential severance damages, ff any, that may be Sustained by the seller as a result of the taking. Such damages may occur where the severance of the taken property from the seller's remaining property, impairs the value of the remaining property or where the taking results in a need to incur additional costs in order to make the remaining property whole. Thus, where condenmafion of a portion of a utility's electric utility distribution system requires the utility to install additional facilities to maintain service to customers in adjacentareas, .the taking may impose, severance costs. Severance damages may be of three types. The first type of severance value relates to the potential loss of business resulting from a partial taking of a franchise; another relates to loss of franchise growth; and the third relates to physical severance. The first two aspects of-severance damages are subsumed within the income value and going concern value of the property, while the third may represent an additional measure of physical severance damages. Utilities generally Possess franchises to distribute electricity in established geographic areas for a specified period of time. The grant of a franchise, however, does not conveY to the recipient the right to charge whatever the market will bear. - 16- Instead, the franchise recipient becomes subject to rate regulation, and that, in mm, determines the income stream expected to be received by owners of utility property and, thus, the value of the property. Through proper compensation for the income and going concern value of the property, the utility owner will usually be fully compensated for the value of this franchise claim. / Increases in sales due to franchise growth that may come about over time involve increases in both revenues and costs. Under the original cost ratemaking standards usually applicable, the owner would be limited to recovery of only its operating expenses, depreciation, and the costs of capital on the unrecovered net bobk value of any property committed to providing increased service~ This amount, is equal to the present value of the capital expenditures and operating costs that the owner would have to incur for expansion purposes. Especially in view of prevailing and reasonable precedents that condemnation compensation should not be allowed on the basis of remote, imaginary, conjectural or theoretcal future developments, it is clear that only in those circumstances where franchise growth is expected to yield a net profit rate in excess of the cost of capital is there an additional future franchise growth value for which the owners of the existing utility franchise should be compensated. Even where future franchise growth value exists, it should be offset, for condenmation purposes, by any new values that condemnation may enable the seller to obtain. For example, when a partial taking of a business provides the seller with cash proceeds that would otherwise not occur, the seller will be able to invest .those funds and derive proceeds that would not otherwise have occurred. While it is a matter of conjecture as to how wisely and lucratively the original owners may be able to employ the funds derived from condemnation, it is entirely reasonable to assume that they should be able to do at least as well as the prevailing return on U.S. government bonds, which axe also generally less risky than corresponding investments in utility property. It is often explicitly recognized in State law that the benefits and advantages gained by the seller as a result of the condemnation taking .should be set off against whatever loss is sustained. See State ex rel. State Hwy. Dept. v. Moms, 47 Del. 477 A.2d 523 (Super. Ct. 1952). Summary The objective of valuation in cases involving the condemnation of utility property is to compensate the owner whose property is being taken on a "make Whole" basis. Thus, the proper value is the mount which the seller would reasonably expect to derive from the property if no condemnation occurred. While the value to the buyer may exceed this amount, under competitive circumstances (and, therefore, in condemnation) the relevant issue is value to the seller. - 18 - The income approach, which estimates the projected present value of net proceeds to the seller (absent condemnation) is typically the most reasonable and accurate method of utility property valuation. In some cases other approaches such as comparable sales, RCNLD, OCLD or capital stock value may provide additional useful information. Also, going concern value and severance damage considerations may produce additional values that must be considered in some utility property condemnation cases. Because of the role of regulation and the resulting relationship between profit, capital recovery, and the net book value of utility distribution plant, it is not surprising that utility rate base valuation often bears a close relationship to condemnation valuation.measures based on the income, comparable sales, and capital stock valuation methods. - 19- FORMATION OF MUNICIPAL'ELECTRIC UTILITIES: A STRATEGIC APPROACH Presented by J. Cathy Fogel Verner, Liipfert, Bernhard, McPherson and Hand, Chtd. 901 15th Street NW Washington, D.C. 20005-2301 202-371-6044 TAKING CHARGE: COMMUNITY OPTIONS TO PROTECT ELECTRIC CONSUMERS Sponsored by American Public Power Association April 23-24, 2001 Sacramento Hilton-Arden West Sacramento, California FORMATION OF MUNICIPAL ELECTRIC UTILITIES: A STRATEGIC APPROA CH Presented by J. Cathy Fogel~ A good recipe will include the best ingredients, but it's the flair of the chef that makes it a success. The required mix for successfully forming a municipal utility follows the same pattern. Necessary elements include: (1) dedicated, intelligent and well- informed City officials and management; (2) excellent planning and organization; (3) a willing Iow-cost power supplier; (4) a current retail utility not favorably viewed by the local citizens, (5) a strc"2 desire for local control of the electric utility; (6) assist2~ce and leadership from knowledgeable advisors; and, most importantly, (7) a united and consistent political will to proceed. ISSUES IN FORMATION OF MUNICIPALLY-OWNED ELECTRIC UTILITIES Communities contemplating formation of municipal electric utilities are often dissatisfied with the rates or service of their local utility. Some municipalities seek local control of their electric futures. A City's goal is often not formation of a municipal system, but rate reductions, service improvements or local autonomy. It is generally only after unsuccessful negotiations - or attempts to negotiate - that a City begins the normally arduous task of forming a municipal utility. ~ Ms. Fogel, a partner at Verner, Liipfert, Bernhard, McPherson and Hand, has practiced utility law for almost twenty-four years. Prior to becoming an attorney, she was on the Legislative Staff of the American Public Power Association for five years. -2- There are a number of threshold issues that must be examined prior to proceeding with a new municipal utility. Some of them are legal, some engineering and economic and some a combination. Probably the single most important issue is the project's, political feasibility. Each must be kept in mind when determining whether to proceed. The following discussion touches on some of the major issues confronting a municipality seeking to form a city-owned system. . Buy vs. Build One threshold issue in establishing a city-owned system is whether the City plans to purchase the existing distribution system (through voluntary agreement or condemnation) or to construct a new system. Massena, New York purchased its utility, '... .... while Clyde, Ohio decided to construct a separate system. In analyzing whether to buy or build, consideration must be given to a number of factors, including the following.. ~:,~ 1. Potential for Voluntary Purchase. The quickest and easiest way of fo?ming a municipal system is a voluntary agreement to purchase the distribution facilities of the . existing supplier. Unfortunately, such "voluntary purchase" often comes after years of litigation. For example, New Orleans Public Service, Inc. and the City of New Orleans eventually came to a "voluntary" purchase agreement (which ultimately was not instituted), but only after the City had defeated the company in a number of legal battles. The Town of Massena, New York engaged in seven years of litigation before an agreement was reached. After many years of litigation, Las Cruces, New Mexico entered into an agreement which compensated the City for all past expenses incurred in pursuing a municipal electric utility and allowed it to purchase the utility at a specified future time and price, should it decide to do so. -3- In contrast, a priVate utility which served only the Town of Sherrill, New York reached a voluntary agreement.to sell its facilities. A large local manufacturer was a strong supporter of the Sherrill municipal utility. The first step in examining formation of a municipal utility is a determination of whether a voluntary'agreement is feasible. If it is, the municipality and the utility will save substantial time and money. If not, the municipality must look at other issues in determining whether to buy or build. 2. Le.qal Authority To Condemn. Most municipalities have the right of eminent domain which enables them to condemn utility facilities, and some states give municipalities specific statutory or constitutional authority to condemn utility property. Normally, municipalities may condemn property pursuant to their general condemnation authority. Some municipalities, such as the City of Casselberry, Florida, have in their franchise with the local Utility a specific.right to purchase, sometimes accompanied by a valuation methodology or procedure. However, some states have a more restrictive view of municipal condemnation authority. To the extent the ability to condemn is restricted, the franchise does not require a sale, and the local utility will not voluntarily sell, a City may consider construction of an alternative system rather than purchase of the existing system. There is an added twist when a utility, like Pacific Gas & Electric Company, is in bankruptcy. The bankruptcy court imposes an automatic stay on litigation regarding the utility's assets. Las Cruces was able to persuade the El Paso Electric Company -4- ("EPE") bankruptcy court to lift the stay for condemnation proceedings; however the court required the City to return prior to taking actual possession of EPE's facilities.2 3. Ability to Oust. Where a utility lacks a valid franchise, a municipality typically has the.ability to oust the utility. Sometimes, prior public utility commission approval is required prior to ouster. For example, the Ohio Supreme Court found that Clyde, Ohio could not require Toledo Edison Company to cease serving existing customers without approval of the Public Utilities Commission of Ohio, even though Toledo Edison's franchise had expired. However, Clyde could serve new customers to the exclusiOn of Toledo Edison because the franchise had expired. If it has the right to oust, a municipality may construct a separate distribution system and require the utility currently serving the municipalitY to remove its facilities. ~ ;,~ If a municipality lacks the ability to oust, construction of a separate distribution ,,:.. system may require door-to-door competition. Unless the municipality's rates are .~': .... ,~i anticipated to be so Iow that the utility cannot compete, the City must take into account .:~, such potential competition - as well as any competition from a state's restructuring - in .~ order to determine the economic feasibility of the project. 4. Valuation. Where a municipality constructs a separate distribution system, the existing utility is not entitled to direct damages. -Inverse condemnation awards are extremely difficult to obtain, and the author is unaware of any such award for construction of an alternative distribution system. Therefore, to the extent that potentially large condemnation damages are anticipated, construction of a separate 2 Las Cruces has not proceeded through the condemnation process, and EPF: is now out of bankruptcy. -5- system may be the better means. It should be noted, however, that a municipality may be required to pay stranded costs if. it builds a separate system and uses the transmission facilities of its former supplier, and, in certain circumstances, even if it does not use the transmission facilities. §. Public Perception. Construction of a separate system raises the specter of duplication of facilities, which could be both uneconomic and aesthetically unpleasant. An active campaign by EPE and Central and Southwest ("CSW")3 in Las Cruces led to public opposition to a separate distribution system. Therefore, the ballot question in Las Cruces was directed toward the purchase of the EPE system, rather than construction of a separate system. 6. Use of Tax-Exempt Bonds. Pursuant to 1987 amendments to the Internal Revenue Code, municipalities may not use tax-exempt financing to purchase facilities of investor-owned electric utilities unless they obtain a portion of their state's volume cap for such financing. 26 U.S.C. § 141 (1988). If a municipality is unable to obtain a portion of the state's volume cap, it could use tax-exempt financing by constructing a new distribution system. There is no limitation on the use of tax-exempt financing for such initial construction. Transmission Access Until the end of 1992, municipalities seeking to form their own electric utility faced a quandary: In order to purchase power at wholesale from a supplier other than their I°cal utility, which they sought to replace at retail, they had to obtain transmission 3 At the time, CSW and EPE were planning to merge. -6- services from that utility. Local investor-owned utilities were reluctant to open up their transmission system to assist a competitor. To obtain access, municipalities were forced to resort to an antitrust remedy4 unless they were fortunate enough to seek transmission service from a utility subject to Nuclear Regulatory Commission antitrust license conditions which required transmission service.5 In 1978, Congress passed the Public Utility Regulatory Policies Act which gave the Federal Energy Regulatory Commission ("FERC") authority to order transmission service -- but only if it reasonably preserved existing competitive relationships, a factor which would preclude required transmission for new municipal utilities. Finally, in 1992, Congress gave the FERC unfettered authority to order wheeling. 16 U.S.C. §§ 824j and 824k. The FERC, pursuant to Order No. 888 and its progeny, requires all jurisdictional utilities to file open access transmission tariffs. Despite this requirement, utilities may still refuse to transmit power for a potential competitor. For example, EPE consistently refused to grant transmission access to allow service to Las Cruces, claiming lack of transmission capacity. Ultimately, the FERC ordered such service, but only after years of litigation. 4 Antitrust relief resulted in wheeling to Elbow Lake, Minnesota. See United States v. Otter Tail Power Co., 410 U.S. 366 (1973). However, engineering claims by Niagara Mohawk Power Corp. precluded a wheeling order in response to an antitrust claim brought by the Town of Massena, New York. See Town of Massena v. Niaqara Mohawk Power Corp., 1980-2 Trade Cases & 63,526 (N.D.N.Y. 1980). 5 Pursuant to Section 105c of the Atomic Energy Act, 42 U.S.C. § 2135(c) (1973), the Nuclear Regulatory Commission may impose antitrust license conditions on owners of nuclear powerplants. Some of the conditions imposed require transmission service to competitors. -7- Transmission access should be easier in the future. The FERC is encouraging formation .of regional transmission organizations ("RTOs") which will be run independently from generation providers. An independent RTO is likely to grant transmission access to a newly-formed municipal utility which meets objective criteria. In contrast, a current retail supplier of electricity may refuse transmission service in order to quash attempts to form a new municipal Utility. Transmission Pricin.q While transmission access may no longer be a problem for new municipals, transmission pricing may raise additional hurdles. Currently, an entity seeking network transmission service would be required to pay for a pro-rata share of the network. An entity whose needs will be met only by upgrading existing transmission capacity may be required to pay for all or part of the upgrade. Formation of' RTOs will make transmission pricing more uniform and should prevent discrimination against new municipal utilities by former retail suppliers. However, as discussed below, the FERC may order payment of stranded costs by a municipality which accesses the wholesale power market by using the transmission facilities of its former retail supplier. Stranded Costs Any municipality seeking to form an electric utility will likely be presented with the threat of "stranded costs," which are generally defined as those above market costs which the current retail supplier will forgo if it loses a customer Before forming a municipal utility, it is essential to understand the implication of potential stranded cost recovery. -8- Theoretically, stranded costs are imposed as a vehicle to allow transition from regulation t° competition in the electric utility industry. Utilities, which had an obligation to serve ultimate consumers, were required to construct or purchase sufficient generation and transmission to meet needs of native Icad customers. In return, state commissions granted utilities the ability to maintain a monopoly in their service territories..This concept is often termed "the regulatory compact." As both wholesale and retail competition for customers became possible, those utilities demanded .recovery of stranded costs in exchange for allowing competition. Of course, these arguments were not as precise as the "sound bites" indicate. Long before recent competitive initiatives, many states specifically allowed displacement of investor-owned utilities with municipally-owned electric utilities. Municipalities in some states, such as Ohio had constitutional authority to form municipal utilities. Prior to recent years, there were limited assertions that formation municipal utilities led to stranded costs. Many states and the FERC have allowed recovery for stranded costs upon formation of a new municipal utility. The FERC required, payment of stranded costs by new municipally-owned electric utilities through Order No. 888, issued in 1996. Order No. 888 reqUired new municipal utilities to pay stranded costs in the following " circumstances: · Where the former retail supplier had a "reasonable expectation" to continue to serve the municipality. · Where a municipality continued to take transmission service from the former retail supplier. 9 · Where there were stranded costs as measured by the FERC formula.6 Individual states may. allow stranded cost recovery where the FERC does not. The FERC has deferred on two occasions to the New York State Public Service Commission ("PSC"), which allows stranded cost recovery without qualifications of either "reasonable expectation" or transmission service from the former provider. It may well defer to any other state which has a means of determining stranded costs. To put the stranded cost issue in perspective, it may be useful to describe how the FERC and the New York State PSC decided the first two stranded cost cases. In City of Las Cruces, New Mexico v. El Paso Electric Company, 87 FERC ¶ 61,201 (1999), the FERC decided that reasonable expectation must be measured from the time that costs Were incurred by the utility. In the Las Cruces case, the FERC decided that EPE incurred above-market costs in 1987, when costs of its nuclear pOwer plant went into rate base;-?-'lt then determined that EPE's planning horizon wastwenty years. Equating planning horizon with reasonable expectation for this case, the FERC found that stranded costs would be recovered by 2006, twenty years after costs were incurred. Logically, if a municipal utility purchases a distribution system through condemnation, it should not be required to pay stranded distribution costs. Where that municipality will use the transmission system of its former supplier, it should not be 6 That formula is as follows: Revenue stream received by the utility for the prior three years from the municipality, less the prospective alternative cost of energy times the number of years the utility reasonably expected to continue to serve the municipality. ? Because Las Cruces entered into a settlement with El Paso Electric Company ("EPE"), the FERC never decided on rehearing whether reasonable expectation shOuld, instead, be measured from the time a plant was completed if that the plant were completed - continued- -10- required to pay any stranded transmission costs, because it will be paying full FERC- approved transmission rates. The Administrative Law Judge in the Las Cruces case had determined that EPE's revenue stream, for the purposes of the FERC formula, excluded all distribution and transmission revenues. The FERC affirmed this decision. In identifying the competitive market value of energy, the FERC decided that, for this case, it would equal the cost of EPE's purchase of power from Southwestern Public Service Company. This cost was specified in large part because of transmission constraints making it difficult to import power from other sources into New Mexico. Based upon this analysis, the FERC determined that Las Cruces must pay a declining amount of stranded costs beginning with approximately $53 million if it began service in July 1999 and declining annually to approximately $9 million in January 2006 and nothing by 2007. Significantly, EPE initially claimed stranded costs of $234 milliQn:~. Stranded costs for the Village of Lakewood, New York ("Village" or "Lakewood~?).;¥.. which is seeking to displace Niagara Mohawk Power Corporation ("Niagara Mohawk") within the Village, were determined by the New York PSC in a decision issued September 13, 2000; however, the case remains pending on rehearing. In New York, the PSC adopted for Niagara Mohawk a calculation of stranded costs which appears similar to the FERC calculation but actually has substantial differences. The formula in New York is revenue stream estimate minus competitive market price of power times the length of time it would take Niagara Mohawk to recover its stranded costs. - continued from previous page - prior to the time costs were included in rate base. -11 - While the FERC looked at an historic revenue stream for the prior three years, the New York PSC examined a future estimated revenue stream. An estimated revenue stream attempts to quantify uncertain future rates and power usage. While the FERC eliminated all transmisSion and distribution costs from the revenue stream, the New York PSC allowed recovery of what it considered to be stranded transmission costs and eliminated only those distribution costs it believed would be avoided upon departure of a municipal utility. While the FERC allowed recovery only for a "reasonable expectation" period, New York allowed recovery for the length of time that it would take Niagara Mohawk to recover stranded costs, which it determined to be an 11 year period. In determining the competitive market value of energy, the New York PSC determined a short-term cost of power based upon then-current New York rates and a long-term cost of power based upon expected costs for new generation and natural gas, expected to be the fuel of choice for new plants. Lakewood sought rehearing based, in part, on new information showing dramatically increased costs of new generation and related fuel. In addition, the New York PSC required payment of the rate base amount for Niagara Mohawk's distribution and street lighting plant in Lakewood. Because existing rates for Niagara Mohawk provide that urban captive customers subsidize rural captive customers, this rate base amount was almost double the actual depreciated cost of the facilities in Lakewood. Similarly, Niagara Mohawk's entire'revenue stream was higher because of this subsidy. Consequently, more than 25 percent of the awarded stranded costs resulted from the subsidy. Initially,. Niagara Mohawk estimated its stranded costs at more than $18 million and the New York PSC staff estimated stranded costs of $15.5 to $16.5 million. Both analyses included the rate based cost of facilities. Lakewood estimated stranded costs of approximately $5 million plus the cost of facilities. The New York PSC allowed stranded costs of slightly less than $14.5 million, assuming that Lakewood formed a municipal electric utility as of January 1,2001. Based upon a stipulation between the parties, this amount should be reduced to reflect Niagara Mohawk's sale of its nuclear power plants. Currently, the Lakewood case is being considered on rehearing. When the New York PSC requested comments on this rehearing, the New York Attorney General stated that no exit fee was warranted. He asserted that any stranded costs would be anticompetitive and discriminatory and questioned whether Lakewood should pay for~,~; Niagara Mohawk's bad business decisions. The New York PSC staff agreed with' Lakewood.that an updated analysis should be performed based upon the current, and higher costs of natural gas. Both the Las Cruces and Lakewood cases show declining stranded costs for the future. Such declining costs are supported by both the theory for stranded costs and related facts. Stranded costs were allowed for the period of transition between regulated generation sales and unregulated sales. In the present situation, those stranded costs should dramatically decrease for the following reasons: · Five years have passed since Order No. 888 and two years since the Las Cruces decision; therefore, the years of'reasonable expectation and resulting stranded costs have decreased. For example, Las Cruces' -13- stranded cost payment, as determined by the FERC, would have been $52.9 million as of July 1, 1999 but would be $39.7 million as of January 1, 2002. · The competitive cost of power has increased dramatically. Thus, there may be limited or even negative stranded costs when past revenue. streams are compared to current and future costs of power. · Some utilities have already recovered stranded costs through state deregulation plans, such as in California. Because the FERC has deferred to state processes, it should defer to state stranded cost determinations. In addition, some municipalities may present special circumstances which could lead to a decision that no stranded costs need be paid. For example, many municipalities served: by Florida Power Corporation have a specific franchise provision allowing purchase of the distribution system at a price set by arbitration when the franchise expires. Although the FERC has not addressed this situation, there is a strong argument that, after franchise expiration, Florida Power Corporation did not reasonably expect to serve customers which had this franchise provision. Despite these optimistic projections, however, the FERC could still allow stranded cost recovery. They have set forth a procedure for an early estimate of stranded costs, to be considered if a municipality decides to examine formation of a municipal utility. Pursuant to the FERC procedure, a municipality may request a utility's stranded cost estimate using the FERC formula. The utility must respond within 30 days. Within -14- 30 days the municipality may respond. If the municipality and the utility are unable to reach agreement regarding the appropriate amount of stranded costs, if any, to be recovered, the municipality may either (1) seek a declaratory order from the FERC or (2) wait for the utility to seek stranded costs. A utility's estimated stranded costs, as filed at the FERC, either in response to a request for a declaratory order by a municipality or as requested by the utility, constitute the maximum amount of stranded costs a utility may seek. In addition, a municipality may require a utility to sell power to it at the utility's estimated competitive market value of energy. Such requirement is triggered by a municipality's request not later than 30 days after the utility files its estimate of stranded costs with the FERC. Feasibility: Le.qal and Economic Some of the legal feasibility issues, discussed above, include: · Abilityto condemn · Ability to obtain transmission access · Ability to oust · Use of tax-exempt financing Other legal feasibility issues include: (1) determination of any state procedures for formation of municipal utilities and condemnation; (2) identification of any valuation standards used by the state; (3) determination of the appropriate governing body for a new municipal; (4) identification of referendum requirements; and (5) determination of any required action before the state public utility commission. Economic feasibility includes a number of valuation issues. Potentially the largest item is stranded costs, as discussed in the preceding section. In addition, if a -15- municipality plans to construct a separate distribution system, the layout, timing, and cost of such system must be determined. If a municipality plans to purchase or condemn a distribution system, it will be necessary to identify the cost of the system based upon alternative valuation methodologies, and the exposure for consequential and severance damages. Valuation issues in condemnation include the following: · The customers who will be served by the new municipal utility. With retail competition, new municipal systems are no longer assured they will serve all of the customers within their boundaries. · Whether the physical propertY will be assessed based upon original cost less depreciation, reproduction cost new less depreciation (which assumes duplication of the exact system being valued) or replacement cost less depreciation (which assumes construction of a new and modern system). · Whetherthe municipality must pay consequential or severance damages. Typically, investor-owned utilities attempt to maximize their damages by seeking the cost of disconnecting and then reconnecting distribution facilities. In the condemnation case involving the Town of Massena, the Commissioners of Appraisal rejected such an attempt, claiming that the utility and the Town could cooperate in using the other system's facilities. · Whether any going concern value will be allowed. Some courts add some value solely on the basis that a utility is a going business. Others have valued based upon capita!ization of earnings. If such valuation method is used, there is a strong potential for mischief based upon the method of projecting earnings. -16- Political Feasibility Legal and economic feasibility issues pale in comparison to that of political feasibility. Residents who seek to form municipally-owned electric utilities almost always face opposition from a well-financed local utility which wants to retain its native load customers. Thus, municipalities must anticipate an active campaign to defeat any referendum and to exhaust the City -- financially and emotionally -- through long and hard-fought legal battles. Very simply, if a City lacks a very strong political will to form a municipal system, it will fail. Such a political will may be assisted by thorough planning and organization throughout the process. Some'suggestions include the following: ~,. · Carefully document legal and economic feasibility. The current retail supplier in a municipality will likely begin a strong attack early. By being. ~.~., thoroughly prepared in this area, local supporters will be able to respond ':~?' ?.., quickly and effectively to any attack. Early analyses for Las Cruces enabled the City to combat legal and technical arguments during the political campaign prior to a referendum on forming a municipal utility. In addition, technical consultants were able to respond promptly to the erroneous assumptions set forth in two technical reports issued during the campaign. · Identify voter interest and concerns, In Las Cruces, the City conducted a poll of residents. As a result, the City determined that the citizens had concerns about formation of a separate distribution system but would like to displace EPE with a municipal system through purchase or condemnation. -17- Ti~erefore, the City did not Put the separate distribution system option on the ballot. -.., .... · Gather and retain information. During the campaign, a lot of information will be developed and disseminated. It is important to organize files of information in a central depository so that efficiency is maximized and important information is not lost. · Develop a theme. Most cities which seek to form a municipal system do so because of frustration with rates or service from local utilities. Themes addressing this frustration are useful. For example, there were signs in Las Cruces pic,L';qg up on the 1992 Clinton Presidentia~ campaign and proclaiming: "It's rates, stupid." Campaign buzz. words emphasized local control and exile of the disliked local utility. In Las Cruces, campaign buttons proclaimed: "Pull theplug" on. EPE. Campaign ads urged citizens to "Plug into City Power." · Simplify the story. It is better to explain the advantages of forming a municipal system in a few sentences rather than a long document. For example, utilities often predict dire consequences from forming a municipal utility. A clear, succinct, and factual rebuttal is the best approach. · Seek help from your friends. Las Cruces called upon speakers involved in efforts to form a municipal utility in Toledo and New Orleans and representatives of successful municipal systems. · Encourage support from community groups. Most communities have groups with common interests, such as the chamber of Commerce, church -18- groups, educators, and senior citizens. Each group normally has specific leaders and interests. By identifying the advantages of public power for those groups, a community can garner support from the leaders and, in turn, the leaders can assist in talking with the members. To the extent that leaders support the opposition, find members of the group which support the City's position. · Speak at community events. Most communities have periodic meetings of business and social groups. These events allow the opportunity to discuss the City's interests and the advantages of forming a municipal utility. · Talk to the medi~, -- early, thorou.3hly and often. It is useful to prepare a media briefing package answering questions regarding the legal and economic feasibility of the project, the benefits of public power generally, and the specific benefits anticipated within the community. Local radio and television talk shows and public hearings are good forums for presenting facts to both the media and the public. · Constantly review and revise strategy. Strategy in developing a municipal uIility is appropriately both proactive and reactive. Through constant contact with voters and community organizations, supporters .of a municipal utility will obtain citizen feedback, which should be shared with other supporters and factored into the City's plans and communications. -19- CONCLUSION The first and final words in forming a municipal utility are honesty and.accuracy. A municipality is -- or should be -- responsive to the needs and wishes of its citizens. First, the City must gather the facts regarding economic and legal feasibility. If the City determines that a municipal utility will be uneconomic or legally infeasible, the effort should be abandoned unless the problems can be overcome. In pursuing formation of a municipal utility, it is more important to listen than to speak. Understanding and responding to the views of citizens as to their interests regarding electric Service are the basis of a successful election as well as a successful · utility. MEMORANDUM iC~TY MANAGER'S May 2, 2001 TO: Alan Tandy, City Manager ~.,~~ FROM: Jack Hardisty, Development Services ~_. SUBJECT: 1820 D Street - Council'Referral# WF00~8~Y4 / 001 On May 1, 2001, the vacant lot at 1820 D Street was abated. SD:cm cc: Dennis Fidler, Building Director Randy Fidler, Chief Code Enforcement Officer ! ~,'~L~-~ City of Bakersfield *REPRINT* WORK REQUEST PAGE 1 REQ/JOB: WF0018814 / 001 PROJECT: DATE PRINTED: 5~03Z01 REQUEST DATE: 4/11/01 CREW: TIME PRINTED: 9:41:31 SCHEDULE DATES LOCATION: ~'£'aK'r: ~11~01 LOCATION ID: ZIP CODE: COMPLETION: 4~19/01 GEN. LOC: FRoM:FACILITY NODES FACILITY ID: TO: REF NBR: REQ DEPT: CITY COUNCIL REFERRAL PRIORITY: HIGH REQUESTOR: COUNCILMEMBER BENHAM ORIGIN: CITY COUNCIL REFERRAL USER ID: DSULLIVAN WORK TYPE: REFERRAL DESCRIPTION: SIDEWALK CLEANUP ON 19TH & D REQUEST COMMENTS ***REFERRAL TO PUBLIC WORKS DEPARTMENT*** BENHAM REFERRED THE ISSUE OF SIDEWALK MAINTENANCE AT THE SOUTHEAST CORNER OF 19TH & D STREETS TO PUBLIC WORKS. Job Order Description: SIDEWALK CLEANUP ON 19TH & D atpg ory: PUBLIC WORKS asK: RESPONSE TO REFERRAL Assigned Department: PUBLIC WORKS INSTRUCTIONS '£n~ ~±u~w~_uK AT THE SOUTHEAST CORNER OF 19TH & D STREETS IS ON THE STREET DIVISION'S CONCRETE REPAIR LIST AND SCHEDULED FOR REMOVAL AND REPLACEMENT THE WEEK OF MAY 21, 2001. THE OVER- GROWN WEED PROBLEM IS BEHIND THE ~ID~WALK ON THE VACANT LOT AT THIS LOCATION. ON 4/16/01'sCHIEFwA CODE ENFORCEMENT OFFICER RANDY FIDLER CONTACTED ABOUT THE OVERGROWN WEEK PROBLEM., CODE ENFORCEMENT WILL BE HANDLING THE CLEAN UP ISSUE. RESPONSE TO THIS REFERRAL IS COMPLETE AND CONSIDERED SATISFIED. START DATE / / COMPLETION DATE __/__/__ CITY MANAGER'S :-' May 2, 2001 TO: COUNCIL MEMBER SUE BENHAM ,,~ / FROM: BART J. THILTGEN, CITY ATTORNEY / GINNY GENNARO, DEPUTY CITY ATTORNE/Y. Subject: SKATEBOARD RESTRICTIONS COUNCIL REFERRAL NO. WF0018827 1 002 (WARD 2) Council Member Benham requested staff to give a response to issues presented by Old Town Kern merchants re: expansion of skateboard restrictions in their area Staff is working on an ordinance modification to address this issue. The proposed ordinance will be presented at the June 25, 2001 Legislative and Litigation Committee meeting. BJT/GG:alj cc: Honorable Mayor and Council Members Alan Tandy, City Manager S:\COUNClL\Refen'als\SkateboardRestrictions. OIdTown.wpd !i ECE!VED BAKERSFIELD PUBLIC WORKS DEPARTMENT MEMORANDUM TO: ALAN TANDY, CITY MANAGER FROM: ~)~ ~CQUES R. LaROCHELLE,  f(~ INTERIM PUBLIC WORKS DIRECTOR DATE: APRIL 30, 2001 SUBJECT: WALL STREET ALLEY Referral Record # WF0018828 001 - Ward 2 Councilmember Benham requested that the dumpsters in the alley on Wall Street be removed for the next Downtown Street Faire due to activities scheduled in the alley. Staff attended a meeting on May 2nd with Cathy Butler of the Downtown Business Association and some of the Wall Street business owners. As staff has told this group for several years, permanent removal of the refuse bins from along the alley for aesthetic improvement depends on establishment of alternate, and perhaps common, areas for containers. Group cooperation has not been achieved in this regard, in spite of staff offering the use of a common bin area at the 18'" Street parking structure. The group expressed hope that the charrette would finally help develop a new arrangement. Staff will participate in the process and recommend the establishment and use of a common area compactor unit similar to those in shopping malls. For an immediate short term solution with the upcoming Farmers Markets and Street Fairs, staff has made arrangements. The group wishes to temporarily relocate the bins to one area of the alley just for the duration of the events. Staff will reschedule the regular service days to occur the day of the events at no extra charge in order for the bins to be easily moveable by the group. As an extra help to the group, staff recommended they save money by using folding, reusable cardboard litter receptacles with plastic bag liners at the events. Staff arranged these for the First Night events, and they were more economical than the extra handling and washing of plastic cads. As a bonus, the cardboard receptacles can be printed with a promotional message or logo. Ms. Butler will consider these. C:~Documenls and Sellings~mpe,ralez\Local Sellings\Temp~WallSIre.wpd RECEIVED · MEMORANDUM HAY- 3 2001 CITY MANAGER'S OF::I{..." May 3, 2001 TO: COUNCIL MEMBER SUE BENHAM FROM: BART J. THILTGEN, CITY ATTORNEY , CARL HERNANDEZ III, DEPUTY CITY ATTORNEY~,'t7A-- Subject: ORDINANCES REGARDING ALCOHOL OR DRUG ABUSE RECOVERY FACILITIES COUNCIL REFERRAL NO. WF0018835 1 003 (WARD 2) Council Member Benham requested that this office address the issue of concentration of "half-way houses" in Wards 2 and 3 and to review any ordinances addressing this issue. Alcohol and drug recovery facilities serving six or fewer persons are a permitted use in any R-1 (single-family dwelling) zone. These facilities are considered a residential use of property for all purposes, and the residents and operators of the facility are considered "a family" and are allowed to be located in any R-1 zone in which a traditional family may reside. This requirement is stated in section 11834.23 of the Health & Safety Code as well as Chapter 17.10.020 of the Bakersfield Municipal Code, both of which are attached to this memorandum for your review. The City can regulate the building safety aspects of such uses, as it does with traditional single-family uses, but cannot prohibit these uses from locating in R-1 zones throughout the City. Alcohol and drug recovery facilities serving seven or more persons require a conditional use permit to operate in the City. An application must be presented before the City's Board of Zoning Adjustment which makes a discretionary determination of whether the use can be located in the proposed zone. 'Federal and state housing laws prohibit intentional discrimination against recovering alcoholics and drug abusers. Such laws also require that the City reasonably accommodate housing for such persons in making zoning decisions. Thus, the City cannot deny a conditional use permit simply based on the fact S:\COUNCIL\Referrals\DrugAbuseResRecoveryFacilities.wpd COUNCIL MEMBER SUE BENHAM May 3, 2001 Page 2 that the proposed use is an alcohol and drug recovery facility, but can place conditions on such facilities to mitigate land use impacts such as limiting the number of occupants and regulating parking. In sum, the City is bound by state law to allow alcohol and drug recovery facilities consisting of six or fewer persons in single family residential zones, as a matter of right. Facilities of seven or more persons must obtain a conditional use permit, but the City cannot disallow such uses solely because they are alcohol or drug abuse recovery facilities. BJT/CH:Isc Enclosures cc: Honorable Mayor and Council Members Alan Tandy, City Manager Jack Hardisty, Development Services Director S:\COUNClL\Referrals\DrugAbuseResRecoveryFacilities.wpd ALCOHOL ABUSE PROGRAMS § 11834.23 This section shall not be construed to prohibit any interested party from bringing suit to invoke the provisions of this article. Added Stats 1984 ch 1667 § 2. Amended Stats 1989 ch 919 § 16. Amendments: 1989 Amendment: Substituted "or drug abuse recovery or t~eatment" for "recovery" after "alcoholism" in the first paragraph. Editor's NoteS--For adoption of regulations, see the 1989. Note following H & S C § 11830. § 11834.22. Taxes and fees An alcoholism or drug abuse recovery or treatment facility which Serves six or fewer persons shall not be subject to any business taxes, local registration fees, use permit fees, or other fees to which other single- family dwellings are not likewise subject. Nothing in this section shall be construed to forbid the imposition of local property taxes, fees for water service and garbage collection, fees for inspections not prohibited by Sec- tion 11834.23, local bond assessments, and other fees, charges, and as- sessments to which other single-family dwellings are likewise subject. Neither the State Fire Marshal nor any local public entity shall charge any fee for enforcing fire inspection regulations pursuant to state law' 'or regulation or local ordinance, with respect to alcoholism or drug abuse i~:overy or treatment facilities which serve six or fewer persons'. ~- Added Stats 1984 ch 1667 § 2. Amended Stats 1989 ch 919 § 17] Amendments: 1989 Amendment: Substituted (1) "or drug abuse recovery or treatment" for "recov-' cry" after "alcoholism" both times it appears; and (2) "Section 11834.23" for "Sec~ tion 1834.23". Editor's Notes--For adoption of regulations, see the 1989 Note following H & S C § 11830. § 11834.23. Zoning laws ~ Whether or not unrelated persons are living together, an alcoholism or drug abuse recovery or treatment facility which serves six or fewer persons shall be considered a residential use of property for the purposes of this article. In addition, the residents and operators of such a facility shall be considered a family for the purposes of any law or zoning ordinance which relates to the residential use of property pursuant to this · article. For the purpose of all local ordinances, an alcoholism or drug abuse : reCOvery or treatment facility which serves six or fewer persons shall not be included within the. definition of a boarding house, i'ooming house, institution or home for the care of minors, the aged, or the mentally infirm, foster care home, guest home, rest home, sanitarium, mental hygiene home, or other similar term which implies that the alcoholism or drag 277 / § 11834.23 ALCOHOL AND DRUG PROGRAMS abuse recovery or treatment home is a business run for profit or differsul~/ .any other way from a single-family residence. This section shall not be construed to forbid any city, county, or other 1~5~!~ cal public entity from placing restrictions on building heights, setback, dimensions; or placement of signs of an alcoholism or drug abuse recovery~i~ or treatment facility which serves six or fewer persons as long as restrictions .are identical to those applied to other single-family residences.~i? This section shall not be cOnstrued to forbid the application to an alcohol-~ ism or drug abuse recovery or treatment facility of any local which deals with health and safety, building standards, environmental.?~;~lt impact standards, or any other matter within the jurisdiction of a public entity. However, the ordinance shall not distinguish alcohohsm or drug abuse recovery or treatment facilities which serve s~x or persons from other single-family dwellings or distinguish residents'.~?~l alcoholism or drug abuse recovery or treatment facilities from who reside in other single-family dwellings." No conditional use permit, zomng variance, or otlaer zomng shall be required of an alcoholism or drug abuse recovery or treatme.'~fi~(~ facility which serves six or fewer' persons that is not required of a singl~-!~!~ family residence in the same zone· 17910) of Division 13 or local building codes. However, nothing in ~I section is intended to supersede Section 13143 or 13143.6, to the extent~i:!!~ those sections are applicable to alcoholism or drug abuse recovery o~?I treatment facilities serving six or fewer residents. Added Stats 1984 ch 1667 § 2. Amended Stats 1989 ch 919 § 18. Amendments: · 1989 Amendment: (1) Substituted "or drug abuse recovery or treatment" for "recov- ery'' after "alcoholism" wherever it appears; and (2) amended the sixth paragraph by (a) adding "or drug abuse" after "alcoholism" in the first sentence; and (b) substitut- ing "or drug abuse recovery or treatment facilities serving" for "recovery facilities providing care for" after "alcoholism" in the second sentence. Editor's Notes~For adoption of regulations, see the 1989 Note following H & S C · § 11830. '~ 11834.24. Fire inspection clearances No fire inspection clearance or other permit, license, clearance, or similar authorization shall be denied to an alcoholism or drug abuse recovery treatment facility because of a failure to comply with local ordinances from which the facility is exempt under Section 11834.23, if the apphcant otherwise qualifies for a fire clearance, license, permit, or similar authod,'{ii!l zation. Added Stats 1984 ch 1667 § 2. Amended Stats 1989 ch 919 § 19. 278 17.10.010 Chapter 17.10 4. A sales office shall be located in a model home; however a separate temporary' office which may include R-1 ONE-FAMILY DWELLING ZONE a commercial coach or mobile home, is permitted for a period not to exceed ninety days pending completion of Sections: construction of the model home. Any sales office located 17.10.010 Generally. in the garage portion of a model home shall be removed 17.10.020 Uses permitted, and converted to a garage prior to the building depart- 17.10.030 Building height, ment releasing covenants restricting the model home's 17.10.040 Front yard. sale and issuing a certificate of occupancy. 17.10.050 Side yards. 5. The vehicle route leading to and in front of any '17.10.060 Rear yard. sales office, shall be paved from an existing improved 17.10.070 Minimum lot area. public stxeet prior to the public being invited to that 17.10.075 E (Estate one-family dwelling) office regarding sales of lots and/or homes in the tract; zone. H. Small family day care home as defined in Section 17,10.080 Distance between buildings on 17.04.160; the same lot. I. Second unit, as defined in Section 17.04.539 and in compliance with the provisions of Chapter 17.65; 17.10.010 Generally. J. Large family day care home as de£med in Section The regulations set out in this chapter shall apply in 17.04.159 and in compliance with the provisions of the R-1 one-family dwelling zone unless otherwise pro- Chapter 17.67; vided in this title. (Prior code § 17.13.010) K. Ramp, platform, basin, pool or other accessory structure used for the riding of skateboards, rollerskates, 17.10.020 Uses permitted, rollerblades, bicycles, motorcycles, or similar devices, The following uses are permitted in an R-1 zone: provided the structure does not exceed a vertical height A. A one-family dwelling; (above or below grade) of four feet, or a horizontal area B. Accessory buildings or slructures, including a (one sumcture or total combined area if multiple struc- private garage the area of which shall not exceed twelve, tures) of one hundred twenty, square'feet. Such smactures percent of the area of the lot; . -~ made nonconforming by this sUbS..~tii~n shall be brought - C. Private greenhouses and horticultural col]'eefi6~, into conformance, obtain c0ndition~i Use approval, or be flower and vegetable gardens and fruit trees, not used or removed by March 31, 1999; intended for commercial purposes; L. Residential facility serving six or fewer persons. D. Home occupations, as defined in Section (Ord. 3964 §§ 8, 9, 2000; Ord. 3868 § 1, 1998; Ord. 17.04.330 and in compliance with the provisions of 3838 § 1, 1998: Ord. 3768 § 6, 1997: Ord. 3613 § 4, Chapter 17.63; 1994; Ord. 3518 § 2, 1993: Ord. 3477 § 7, 1992: Ord. E. Swimming pools and hot tubs; 3226 § 3, 1989: Ord. 3087 § 1, 1987: Ord. 2985 § 1, F. Garage and yard sales as defined in Section 1985: Ord. 2697 § 1, 1982: prior code § 17.13.020) 17.04.305; G. Real Estate Tract Sales Office and Model Homes. 17.10.030 Building height. 1. Each subdivision tract is permitted a maximum Building height requirements in an R-1 zone shall not of six model homes, one of which may include a sales exceed thirty-five feet. (Ord. 3964 § 10, 2000: prior code tract office, for each home builder in the tract. Additional § 17.13.030) model homes may be permitted subject to approval by the planning director. 17.10.040 Front yard. 2. Model homes may be constructed prior to recor- A. Except as otherwise provided in Section dation of a final map for the tract; however, no such 17.08.125, there shall be a front yard of not less than home shall be offered for sale or rent, or be sold or twenty-five feet in depth measured from the front lot line. rented until the final map has been recorded pursuant to B. On cul-de-sac Streets the front yard setback line Title 16 of this code. shall be as follows: 3. Sales offices shall only be used during the origi- 1. A straight line drawn between two points located nal sales of the lots and/or homes within the subdivision on the side property lines twenty-five feet back of the tract in which they are located, front lot line. In no case shall any portion of this setback line be less than fifteen feet fi.om the front lot line. (Bakersfield 9-00) 684 MEMORANDUM May 2, 2001 TO: COUNCIL MEMBER IRMA CARSON FROM: BART J. THILTGEN, CITY ATTORNEY WALTER H. PORR, JR., DEPUTY CITY ATTORNE Subject: PAC MEMBERS REIMBURSEMENT ' COUNCIL REFERRAL NO. WF0018834 / 001 (WARD 1) Council Member Carson requested staff to re-address a PAC member's request for reimbursement and define a policy The subject for reimbursement has been placed on the Redevelopment Agency's agenda for its next meeting. As the Southeast PAC members have been repeatedly told, it is the Redevelopment Agency which is ultimately responsible for all decisions related to redevelopment funds and these funds are controlled by the Agency's budget, as approved by the City Council. The Agency may, in its discretion, appropriate funds from the Southeast Project Area operation's account to cover this expense. The definition/creation of a policy concerning such expenditures is also a matter committed to the Redevelopment Agency's discretion. Should it choose to adopt one, the City Attorney's Office will provide the Agency with any assistance it deems necessary. BJTNVHP:alj cc: Honorable Mayor and Council Members' Alan Tandy, City Manager S:\COUNClL\Referrals\PACmember-Reimbursement.wpd NAY - ~. 2001 C~TY MANAGER ,., BAKERSFIELD PUBLIC WORKS DEPARTMENT MEMORANDUM TO: ALAN TANDY, CITY MANAGER (~,~JAOQUES R. LaROCHELLE, FROM: ~x0 INTERIM PUBLIC WORKS DIRECTOR DATE: ~J May 2, 2001 SUBJECT: KERN RIVER FREEWAY Referral Record # WF0018829 001 - Ward 4 Councilmember Couch requested staff provide copies of the approvals from all the environmental agencies regarding the Kern River Freeway.. As of this date, staff has received no written correspondence pertaining to approvals from environmental agencies regarding the Kern River Freeway. As Caltrans is the agency preparing the Tier One Environmental Document, the City does not receive copies of this correspondence during this process. However, staff routinely checks with Caltrans staff regarding the progress and status of these approvals and the Environmental Document. As of today, staff has been told by Caltrans staff that all agencies have approved the Tier One Environmental Document orally, and further that all agencies have provided written opinions of this approval except for Fish and Wildlife. Nevertheless, none of these documents have been made available to the City or public, and will not be available until the Federal Highway Administration (FHWA) publishes the Final Environmental Document (which will contain these approvals) and accompanying public notification. As soon as the Environmental Document is available, staff will provide copies to all City Councilmembers who desire one. Thirty days after the date of publishing and public notice, a Record of Decision (ROD) is published by the FHWA indicating the end of the Tier One Environmental Process. Caltrans staff told City staff this week they believe the document publishing/public notice to occur by the end of June, 2001 with a ROD occurring late July, 2001. G:\GROUPDAT~ReferraJs\Couch~00 l\KernRiverFreeway_W F0018829 001 .wpd AY- 3 2001 i'~Ti'~~ 6/1AtN~L,F~:' '~ BAKERSFIELD PUBLIC WORKS DEPARTMENT MEMORANDUM TO: ALAN TANDY, CITY MANAGER FROM: (~)~CQUES R. LaROCHELLE,  1~)' INTERIM PUBLIC WORKS DIRECTOR DATE: APRIL 30, 2001 SUBJECT: BRIMHALL ROAD TRAFFIC Referral Record # WF0018830 001 - Ward 4 Councilmember Couch requested the Traffic Engineer do a traffic analysis of Brimhall Road between Coffee and Calloway to determine if it should be upgraded from a collector to an arterial. Traffic Engineering researched the traffic volumes,'conditions and future traffic projections for Brimhall Road. The road is only partially built and currently is a two lane plus center turn lane road from Calloway to Coffee Roads. The road carries over 14,725 vehicles on a typical 24 hour weekday. The theoretical daily capacity of the current facility is about 15,000 vehicles. The existing traffic volumes result in severe congestion during the peak hours of the morning and evening commuter travel time. The General Plan Circulation Element calls for this segment to be a 4 lane, plus center turn lane, collector road. The road was designated as such in the general plan prior to the current 2010 General plan. When the road is widened to the ultimate configuration of 4 lanes, the capacity of the road will be 40,000 vehicles per day with a Level of Service (LOS) "C" limit of 32,000 vehicles per day. The most recent Kern COG traffic model for 2020 projects that the road will need to carry almost 32,000 vehicles per day between Coffee and Harvest Creek Road and about 24,000 vehicles per day between Harvest Creek Road and Calloway Drive. Of the remaining Bakersfield System Study alternatives, only number 20 (beltways only) show Brimhall exceeding the LOS C level of 32,000 in 2030. In summary, while the expansion of Brimhall to an Arterial would be beneficial, it is not needed in the next 20 to 30 years or more, after the road is completed to the designated 4 lane collector per the 2010 General Plan. C:~Documents and Sellings~mperalez\Local Seltings\Temp\BrimhallRoadTraffic_WF0018830 001.wpd BAKERSFIELD PUBLIC WORKS DEPARTMENT TO: ALAN TANDY, City Manager FROM: JACQUES R. LaROCHELLE, Interim Public Works Director DATE: May 2, 2001 SUBJECT: HIGH SPEED RAIL STATION Council Referral No. WF0018843 / 001 (Ward 4) Councilmember Couch requested that staff respond to selected questions on the fax I that was received from Herman Ruddell regarding high speed rail concerns. I Staff prepared a response letter to Mr. Ruddell. A copy of that letter is attached. A copy of that letter was also sent to Councilmember Couch per his request in the referral. G:\GR~UPDA~~Referra~s\C~uch\2~~1\FaxFr~mHermanRudde~~-HighspeedRai~stati~n-wF~~18843 001 .wpd B A K E R'S F I E L D PUBLIC WORKS I)EPARTMENT- 1501 TRUXTUN AVENUE BAKERSFIELD, CALIFORNIA 93301 (661) 326-3724 May 2, 2001 R*UL M. ROJAS, DIRECTOR. CITY ENGINEER Herman Ruddell Minter Field Airport District 201 Aviation Street Shafter, CA '93263 RE: California High Speed Train System Subject: Kern Transportation Foundation's (KTF) Report on Station Locations in Bakersfield Your Concerns as Expressed in Facsimile to City Councilmember David Couch dated April 25, 2001 Dear Mr. Ruddell: ' City Councilmember Couch requested that City staff respond to the questions at the bottom of the above referenced facsimile. Your first question was "Could supporting the KTF study be predisposing Bakersfield paying the cost of bringing 'Italian Plan' local track into the city? What is the cost?" Our response to that question is as follows: The City of Bakersfield has delivered a letter to the High Speed Rail Authority supporting the KTF recommendation that three potential station locations be studied in further detail by the Authority. This support does not commit the City to any specific station location nor to any specific routing concept for the tracks into, through or out of the metropolitan area. Cost studies were not included in the KTF study scope of work. City staff has not prepared any cost estimates of any portion of the high speed train system. Preparation of those estimates is properly the responsibility of the Authority during their various studies. Your second question Was "Since there are no mandatory urban speed reductions, how does each Downtown site really rate as a direct service Site?" Our response to that question is as follow: - The KTF committee evaluated each site under both the direct track scenario and the indirect, or 'Italian Plan', track scenarioi' Under the direct track scenario, the evaluation of each site considered the relative. expense of constructing main line tracks to the station location. If you desire more information on the evaluation parameters used by the committee, I suggest that you contact either Dale Mills or Dale Hawley of the Foundation. Very truly yours, Jacques R. LaRochelle Interim Public Works Director - c: David Couch Reading File S:\PROJECTS~ARNOLD\HIGH SPI~ED RAIL\Ruddell 05 02 01.wpd BAKERSFIELD A[an Tand¥ · City Manager April 30, 2001 John Barna, Deputy Director California High Speed Rail Authority 925 L Street, Suite 1425 Sacramento, CA 9581.4 RE: High Speed Rail Station Locations in Bakersfield, California Dear Mr. Barna: In 1999, the City Council of the City of Bakersfield adopted a resolution supporting a downtown. location for the Bakersfield station on the high speed rail system. A copy of that resolution is attached. The City Council still maintains that position. As stated in that resolution, the Council supports a downtown locations for the following reasons: · A downtown location supports the goals and objectives of the Metropolitan Bakersfield 2010 General Plan to foster multi-modal transportation facilities since it would be close to the Amtrak Station and a local transit system major transfer facility; · A downtown station location will be more accessible to Iow and moderate income citizens; · A downtown station location is more compatible with.the efforts to control urban sprawl; · A downtown station location will have equal accessibility from all geographic areas within Metropolitan Bakersfield; and · A downtown station location will have. greater accessibility to government and other public service facilities. The Bakersfield downtown area has been experiencing a re-birth over the last several years. This is due to both governmental and private sector investment in that area. A downtown location for the high speed rail station will support those on-going redevelopment efforts. Recently, the Kern Transportation Foundation completed a study to determine feasible locations for a high speed rail station in the Bakersfield Metropolitan Area. In the course of that study, they evaluated seven different possible locations based on several aspects including the possible high speed rail routes between Bakersfield and Los Angeles. The Foundation's report recommends that the following three possible station locations be evaluated by the High Speed Rail Authority during your environmental and preliminary engineering studies. Those locations are · Seventh Standard Road west of SR99; · Golden State Boulevard between F Street and M Street; and · Truxtun Avenue at Union Avenue. City of Bakersfield · City Manager's Office ° 1501 Truxtun Avenue Bakersfield · California · 93301 (661) 326-3751 · Fax (661) 852-2050 John Barna 2 High Speed Rail Authority April 30, 2001 A copy of the Foundation's report is also attached. While the City of Bakersfield believes that a downtown station would be best situated to serve the citizens of Bakersfield and Kern County, the City acknowledges that additional Sites should be studied. The Council concurs with three Foundation recommended sites. As your staff and consultants study a station location in Bakersfield, our staff will be available to assist you with any questions that you might have regarding local development standards and planning policies. Please direct all inquiries to Jack LaRochelle, Interim Public Works Director, 661-326-3724. Ver~ly your~s, City Manager c: Ron Brummett, KernCOG Dale Hawley, Kern Transportation Foundation Craig Pope, County of Kem Jack LaRochelle S:~PROJECTS~ARNOLD~rlIGH SPEED RAIL~HSR - 04-26_01 .wpd B A K E R S F I E L D PUBLIC WORKS DEPARTMENT TO: ALAN TANDY, City Manager ('~J~CQUES R. Works Director FROM: '~/'i'~r Interim Public LaROCHELLE, DATE: ~/ May2, 2001 SUBJECT: HIGH SPEED RAIL Council Referral No. WF0018822 / 001 (Ward 4) Councilmember Couch requested that staff prepare a letter of support to the California High Speed Rail Authority and direct staff to attend the scoping meeting scheduled for April 30, 2001. Staff prepared a letter to the California High-Speed Rail Authority restating the Council's position supporting a downtown location for the Bakersfield station. A copy of that letter is attached. Public Works Department staff attended the Authority's Scoping Meeting on April 30, 2001, presented that letter as written comments and presented a summary statement as verbal comments. G:\GROUPDAT~Referrals\Couch~2001\Ltr_HighSpeedRail_WF0018822 001 .wpd BAKERSFIELD Alan Tandy · City Manager April 30, 2001 John Barna, Deputy Director California High Speed Rail Authority 925 L Street, Suite 1425 Sacramento, CA 9581.4 RE: High Speed Rail Station Locations in Bakersfield, California Dear Mr. Barna: In 1999, the City Council of the City of Bakersfield adopted a resolution supporting a downtown location for the Bakersfield station on the high speed rail system. A copy of that resolution is attached. The City Council still maintains that position. As stated' in that resolution, the Council supports a downtown locations for the following reasons: · A downtown location supports the goals and objectives of the Metropolitan Bakersfield 2010 General Plan to foster multi-modal transportation facilities since it would be close to the Amtrak Station and a local transit system major transfer facility; · A downtown station location will be more accessible to Iow and moderate income citizens; · A downtown station location is more compatible with.the efforts to control urban sprawl; · A downtown station location will have equal accessibility from all geographic areas within Metropolitan Bakersfield; and · A downtown station location will have greater accessibility to government and other public service facilities. The Bakersfield downtown area has been experiencing a re-birth over the last several years. This is due to both governmental and private sector investment in that area. A downtown location for the high speed rail station will support those on-going redevelopment efforts. Recently, the Kern Transportation Foundation completed a study to determine feasible locations for a high speed rail station in the Bakersfield Metropolitan Area. In the course of that study, they evaluated seven different possible locations based on several aspects including the possible high speed rail routes between Bakersfield and Los Angeles. The Foundation's report recommends that the following three possible station locations be evaluated by the High Speed Rail Authority during your environmental and preliminary engineering studies. Those locations are · Seventh Standard Road west of SR99; · Golden State Boulevard between F Street and M Street; and · Truxtun Avenue at Union Avenue. City of Bakersfield · City Manager% Office · 1501 Truxtun Avenue Bakersfield · California · 93301 (661) 326-3751 ° Fax (661) 852-2050 John Barna 2 High Speed Rail Authority April 30, 2001 A copy of the Foundation's report is also attached. While the City of Bakersfield believes that a downtown station would be best situated to serve the citizens of Bakersfield and Kern County, the City acknowledges that additional sites should be studied. The Council concurs with three Foundation recommended sites. As your staff and consultants study a station location in Bakersfield, our staff will be available to assist you with any questions that you might have regarding local development standards and planning policies. Please direct all inquiries to Jack LaRochelle, Intedm Public Works Director, 661-326-3724. Very~l; .rply your.s, City Manager c: Ron Brummett, KernCOG Dale Hawley, Kern Transportation Foundation Craig Pope, County of Kern Jack LaRochelle S:~ROJECTS~ARNOLD\HIGH SPEED RAIL~-ISR- 04-26_01 .wpd RECEIVED 3fly MANAGER'S OF~'~. BAKERSFIELD ..... ~- PUBLIC WORKS DEPARTMENT TO: ~ALAN TANDY, CITY MANAGER ~CQUES R. LaROCHELLE, FROM: ~' INTERIM PUBLIC WORKS DIRECTOR DATE: ~ April 30, 2001 SUBJECT: NEW STINE ROAD WALL Informal Council Referral - Ward 5 Councilmember Hanson has requested staff provide an estimate to construct a wall in the outer median island along New Stine Road from Demaret Avenue to Sundale Avenue. The attached aerial Photograph shows the limits of the proposed wall. Staff estimates the construction cost to be $145,000 for the 2,650 lineal feet of wall required for this segment. Attachment: Aerial photograph c: Theodore D. Wright, Civil Engineer IV S:\TED~2001memo\04300 lat.wpd ~ CITY MANAGER'S BAKERSFIELD PUBLIC WORKS DEPARTMENT MEMORANDUM TO: , ALAN TANDY, CITY MANAGER FROM: (~)~'~CQUES R. LaROCHELLE, l/ INTERIM PUBLIC WORKS DIRECTOR DATE: v May 1, 2001 SUBJECT: PG&E LINES ON STOCKDALE Referral Record # WF0018826 001 - Ward 5 ICouncilmember Hanson requested the status of undergrounding and removal of PG&E lines on Stockdale Highway at Gosford Road. Staff discussed the status of the Stockdale Highway Underground District with PG&E's local representative. PG&E's representative has indicated that the recent bankruptcy has released the Rule 20A funds, so this under grounding project can go forward. Incidentally, a part of the under grounding project (Ashe Road and Stockdale Highway) will be done sooner rather than later as a part of the City's current resurfacing projects. G:/GROUPDA'r~Referrals/Hanson5/PG&Elines Stockdale WF0018826 001.wpd BAKERSFIELD PUBLIC WORKS DEPARTMENT TO: ~A/LAN TANDY, City Manager FROM: (~[ JACQUES R. LaROCHELLE, il' Interim Public Works Director DATE: May 1, 2001 SUBJECT: CLEANUP ON SOUTH H STREET & WILSON ROAD Council Referral No. WF00'18836/00'1 (Ward 7) Vice-Mayor Salvaggio referred to staff cleanup of debris at the northeast corner of South H Street and Wilson Road (County area). The debris at the northeast corner of South H Street and Wilson Road has been removed. C:\WlNDOWS\TEMP\CleanupSoH_VVilson_VVF0018836 001 .wpd ...... RECEIVED , PUBLIC WORKS DEPARTMENT 2!TY MANAGER S O~.~,,- MEMORANDUM ~ TO: ALAN TANDY, CITY MANAGER 'o INTERIM PUBLIC WORKS DIRECTOR DATE: April 30, 2001 SUBJECT: UNIMPROVED GAP ON AKERS ROAD - WARD 7 Referral FOLLOW-UP Record # WF0018772 / 001 There is a short segment of roadway along the west side of Akers Road (266 linear feet)just south of the Arvin-Edison Canal that is currently unimproved. This is the last segment of Akers Road unimproved between Pacheco Road and Berkshire Road. City staff routinely explore improving these "gaps" to provide continuity of road and drainage improvements throughout the City, particularly when it appears that the gap 'is not likely to be improved in the near future by adjacent development. This segment is adjacent to an existing residence, and staff has been working for several months with the property owner/resident to provide street right-of-way dedication to allow Akers Road to be widened along this segment. Staff has proposed that the resident grant right-of-way in consideration of the value of the improvements (roadway tie-in, curb and gutter, and sidewalk) the Citywould construct on the right-of-way. In addition, staffhas proposed extending a sewer pipeline a short distance and providing laterals to allow connection of the existing residence as well as possible future residences to sewer service (were the property to be subdivided in the future). The resident's property is currently located at an elevation below that of existing Akers Road so that drainage on the resident's property cannot drain out to the street as is the standard for new subdivisions. Public Works staff, as part of the street improvements adjacent to the residence, has designed a plan for grading the resident's property so that it could drain to the back of the property into a shallow sump or dry well. A plan showing the proposed construction has been forwarded to the resident for his consideration. A copy of the letter sent to the property owner is attached. As of this date, the property owner has not responded to this letter. Staff contacted the property owner on April 16, 2001, who said he needed more time to review and analyze the proposal. Staff has received no further communication from the property owner. It appears to staff that the property owner has little interest in pursuing the proposal, and accordingly staff recommends that the issue be brought to City Council for their consideration of undertaking condemnation proceedings. Vice-Mayor Mark Salvaggio has been following this process and is aware of staff's recommendation. Attachment c: Theodore D. Wright, Civil Engineer IV S:\TED~2001memo\04300 la_4.wpd BAKERSFIELD PUBLIC WORKS DEPARTMENT 1501 TRUXTUN AVENUE BAKERSFIELD. CALIFORNIA 93301 (661) 326-3724 RAUL M. ROJAS, DIRECTOR · CITY ENGINI~.R February 27, 2000 Leonard L. Aguirre P.O. Box 259 Gila Bend, Arizona 85337 RE: PROPOSED ROADWIDENING4917 AKERS ROAD Dear Mr. Aguirre: : . Last September, i met you at the referenced location concerning a proposed project to widen Akers Road. Subsequent to our meeting, the City sent you a letter outlining a proposal to provide improvements in exchange for the necessary street right of way to widen the road. Recently, Councilmember Mark Salvaggio contacted you regarding the proposal and you indicated to him an ongoing concern with drainage of the property, in the event the roadway is widened. Councilmember Salvaggio asked me to look into this concern and get back with you as to possible solutions. A survey was performed on your property to determine how best to deal with drainage. As a result of the survey, it was determined the only way to properly dispose of drainage waters is the use ora shallow retention basin or dry well in the back yard area as shown on the attached plan. Swales would also have to be o~raded to ensure positive drainage. With respect to the southerly portion of your property, we took the liberty of showing how two potential lots could be created through a parcel map. Drainage for these lots could be accomplished in a similar manner as shown on the attached plan. As an alternative, this area could be built up with fill dirt to provide positive drainage out to the street. As a result of the survey and drainage concerns, we would like to amend our original proposal to include provisions for drainage including grading and/or the installation of a dry well. Therefore, the amended proposal would be as follows: CITY RESPONSIBILITY 1. Widen Akers Road along your property frontage including curbs, gutte;s, sidewallc, up to three drive approaches and pavement tie-in. 2. The existing driveway would be modified to conform to the new drive approach. 3. Extend sewer to the north with up to three service laterals to the property line. 4. Grading of yard and/or installation of a dry well to convey storm drainage. OWNER RESPONSIBILITY 1. Dedicate necessary right of way to facilitate Akers Road widening. As stated in our previous correspondence, existing utilities are currently stubbed at your south property line. Thank you for your consideration of this revised proposal and I look forward to hearing from you in the very near future. IfI can be of assistance, please do not hesitate to call me at (661) 326- 3596. Very truly yours, J/~ae's R. LaRochelle, /dSI~erim Public Works Director cc: Mark Salvaggio, Ward 7 Councilmember Alan Tandy, City Manager Don Anderson, Senior Real Property Agent B A K E R S F I E L D PUBLIC WORKS DEPARTMENT MEMORANDUM TO: ALAN TANDY, CITY MANAGER FROM: ~.~,~ACQUES R. LaROCHELLE,  1~' INTERIM PUBLIC WORKS DIRECTOR DATE: ~J MAY 4, 2001 SUBJECT: SEWER USER CHARGES Referral Record # WF0018837 / 002 (Ward 7) Dual Referral to Budget & Finance Committee (lead) and Public Works Department. Vice-Mayor Salvaggio requested that the Budget & Finance Committee look into the issue of 5-year phasing of fees vs. the 3-year phasing in the proposed Revenue Program and bring back a recommendation to Council at the May 16 meeting. Salvaggio requested that Public Works Staff provide a copy of the Budget & Finance Report regarding this issue to Mrs. Carlson who spoke at the hearing. The Budget & Finance Committee Meeting was held on May 3, 2001. Mrs. Carlson was in attendance at this meeting and was given copies of all information relating to sewer user charges. G:\GRO,UPDAT~Referrals\0018837-02Ward7.wpd