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CITY COUNCIL AGENDA ITEM NO. 26

Meeting Date:  April 11, 2000 

Subject/Title:    Interest-Free Loan  

Submitted by:  City Engineer, J. Stevenson 

Approved by:   Jon Elam, City Manager

RECOMMENDATION

As recommended by the Sewer and Water Subcommittee who recommends approving a Resolution establishing an interest-free loan program for existing commercial, office and industrial businesses doing business in Brentwood for additional water meters and sewer pretreatment devices.

PREVIOUS ACTION

On May 11, 1999, the City Council adopted Ordinance No. 613 which established sewer rates for the City of Brentwood based on the strength and volume of the individual users’ sewage. 

On February 8, 2000, Council directed staff to review the procedure and bring the recommendation to Council at a later date. 

BACKGROUND

Following implementation of Ordinance No. 613, staff and the City Council became aware of two elements that need to be addressed in order to fully take advantage of the new ordinance. 

The first missing element is that several commercial centers in the City are served water through a single water meter.  This makes it difficult to bill the separate businesses in the centers based on their volume of water and sewage.  Reworking the plumbing and adding separate meters can be expensive and create a hardship on our existing businesses.  If a restaurant or other business that produces a strong sewage is located within that business center, it can have a profound effect on all businesses in the center through increased monthly sewer bills. 

The second, and equally serious and expensive problem, relates primarily to restaurants.  Restaurants typically have a very strong and therefore expensive sewage to treat.  Therefore the monthly sewer bill is relatively high.  It is to the business owner’s and the City’s benefit for that effluent to be reduced in strength.  This program will allow for the installation of sewer pretreatment devices, (grease traps) which will reduce the strength of the restaurant’s sewage.  Once these devices are installed, the business owner will receive a 20% reduction in sewer rates as long as the grease traps are maintained according to City required cleaning intervals.  The required maintenance interval for small sink/floor traps (indoors) is monthly, and for large (usually outdoor) industrial traps is quarterly. 

These two serious and expensive problems and related water distribution problems can be solved through this interest-free loan program.  Additional water meters can be added to separately meter each business to afford the most accurate metering of each business’s water and sewer usage.  The other use of this interest-free loan  

program is for the purchase and installation of sewer pretreatment devices such as grease traps and food diverters that could be installed in a restaurant.  Installation of these two devices (if they don’t already exist) could substantially reduce a restaurant’s monthly sewer bill.

Resolution No.        

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD ADOPTING AN INTEREST-FREE LOAN PROGRAM TO ASSIST EXISTING COMMERCIAL, OFFICE AND INDUSTRIAL BUSINESSES IN BRENTWOOD WITH THE FINANCING OF THE PURCHASE AND INSTALLATION OF SEWER PRETREATMENT DEVICES AND ADDITIONAL WATER METERS TO MORE ACCURATELY ASSESS MONTHLY SEWER SERVICE 

WHEREAS, the Sewer Enterprise Rate Study for the fiscal years 1999/00 to 2004/5 prepared by Berryman & Henigar, Inc., dated April 27, 1999 proposed to provide adequate operating revenue to pay for qualifying expenditures, provide adequate debt service coverage, maintain a positive cash flow in the sewer enterprise fund and equitably distribute the sewer treatment and collection system costs to each user; and 

WHEREAS, Ordinance No. 613 adopted the Berryman & Henigar Sewer Enterprise Rate Study on May 11, 1999; and 

WHEREAS, the sewer rates are based upon a number of factors and are separately calculated for different categories of users.  It has come to the attention of the City that several existing commercial, office and industrial users are located upon a single parcel of property with a single water meter, thereby making it difficult to accurately apply the appropriate sewer rate; and 

WHEREAS, it has also come to the City’s attention that certain restaurants’ impact upon the City sewer system may improve if certain pretreatment devices are installed and maintained on a regular basis; and

WHEREAS, in order to facilitate the addition of these costly measures which will improve the accuracy of the City’s sewer rate application and improve the quality of the City’s sewer system, the City desires to offer users who choose to install these measures a loan on certain terms and conditions; and

WHEREAS, it is in the best interest of both the business community and the City to have the most accurate and equitable sewer rate structure possible; and 

WHEREAS, the City Council has a policy of being business friendly; and 

WHEREAS, it is the City Council’s intent to make interest-free loans available to commercial, office, and industrial businesses that are currently doing business in the City of Brentwood, for financial assistance in retrofitting existing private sewer and water systems with sewer pretreatment devices and/or additional water meters. 

NOW, THEREFORE, the City Council of the City of Brentwood does resolve as follows:

1.                  The City Council authorizes the City Manager, or his designee, to administer a loan program for the limited purposes of (a) providing additional water meters to those commercial, office and industrial businesses existing as of the date of this Resolution who need multiple water meters to accurately and fairly apply the City’s

Sewer rates adopted through Ordinance No. 613; and (b) providing pretreatment devices for restaurants existing as of the date of this Resolution. 

2.         The loan program shall have the following features, at a minimum:

a.         The amount of each loan shall be subject to approval by the City Engineer and shall be based upon his approval of the meters and/or sewage pretreatment devices and determination that the users existed upon the date of this Resolution;

b.         No loan shall be provided for equipment required by law to be installed which is the sole responsibility of the user;

c.         The loan shall be repaid through the monthly bills sent out by the City and shall be amortized to be repaid fully in a two year period;

d.         No interest shall be charged on the loan;

e.         The loan recipient shall covenant to maintain the equipment installed to the satisfaction of the City Engineer, and the Chief Building Official;

f.                    The City Attorney is directed to prepare the legal documentation to implement the loan program and may add other features to protect the City’s legal interests. 

3.         City staff is directed to analyze how to apply separate water meters and sewage pretreatment devices, against all new users where appropriate. 

4.         This authority under this Resolution shall expire in two (2) years, unless the Council renews it with or without modification.”

            PASSED by the City Council of the City of Brentwood at its regular meeting of April 11, 2000, by the following vote:

Sewer Pretreatment and Water Meter

Loan Application

Property Owner’s Name:

Business Owner’s Name:   

Business Name:     

Business Address:

A.P.#:

Equipment being installed:

Contractor:

Bid Price:      Completed Cost:  

I,                                    , being the business owner of                                              located at                                                               , City of Brentwood, do hereby apply for a loan for the purchase and installation of the equipment listed above.  I understand and agree that this loan will be paid back by me through monthly billing by the City and that non-payment shall be grounds for termination of water and sewer service.  The charge will be $          per month.  I further understand that payment from the City pursuant to this loan will be made to me following acceptable installation of the listed equipment, inspection by the City’s building inspector and that building inspector’s written release to the City’s Finance Department.

                                                                                                                            

Business Owner Signature                                                  Date

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