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Minutes 64-02-17MINUTES OF THE CITY COUNCIL OF THE CITY OF CYPRESS HELD February 17, 1964 The City Council of the City of Cypress held an adjourned regular meeting on February 17, 1964, in the City Council Chambers, 9471 South Walker, Street, Cypress, California, at 7:30 p.m., Mayor Frank P. Noe presiding. PRESENT: Kanel, Van Dyke, Wright, and Noe ABSENT: Gorzeman Also present were City Manager/City Clerk Dartell Essex, City Attorney H. Rodget Howell, Public Works Director Harold Neu, Secretary of the Plannin~ Commission Dartell Dalton, Police Chief O. C. Foster, and Building Superintendent John McGettrick, ORAL COMMUNICATIONS: Mr. Kenneth Bordner, 5562 Bishop Street, Cypress, addressed the Council, stating that a Notice of Intention to circulate in the City of Cypress an initiative petition for enacment of a proposed Ordinance requiring an election of the people before the City May proceed to enter into the utility business, had been filed with the City Clerk on this date. Mr. Bordner requested that all water service negotiations be placed in abeyance until an election is held and the people have an opportunity to vote on the City enterin~ the water business. The following individuals addressed the Council, stating that they a~ree with Mr. Bordner's proposal: Mrs. Sharon Pritchett, 5897 Orange Avenue, Cypress. Mr. Robert Shores, 10012 St. Charles Avenue, Cypress, representin?~ the Cypress Civic League. Mr. Jessee Black, President of the Cypress Chamber of Commerce. Mr. Warren Hamilton, 5197 Cumberland Drive, Cypress. Mr. John Kennedy, 10002 St. Vincent Circle, Cypress. Mr. Jack Blum, 4291 Agate Circle, Cypress. Mr. Christian Frey, 5572 Bishop Street, Cypress. Mr. Tom Hiatt, 10341 Aurelia, Cypress, addressed the Council concerning the possible damage that has been done due to the City Council havin~ previously adopted an Ordinance setting'up a mdnicipal water system. Mr. Warren Hamilton, 5197 Cumberland Drive, addressed the Council, stating that he is not accusing the City of doing anything wrong or unfair. Mr. James Duncan, 9582 Walker Street, addressed the Council, requesting that the City Council proceed with the regular agenda items and in this manner many of the questions may be answered in the presentation of the reports. Mr. John Kennedy addressed the Council, inquiring what would happen if the bond election is turned down. Mr. Tim Timlin, 4311 Agate Circle, Cypress, addressed the Council concerning municipal ownership of the Water System. Mr. Jack Roberrs addressed the Council, asking if it is the City Council's intention to go ahead with negotiations without submitting the matter to a vote. Mrs. Edith Frey, 5572 Bishop Street, Cypress, addressed the Council, asking if it is not the people's right to vote on this matter. Mr. Carl de Pietro, 10301 Sande Street, Cypress, addressed the Council, statin~ that he would have liked an opportunity to voice an opinion at the time the City first went into the water business. February 17, 1964 Mr. Frank Visca, 5782 Lime Avenue, Cypress, addressed the Council, stating that at the =ime the Ordinance setting up the Water Department was adopted, many of the citizens were involved in other matters. Mr. Robert Doerr, 5207 Cumberland Drive, Cypress, addressed the Council, statin~ that he would be interested in what it will cost the citizens to have a Water Department. The Mayor addressed the audience stating that rather than spending additional time answerin~ the individual questions, the presentations by the Financial and Englneerin~ Consultatns would clarify many of the issues and further questioning would be held following the presentation of the reports. The Mayor declared the Oral Communications closed. PRESENTATION OF REPORT "FINANCING WATER SYSTEM ACQUISITION--CITY OF CYFRESS": The City Manager introduced Mr. Ed Wells, r~resenting the firm oS'~e and YoungberR, Municipal Financln~ Consultatns, who prepared the report "Financin~ Water System Acquisition--City of Cypress" dated February 1964. Mr. Wells addressed the Council and reviewed the above report. The followin~ is a summary of his remarks: The purpose of the financial report is to determine the financial feasibility of acquisition of the existing facilities of the Southern California Water Company in the Cypress area and the construction of the necessary improvements to expand the water system as recommended in the EnRineer's Master Plan for development of water facilities in the City of Cypress. The Cypress system, owned by the Southern California Water Company, had approximately 3,125 services as of January 1, 1964, with approximately 825 services located in the unincorporated areas adjacent to the City. The forecast of service connections will be approximately 6,750 in the Cypress area for 1970. Based on an average of 3.7 persons per service connection, this indicates a population of approximately 25,000. The Engineerin~ Report of Koebig & Koebig estimates a population of 41,000 by 1970. The difference between these two figures represents a significant safety factor in the financial study. The estimate of project costs is as follows: Stage I improvements (3 years) $1,300,000 Distribution System Improvements ~50,000 Acquisition Allowances 1,A+75,000 ContinRency Allowance 125,000 Bond Reserve 150,000 Total $3,500,000 The suRRested method of financin~ is through the issuance of revenue bonds which must be authorized by a majority of those votin~ at an election for this purpose in the City. Revenue bonds must be self- supportinR from Water Department revenues and the report indicates that the proposed system will provide ample revenues to pay for all operation and maintenance and bond service on a completely self-supporting basis without recourse to other funds of the City. The projected revenues of the Water System were based completely on the existing rates of the Southern California Water Company with no rate increase anticipated. February 17, 1964 The repayment of the bonds was scheduled at a 4% interest Pate, with each bond issued maturinR in 30 years. Usin~ the conservative opoulation increase, the existin~ operatin~ costs of the Southern California Water Company~ and the bond service rate of ~% at 30 years, the accumulative surplus to the City by the year 1970 would be $431,~00.00. This surplus may be used for further capital improvements, earlier retirement of the bonds, or reduction in water rates. This water surplus may be even greater because of the [ollowin~ financial safeRuards: 1. Population may increase at a Sreater rate than the minimum estimate used. The report is based on single family residence type customers, and Sreater revenues will accrue with the development of multiple, commercial, and industrial water users. 3. No increase in water rates has been assumed, ad the present rates charred are 10% lower than authorized by the P.U.C. 4. Investment of bond proceeds durinR construction. 5. Investment of water department surpluses. Operatins expenses may be lower than estimated for the followins reasons: Lower Reneral and administration expenses than those of the Water Company because oepration will be consolidated with other funcfions of the City. 2. A savinSs in actual interest costs for the bonds if they sell at less than 3. SavinRs in actual construction costs. 4. Savings to the City in capital improvement costs because facilities are dedicated to the City by developers. Based on these findings and analyses~ Mr. Wells concluded that the City should be able to acquire the existins facilities of Southern California Water Company and provide the necessary improvements with the authorization of the $3,500,000 water bond revenue issue, w~ich would be self-supportins with no increase in taxes and water Fates. PRESENTATION OF REPORT "MUNICIPAL WATER PROGRAM REPORT, CYPRESS, CALIFORNIA": Mr. Keith TranbarSer, of KoebiB and Koebig, th~ EnSineerinB Firm that prepared the report entitled "Municipal Water ProSram ReDort~ Cypress, California", January, 1964, addressed the Council c~n'~er~t~S this reDoFt. The followin~ summary was Riven by Mr. Tranbar~er. The purpose of the En~ineerin~ study is to determine the feasibility, both financially and administratiVely~ for the City of Cypress undertakin~ a municipal water program from an en~ineerin~ standpoint. The EnSineerinR Report was based on the recently adopted Master Plan· Hi~hliRhtinR the report were the followin~ conclusions: The past Fapid ~rowth of the City will continue for the next several years, convertin~ a~ricultural land into Fesidential, commercial~ and industrial uses· 2. Water demand by 1980 should exceed the 1963 usaRe by approximately 500%. Febraury 17~ 196~ 3. Southern California Water Company, a private utility, owns and operates the main water supply to the Cypress Area. a. Four active wells provide most of the present water supply from ~roundwater. b. No emergency storage exists within the Cypress Area. c. Emergency standby equipment is not provided at the existinR wells. d. Many supply lines are inadequate to supply recommended fire flow demands. e. Several areas are deficient in fire hydrant size and spacing. An adequate supply of water, consistin~ of well water and imported water, will be available for the Cypress Area to supply ultimate demands. 5. Operatin~ storagem fire storaRe, and emergency storage are needed immediately for present demands. A master plan of improvements for transmission mains and other principal facilities has been developed for ~uidance in providin~ a proper water supply. 7. A Municipal Water Department would be self-supporting from water revenue, based on current water rates. As a result of Koebi~ and KoebiR's study, there are two recommendations: The master plan of improvements for transmission mains and other principal facilities should be adopted. A bond election should be called for the approval to sell 63,500,000 worth of bonds to provide funds for: a. City acquisition of existin~ water works facilities within the Cypress Area. b. City installation of capital improvements to provide an adequate water supply to new and existinR customers. c. General contingency for miscellaneous items. Mr. TranbarRer closed his remarks by listinR the following beneficial elements of a Municipal Water Department: 1. It is not a tax burdenm bein~ self-supportin~ from water revenue, which helps to stabilize the entire City tax structure. 2. Water rates are controlled by the City, which is not a profit- makinR a~ency. 3. Flexibility is provided by municipal ownership in attractin~ industry and commerce. Facilities would be designed and constructed, considerin~ lon~-ranRe future requirements. 5. Facilities would provide proper fire protection and emerRency storage. 6. Deficiencies, such as inadequate water pressurem would be readily improved. February 17, 1964 7. A municipally-owned system is much mope sensitive to the demands of the ~eneral public. 8. Centralized control, coordination, and recordin~ of utilities and street improvements would result. 0UESTIONS FROM AUDIENCE REGARDING FINANCIAL AND ENGINEERING REPORTS: F0'flowing the reports' of b'oth Mr. Wells and Mr. Tranbarger, Mayor Noe invited members of the audience to ask questions of these ~entlemen concerning their reports. The followin~ discussion was held: Mr. J. H. Graham, ~292 Garnet Avenue, Cypress, inquired of Mr. Wells if there would be a tax loss to the City if Southern California Water Company does not supply water. Mr. Wells stated that certain taxes would be lost to the City~ however, these are more than off-set by the surpluses from the Water Department revenues. Mr. Graham also inquired concerning fire hydrant spacing. Mr. Tranbarger stated that standards were established by the National Board of Fire Underwriters for fire hydrant spacing. Mr. Tom Thorpe, Division Manager of Southem California Water Company, addressed the Council, stating that the spacing of their hydrants is indicated by the County Fire Department, not by the Water Company. Mr. Kenneth Bordner, 5562 Bishop Street, addressed Mr. Wells, asking if the report projected any use of water from Metropolitan Water District lines. Mr. Wells stated this is not included in the first sta~es~ however, the acquisition would include a right to the water which is now imported at the connection at Knott and Cerrltos. Mr. Robert Doerr, 5207 Cumberland Drive, Cypress, inquired if industry is vitally interested in water service when looking for an area in which to located. Mr. Tranbar~er indicated that industrial firms are always interested in the supplier of water and normally request this information of the City when seekin~ an industrial location. The City Manager stated thatazprivate water company, for economic reasons, is normally not in a position to install a large water main to serve only one industrial firm. However, the City, which is seeking a broader tax base, can justify this main line extension in an industrial area in an attempt to develop an industrial complex. Mr. Carl de Pietro, 10301 Sande Street, inquired of Mr. Wells concerning severance damages. Mr. Wells stated that as far as the financial report was concerned, there would be no severance damages. Mr. Frank Visca, 5782 Lime Avenue, addressed the Council, asking if he would be correct in presumong that everythin~ that the engineer stated would be done by the City through the Water Department would not be done by a private concern. Mr. Tranbarger stated that the best answer to this question is to look at the existing deficiencies within the City. Mr. James Duncan, 9582 Walker Street, addressed the Council concernin~ the private water wells in the City, asking if the owners will be com- pensated for these wells by the City. Mr. Wells stated that if the private well owners wished to connect to the City system, there are funds provided for acquisition of these private facilities. Mr. Timlin, ~311 Agate Circle, Cypress, inquired of Mr. Wells about the housing and administration of the Water Department. Mr. Wells stated that the City can provide for a WateP Department without any increase over Southern California Water Company's costs and may even reduce the overhead since a portion of the personnel, equipment, and facilities are already in existence for the general administration of the City. Mr. Frank Visca addressed the Council asking if the purpose of the Water Bond election is to allow the people to decide whether they want to Ro into the Water Business. The City Manager peplied that the purpose of the election is to decide whether the City should proceed with the acquisition of the Southern California Water Company facilities and provide the StaRe 1 improvements. Mr. Visca inquired what would take place if the bond election fails. The City ManaEep stated that this would require a decision of the City Council. February 17,196~ 493 Mr. John Kennedy~ 10002 St. Vincent Circle, addressed the Council re~arding the money spent by the City on the water program prior to the water bond election. Mr. Wells gave the following reasons for Stone and Youngberg recommending the City adopt an ordinance establish- ing a Water Department prior to the bond election: The water facilities which are dedicated by the developers are a savings to the taxpayers, since they will not have to be acquired from the Water Company at a later date, The City water system curtails the growth of the Southern California Water Company, makln~ it possible to negotiate for a lower price for the acquisition of the system~ again resulting in a savings to the taxpayer. It is desirable in the marketing of revenue bonds to state that the City has a Water Department in operation. This could have an effect to lower the bond rate, which would reduce the total cost to the taxpayer. Mr. Warren Hamilton, 5197 Cuntberland Drive, inquired of Mr. Wells concernin~ the purchase price of $1,200,000 for Southern California WaTer Company's facilities. Mr. Wells stated he has confidence that this is a realistic figure based on the value of similar systems. Mr. Ralph Stewart inquired of Mr. Wells if the City Water system would stop at City boundary lines, and if not, asked what the basic water rates would be outside of the City. Mr. Wells stated that it would not stop at City boundary lines., but would extend into the area presently served by Southern California Water Company north of the City limits. He also indicated the water rates would be the same as inside the City for those customers who are now being served by Southern California Water Company, which would be included in the City acquisition plans. Mr. Christian Frey asked Mr. Tranbarger about the placing of laterals alon~ the transmission line on Orange Avenue. Mr. Tranbarger stated that laterals are normally not installed prior to the development of the adjacent property since it is usually difficult to project exactly where the laterals will extend prior to actual development plans for the property. Mr. Warren Hamilton addressed the Council, asking if there has been any revenue gain or cost to the City for the operation of the Water Department. The City Manager explained that although the City is in the Water business, it is not actually servicin~ any existing residences at the present time. Councilman Van Dyke stated that he is in favor of the City taking over the water system which would be at no cost to the taxpayers. Mr. Van Dyke emphasized that the citizens will save money on their fire insurance ratesm will have adequate water pressure, storagesetc. Mr. Robert Doerr addressed the Council concerning usage of water revenue surpluses. Mr. Wells~ in answer to a previous question from Mr. John Kennedy concerning water development plans fo the City between this time and the time of an election, stated that if the City has the opportunity to put in any further facilities, it should take advantage of that opportunity. Any investment that is made in water facilities now, with the aid of the subdividers, will keep the City from having to purchase them later. Mr. John Kennedy addressed the Council, stating that he feels the people of Cypress should have a chance to vote on whether or not the City should 4o into the water business. Mr. Carl de Pietvo inquired of the City Manager concerning the amount of money the City has expended to date on the water project. The City Manager stated that no funds have actually been expended to date, but the City does have financial commitments for the preparation of the Engineering and financial reports and for the drilling of the well on Valley View, February 17, 1984 . Councilman Kanel stated that he would llke to hear comments fromthe citizens who had spoken at the early part of the meetinR prior to hearin[ the reports from the EnRineerin~ and Financial Consultants. Mr. Timlin addressed the Council, statin~ that perhaps Southern California Water Company would be more responsive to the City's demands if they knew that the City is willin~ to 9o into the water business. Mr. Warren Hamilton addressed the Council, stating that he feels that much incorrect information has been passing around the community concerning the water question. He stated that he has been enlightened concernin~ the situation after attending this meetln~. Mr. Christian Frey addressed the Council, statinR that he took the position that he did because he was not fully informed as to what action the City had taken. The Committee that brou~ht the initiative petition to the City feels that it is possible that the City will not do what it says it will with reference to the Water system, and for that reason they have asked that all water matters be held in abeyance until an election is held. Mr. John Kennedy addressed the Council, statin? that he concurs with Mr. Frey. Mayor Noe about one an honest stated that the City has been studyin~ this water situation for year and has employed the most recognized consultants to Rive and accurate appraisal of the water situation. Mr. Robert Doerr addressed the Council, statin~ that he is in favor of the bond issue comin~ before the voters and now wants time to study the matter. Mr. Wells stated that the City Council has not, to date, been in a position to furnish any information concerninR the bond issue due to the fact that the financial report was ~ust completed. Mr. Kenneth Bordner addressed the Council, statin~ that there has been a lack of communication concerning the water situation. He stated that the discussion at this meetin~ has been excellent. Mrs. Sharon Pritchett addressed the Council, statinR that she represents a number of housewives, and that previous to this meeting they have had no information concernin~ the situation, Mr. James Duncan addressed the Council, requestinE that the audience be informed of the meetinR times of the City Council and Planning Commission, whereupon the City Manager announced these.dates. The City Manager further stated that he would welcome the opportunity to speak to any ~roup to review the reports prepared by the consultants re~ardin~ the water pro?ram. Mr. John Kennedy asked if civic ~roups can receive copies of the two water reports. The City Manager replied in the affirmative. Mr. Shores inquired of Mr. Wells concernlnR what would Euarantee that the water rates would not be doubled. Mr. Wells stated that Erowth ~f the system is the safety factor. Mr. Tom Thorpe of Southern California Water Company explained the reason for their rates beinR 10 percent lower than those authorized by the Public Utilities Commission. Mr. Shores also inquired concerning replenishment of the ground with water. Mr. Tranbarger explained ground water levels, replenishment, etc. February 17, lg6B After discussion, it was moved by Councilman Van Dyke, seconded by Councilman WriRht~ and unanimously carried, the followin~ Resolution be adopted, title as follows: RESOLUTION NO. 448 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CYPRESS, CALIFORNIA, CALLING, PROVIDING FOR, AND GIVING NOTICE OF A SPECIAL MUNICIPAL ELECTION TO BE HELD IN SAID CITY ON TUESDAY, APRIL 14, 1964, FOR THE PURPOSE OF SUBMITTING TO THE QUALIFIED VOTERS OF SAID CITY A PROPOSITION FOR THE ISSUANCE OF WATER REVENUE BONDS BY SAID CITY AND CONSOLIDATING SAID ELECTION WITH THE GENERAL MUNICIPAL ELECTION TO BE HELD ON SAID DATE. The following roll call vote was taken: AYES: 4 COUNCILMEN: NOES: 0 COUNCILMEN: ABSENT: 1 COUNCILMEN: Kanel~ Van Dyke, Wright, and Noe None Gorzeman The City Attorney explained that pursuant to law, the City Clerk shall post a notice to electors to permit the persons who either favor or do not favor the bond measure to submit written arguments to the City Clerk for printinR and to be included in the sample ballots. It was moved by Councilman Wright~ seconded by Councilman Kanel, and unanimously carried~ the City Clerk Prepare the required notice to persons who wish to submit written arguments to the City Clerk~ fixin? the last date for filin~ said arRuments as March 6, 1964. The following roll call vote was taken: AYES: 4 COUNCILMEN: NOES: 0 COUNCILMEN: ABSENT: 1 COUNCILMEN: Kenel, Van Dyke, Wright, and Noe None Gorzeman The City Attorney explained that the City Council should designate a Chairman to submit a written argument favoring the water bond adoption on behalf of the City Council. Mr. Frank Visca, 5782 Lime Avenue~ addressed the Council~ recommending that the City Council consider the designation of Mr. John Kanel for this responsiblity. Mayor Noe appointed Councilmen John Kanel to prepare the argument as Chairman for the Council for the sample ballot favoring the water bond adoption. Councilman Kanel accepted this appointment, whereupon it was moved by Councilman WriRht, seconded by Councilman Van Dyke, and unanimously carried, the following Resolution be adopted, title as follows: RESOLUTION NO. 499 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CYPRESS, CALIFORNIA, AUTHORIZING CERTAIN OF ITS MEMBERS TO FILE A WRITTEN ARGUMENT FOR A CITY MEASURE The followinR roll call vote was taken: AYES: 3 COUNCILMEN: Van Dyke, Wright, and Noe NOES: 0 COUNCILMEN: None ABSENT: 1 COUNCILMEN: Gorzeman ABSTAINED: 1 COUNCILMEN: Kanel The City Manager stated that the notice of the last date to file arguments would be posted on the three official postin~ places of the City, end in addition would be posted on the bulletin board on Lincoln Avenue. Mayor Noe expressed his appreciation to the members in the audience fop their attendance, and there beinR no further business to come before the Council, he declared the meeting adjourned at the hour of 10:35 p.m. ATTEST