TO:
Honorable Mayor and Members of the City Council
THROUGH:
John Jalili, Interim City Manager
FROM:
Bruce Moe, Finance Director
Steve Charelian, Revenue Services Manager
SUBJECT:Title
Revised Street Sweeping Refund Process for Expanded Refund Period (Finance Director Moe).
RECEIVE REPORT
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Recommended Action
RECOMMENDATION:
Staff recommends that City Council receive this report on the revised street sweeping fee refund process.
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FISCAL IMPLICATIONS:
The total amount of refunds will depend upon the number of claims submitted. If all accounts, past and present, file a claim dating back to the inception of the street sweeping fee in 2004, it is estimated to have a maximum value of $3.05 million (this includes claims already submitted and paid under the previous four year refund period). Refunds are paid from the Refuse Fund balance (the fund which collected the fees). Please note that to the extent refunds exceed available Refuse Fund moneys (estimated at $860,000), the General Fund will need to subsidize the refunds. This may require utilization of the Economic Uncertainty reserve.
BACKGROUND:
In 2004, the City commenced charging a street sweeping fee to residents and businesses. The charge appeared on utility bills as a separate line item and was based upon a percentage of the refuse bill. Street Sweeping fees collected have been used to recoup the costs associated with removing debris from the streets and preventing the collection and accumulation of that debris in the storm drain system and ultimately the ocean.
Starting June 24, 2013 the City discontinued charging residents and businesses the street sweeping fee, and provided a claim process for refunds of fees already paid. Refunds were provided for up to four years for claimants based on actual fees paid. Since July 2013, 2,836 claims have been processed with a total value of $287,000. Out of the 2,836 claims, 1,364 customers chose to take a credit on their utility bill and 1,472 customers opted for a check refund. No street sweeping fees have been collected since July 1, 2013.
DISCUSSION:
At its January 21, 2014 meeting, City Council expanded the refunds for street sweeping fees from the original four years, to commencement of the collection of the fees in 2004. At that time, City Council directed staff to design a process for the new refund period which takes into account refunds already processed as well as pending claims. Simplification of the claim form was also a goal; the new form does not require a witness and has less legalese (see Attachment #1). City Council further requested that the revised process by reported to the Council.
Under the new procedure, staff identified the following five categories of claims and the associated process:
Category 1 - Claims Already Processed and Paid
To date, 2,836 customers have filed claims and signed releases for street sweeping refunds for up to four years. They have received either a check or credit on their utility bill at their option. Under the expanded refund program, claimants in this category will automatically receive a second check or credit for the actual amounts paid back to 2004 (fee inception). They will not be required to submit a new claim form or sign a revised release in order to receive the additional applicable refund. The additional refunds total $255,700, bringing the total refunds to this group to $542,800.
Category 2 - Claims Valued, Refund Pending Receipt of Release
Six hundred thirty-nine (639) customers have had their claims validated/valued and have been sent a release form but have yet to return it in order for the refund to be issued. Once the release is received, a check or account credit will be issued for actual fees paid back to 2004. No further claim form will be necessary.
Category 3 - Claim Filed, Release Received, Refund Pending
There are approximately 45 claimants that have signed the release form for which the City was in the process of refunding. Those refunds were delayed pending this new expanded refund period process. These customers will receive a check or credit as originally requested on their claim form for up to the nine year period. No further claim or release form will be required.
Category 4 - Claims Received, Validation/Valuation Pending
There are approximately 140 claims that are pending valuation by the City. These customers will receive a letter informing them of the total value of their claim for up to nine years, and will receive a simplified release form (Attachment #1) with their expanded total value. The estimated value of these claims is being determined.
Category 5 - No Claim Submitted
Those who have not previously submitted a claim under the four year refund program will be required to complete a claim form and sign the newly revised release form after valuation of the claim.
This revised claim period will take effect on April 1, 2014, at which time staff will commence the processing described above. Refunds will take 8-10 weeks to process.
The street sweeping fee refunds continue to be advertised on the City website (with FAQ's), City Hall (Receptionist, Finance Cashier, Council Chambers lobby, PD/FD reception counter) as well as printed information on the face of each utility bill. Claim forms are available on-line, at City Hall and the Police/Fire lobby area.
CONCLUSION:
Staff recommends that the City Council receive this report.
Attachment:
1. Revised Street Sweeping Release Form