REPORT TO THE CITY COUNCIL
FROM: BROCK D. BUCHE, PE, PLS, Director
Department of Public Utilities
BY: HENRY MCLAUGHLIN, Business Manager
Department of Public Utilities - Water Division
SUBJECT
Title
***RESOLUTION - Authorizing the Department of Public Utilities to apply for and participate in the California Extended Water and Wastewater Arrearage Payment Program (Subject to Mayor’s Veto) (Citywide).
Body
RECOMMENDATION
Staff recommends that the City Council adopt a Resolution authorizing the Department of Public Utilities to apply for and participate in the California Extended Water and Wastewater Arrearage Payment Program (CEWWAPP).
EXECUTIVE SUMMARY
The new CEWWAPP has been authorized by Governor Newsom and the California State Legislature to provide payments to community water systems, wastewater treatment providers, and wastewater billing entities to forgive water and wastewater customer arrearages for the extended COVID-19 pandemic bill relief period of March 4, 2020, through December 31, 2022. Appropriations of $600 million are being funded from the Coronavirus Fiscal Recovery Fund, established by the American Rescue Plan Act of 2021 (ARPA). The original California Water and Wastewater Arrearage Payment Program covered the period from March 4, 2020, to June 15, 2021. This new program extends the pandemic bill relief period from June 16, 2021, to December 31, 2022. The State Water Resources Control Board (SWRCB) will administer the program.
The application period was opened on November 1, 2023, and closes December 31, 2023. The City of Fresno (City) is eligible to receive this funding and staff is requesting approval to apply for a total of approximately $8.5 million pending final determination of eligible customer accounts. Of this amount, $5.3 million will be applied directly to past due balances on eligible residential and commercial water customer accounts (estimated at 10,198) and $3.0 million for wastewater customer accounts (estimated at 10,125), thereby reducing accounts receivable and the potential of bad debt incurred by the utility. In addition, as the City may expend up to 3 percent of this amount to cover costs incurred by complying with this assistance, an additional $200,000 is included in the application.
Program requirements include applying these bill credits within 60 days of receiving funds, returning unused funds within six months, notifying customers about the credits, suspending shut-offs, continuing to offer payment plans and informing customers that additional assistance may be available through the Low Income Household Water Assistance Program (LIHWAP) and other low-income assistance programs.
BACKGROUND
In response to the continuing economic impacts caused by the COVID-19 pandemic and associated public health measures, including leaving many Californians unable to pay their utility bills due to lack of reliable and consistent employment; the State Budget Act of 2021, included $985 million to the SWRCB to administer the CWWAPP to provide relief to community water and wastewater systems for unpaid bills related to the pandemic from March 4, 2020 and ending June 15, 2021. The funding source for CWWAPP was a portion of the State’s share of the Coronavirus State Fiscal Recovery Fund established under ARPA. The Water and Wastewater Arrearages Programs disbursed $385 million to eligible entities with water and wastewater debt accrued by residential and commercial customers. The City of Fresno applied for and applied credits totaling $5.5 million for water ($3.5 million) and wastewater ($2.0 million) customers.
The SWRCB is now implementing the CEWWAPP, which expands the arrearage period to encompass water and wastewater debt accrued between March 4, 2020, and December 31, 2022. The State Water Board has received $600 million appropriated by the Budget Act of 2021 (Senate Bill 129) and the Budget Act of 2023 (Assembly Bill 102) from the Coronavirus State Fiscal Recovery Fund, established by the American Rescue Plan Act of 2021, for the Extended Arrearage Program. These dollars are the remaining funds after implementation of the original Water and Wastewater Arrearages Programs. As with the Water and Wastewater Arrearages Programs, the Extended Arrearage Program will not disburse funds directly to customers for overdue accounts. All funds disbursed will be paid directly to the eligible community water systems, wastewater treatment providers, and wastewater billing entities for bill credits to be applied to eligible customer accounts.
Beginning November 1, 2023, community water systems, wastewater treatment providers, and wastewater billing entities can apply for funding during the 60-day application period. The State Water Board will begin disbursing funds to eligible entities that submitted applications within the 60-day application period by February 2024. Upon receiving funds, entities then have 60 days to credit customer accounts and let customers know in writing that the debt has been cleared or reduced. At the time of application, community water systems must cease shut-offs due to non-payment of bills and restore any discontinued services eligible to receive bill credits from the CEWWAPP. Community water systems, specifically, must offer to enroll customers with remaining debt into a payment plan, unless the customer currently is enrolled in a payment plan that can be carried forward after the bill credit is provided. In addition, customers must be notified that additional assistance may be available through LIHWAP and other low-income assistance programs. Within six months of receiving the funds, entities must return any unused funds back to the State Water Board and provide certification that the Extended Arrearage Program Funds were applied as bill credits.
The City is eligible to apply to receive a total of approximately $8.3 million in CEWWAPP funding on behalf of eligible residential and commercial water and wastewater customers’ (commercial excludes industrial, agricultural irrigation, or landscape irrigation) bills that are 60 days or more past due during the period starting June 16, 2021, and ending December 13, 2022. This total is comprised of a projected $5.3 million for 10,198 customer accounts in Water and $3.0 million for 10,125 customer accounts in Wastewater. This includes both active and inactive accounts, as well as customer accounts that have payment plans or payment arrangements. The final amount will be determined after all eligible customer account balances have been identified. Within 60 days of receiving CWWAPP funding, the City will allocate payments as bill credits directly to customer accounts to help address past-due billed amounts for water services and will notify customers of the amounts credited to their accounts. In addition, the City is eligible to apply for up to 3 percent or around $200,000 for the costs incurred in applying for or complying with the use and reporting conditions of the assistance. The total application amount will be approximately $8.5 million. The final application amount will be determined after all eligible customer account balances have been identified.
The Extended Arrearage Program does not restrict an entity from receiving other COVID-19-related funding from other sources. However, entities receiving money for water arrearages and/or wastewater arrearages cannot also receive money from any other source for these same arrearages.
The Resolution for authorization to apply and participate in the CEWWAPP has been approved as to form by the City Attorney’s Office. Adoption of this Resolution and identifying an individual authorized to execute agreements is necessary to proceed. As part of its application, the City must provide a completed Authorized Representative Delegation Form and Conditions of Payment form.
ENVIRONMENTAL FINDINGS
Pursuant to the definition in California Environmental Quality Act Guidelines (CEQA) Section 15378, participation in CEWWAPP is not a “project” for the purposes of CEQA.
LOCAL PREFERENCE
Local preference was not implemented because this action does not include a bid, an award of a construction contract, or approval of a services contract.
FISCAL IMPACT
Acceptance of the CEWWAPP funding will not impact the General Fund. The funds received will be used to reduce or eliminate past due balances on residential and certain commercial water and wastewater customer accounts. This will reduce accounts receivable and the potential for bad debt incurred by the Water and Wastewater enterprise systems. All funds, totaling $8.5 million, will be deposited in the Water Enterprise Fund (4000-4001) and Sewer Enterprise Fund (4500-4501). The estimated amounts are $8.3 million for customers’ arrearages and $200,000 for program costs (3% of the arrearage amount).
Attachment: Extended CWWAPP Resolution