Council approves steep sewer rate hike

Okay, perfect. Good evening. Happy, beautiful, lustrous, warm St. Patrick's Day. I'm going to call to order our 6 p.m. City Council Meeting. Hello. Everybody's so excited to be here, they don't want to be quiet. All right, we're going to call to order our 6 o'clock Council Meeting at 6.01. We'll start with our invocation by Police Chaplain Peter Hansen. Thank you, Mayor. May we begin to pray. Almighty God, our city's leaders are here assembled to join their hopes and designs to meet our common needs. We all want a good life. We long for safer streets, happier homes, great schools and good citizens. To achieve rewarding careers. To enjoy family life. To give loving care for the elderly and infirm.

And lead lives that honor you, respecting each other. Let us seek a meeting of minds. Agree on good aims. Share in one vision. And hope for future things. Finding the ways and means needed to achieve them together. Our best hopes are met only in you. To walk paths of peace and harmony with gracious manners and patience. To seek and to discover clearly the steps before us. And with one heart. To begin again. While we rest in the grace and comfort of your spirit. May you receive our desires and dreams for a better city. Through your mercy, we open this meeting. Knowing you are always more ready to hear than we are to ask. Always willing to give us more than we desire or deserve. Father, we pray this in your most holy name.

Amen. Madam Clerk, can you call our roll for us since I skipped that? Sorry. Okay. And then we'll do the pledge after that. So, let's see. Council Member Goldstein. Present. Council Member Hawley. Here. Council Member O'Brien. Here. Council Member van Overbeek. Here. Council Member Winslow. Here. Vice Mayor Bennett. Mayor Reynolds. Alright. please rise for the Pledge of Allegiance. All out of order, sorry. Speaker card announcement. Wishing to address the Council on any matter listed on the agenda should first complete a Speaker card found in the back of the Chamber. Once completed, please turn it in to our City Clerk, and speakers are taken in the order received. Once the first speaker begins, no additional cards will be accepted on that item.

Persons demonstrating rude, boisterous, speaking on matters outside the jurisdiction of the City Council or engaging in otherwise disruptive behavior will be called to order. If such conduct continues, I may call a recess requesting removal of such persons from the Council chambers and adjourn the meeting or take other necessary appropriate actions if needed. City Attorney Brian Jones. Yes. Can you report out for our March 16th and 17th meeting for us, please? Yes. Happy to do that, Council. So, from yesterday, the March 16th meeting, there was a closed session on a couple things. The Believe in Chico lawsuit direction was given to Council on that one, as well as there was a City Manager recruitment discussion and direction was given from the City Council to staff as well as the executive search firm.

And in the closed session earlier today, there were two items, labor negotiations and direction from the Council was given to staff and the continuation of the City Manager recruitment direction was given by the City Council to the staff and to the executive search firm. That's my report from closed session. All right. Thank you very much. So, we have an item that arose after the posting of the agenda. This requires two-thirds vote to agendize. This is a minute order authorizing the City Manager execution of a loan agreement between the City of Chico and Turning Point Commons. If agendize, this matter will be heard as item 5.6. Can I, does anybody have a motion? So moved. Second. Okay, we have a motion and a second.

Okay. All right. Council Member Goldstein. Council Member Goldstein. Yes. Council Member Hawley. Yes. Council Member O'Brien. Yes. Council Member van Overbeek. Yes. Council Member Winslow. Yes. Vice Mayor Bennett. Yes. Mayor Reynolds. Aye. Carries 7-0. All right. Consent agenda. All matters listed on the consent agenda are considered routine in nature and can therefore be enacted with one motion. Do we have any no votes or Council Member disqualifications? No? All right. I'll consider a motion. Oh, do we have speakers? Move to approve. Oops. I'll move to approve now. All right. Thanks, Council Member. We're right. Second. Tie to the Vice Mayor. That was a motion and a second to approve the consent agenda as read, which included the consent of the City Council of the City of Chico amending section 16.66.040A of the Chico Municipal Code to add the Chico Area Recreation and Park District as an exempt entity from tree preservation regulations.

Council Member of Chico is a final reading and a second to approve the consent agenda. Yes. Council Member Goldstein. Yes. Council Member Hawley. Yes. Council Member O'Brien. Yes. Council Member van Overbeek. Yes. Council Member Winslow. Yes. Vice Mayor Bennett. Yes. Mayor Reynolds. Aye. Carries 7-0. All right. Public comment. Members of the public may address the council at this time on any matter not already listed on the agenda and are within the jurisdiction's authority. Council cannot take action at this meeting on these requests made under this section of the agenda. How many speakers do we have today? We have three. All right. Three minutes each. All right. I'll call the first two up and if you can go ahead and line up in the middle aisle.

Beau Powell will be our first speaker followed by Carrie Welch. Hello Glenn. Didn't mean to beat you up Mike. It wasn't, I was just repeating your words and putting my thoughts to them last meeting. I said you said two things that stuck out in my mind. One was the police being the forward front of the local government, which it is. And when people don't like what you do, you know, they blame the police sometimes. And the other thing you said, you didn't really want to talk about the campfire because everybody had been talking about it. And you said the one thing you did want to say about it was unprecedented. It was a word that everybody was using. And you said the thing that was most unprecedented to you was that there wasn't a command center set up.

And like protocol, I believe calls for it. My dad volunteers down in the Sacramento area. He used to be law enforcement. And that's what he does for the hospitals was set up command centers. Well, we all know where the sheriff was because we saw him directing traffic up in Paradise. So who was in charge of the command center during that fire? Has anybody ever looked into that? The park fire we had a year later, the news is showing a firefighter who was able to make it home during the middle of the fire and save some of his stuff. I mean, I know it's a tough job and we all need the police and fire to do their job. Personally, that's why my family is getting sprayed because they failed to do their job willfully.

But, you know, that's neither here nor there. I saw Mr. Winslow at the Mike McGuire's thing. That's a nice place they have there, huh? That Palms. Can't imagine somebody wanting to make such a nice place in an area that lets farmers spray children in the members of the public. Once again, we need you to do something about the public safety. You know. Chief Aldridge is the fourth police chief since I came here in 2014 and told the city council about this. They didn't care about it then. And now we're hearing about the sewer and how it's been put off. Well, we know who was in charge of the finance committee. That's time. Thank you. And we'll get back there. Good evening, everyone. Carrie Welch. I'm a commercial real estate broker.

And I have good news for downtown that I get to share. I want to let everybody know that it's public knowledge that the Starbucks is going to be replaced by great state coffee. That's Alex Binion and Jasmine James. They have experience. They know what they're doing. And I'm really excited to bring something positive. I'm not bringing it, but the community is bringing something positive to downtown and some great coffee. Thank you. Thank you. And then our last speaker is Rob Berry. I just want to briefly address the obvious. I know that even my liberal friends on the dais here cannot possibly find the situation outside of the city hall acceptable. And I happen to believe that there are plenty of things that can be done that will not offend the Warren settlement.

And I know that this town and certainly this downtown cannot wait until January of 2027 before we take action to begin to make at least incremental improvements in the public nuisance and the blight. That is a constant reminder. Every time we come to the city council hall and through this meeting, we have to walk through the smells and the sites of a pop up soups kitchen that draws people down here for the spectacle of requiring the public to navigate through these encampments and this public health hazard in order to attend their city council meeting. It is completely unacceptable. It is completely deleterious to the health and safety and quality of life of the city. And I hope the city council members can find it in their hearts and in their intellect to take some action that will begin to turn the situation around in a positive direction.

Thank you very much. Thank you. Speaker 2 Speaker 2 Speaker 2 Speaker 2 Speaker 2 Speaker 2 We have no public hearings. So sewer enterprise study, public works director of engineering, Brenda Notobani. You're up. Yes. And sorry. Wow. David Keene will be doing the presentation. Welcome, David. Hello. All right. Good evening, members of council. Vice mayor Bennett, mayor Reynolds. My name is David Keene. I'm here. I'm here. I'm here. I'm here. I'm here. I'm here. I'm here. I'm here. I'm here. I'm here. I'm here. I'm here. I'm here. I'm here. I'm here. Watford. Watford. So tonight I am standing here before you, but this has been a collaborative effort between your finance department, operations, engineering, as well as third-party consultants, Corollo Engineers, who are experts in the wastewater field.

With us tonight we have Beverly Hahn, and on Zoom we have their finance team available for any questions as well. And so I want to acknowledge this is a complicated process. This is a multifaceted endeavor that the city has undertook, and so this presentation is a high-level overview, but it is about 18 minutes, so I will work through it. So here is an overview of what we will go through tonight. First we will go through the background, we will look at some of the challenges that the sewer fund is facing, we will look at the capital improvement plan to address those challenges, how that impacts customers depending on customer class, some financing options that the finance committee has reviewed, we will look at the finance committee recommendation, and then the next steps.

So we will go ahead next. So before we get into this, I want to acknowledge that the city operates a public utility. The sewer enterprise is the fund that is a restricted fund to operate that utility. The city council serves as the governing board for the city's public utility, and in that role they provide policy direction and oversight to ensure the system operates safely, reliably, and in compliance with regulations. And the crux of this slide is that council is responsible for stewarding the system's long-term financial health, including setting rates that fund its operation and maintenance. So that's what we will be talking about tonight. And so the background of the sewer fund. So prior to 2022, the city of Chico sewer fund had the lowest rates in the region for comparable agencies by far.

In 2022, a significant rate increase was adopted at that time, but still resulted in the lowest rates in the region. What does this mean? This is long-term under financing of the system. So improvements that could have been done over the past 15 years have now been postponed and delayed. One thing that this slide does not capture is it reflects residential rates, but it does not capture the important introduction of equivalent dwelling units, which is a method of equitably allocating cost depending on customer class and the strength of effluent that they generate. So what that means is a higher strength user will pay more per gallon than a lower strength user. So that was introduced in 2022, and that was a critical part of that sewer rate update.

So I showed the background there with regards to the sewer fund rates and how that has impacted customers. And these are some of the challenges that the sewer fund is facing. As a result of that long-term under financing, deferred maintenance. While we've had enough to operate the system and keep the lights on, we have not had enough to invest in the infrastructure over long term. Also, we postponed regulatory compliance. So in the last rate study, there was a significant regulatory compliant project that was postponed in that rate study. It is now written directly into our permit that needs to be adhered to by 2032. As a result of deferred maintenance, we've had to perform emergency repair projects.

For example, we have the primary clarifiers rehab out at the treatment plant, and your finance director in December presented to you the sewer fund projections in which ideally we have around a one-year operating reserves targeted to be at 11 million, and our forecasted actuals are around 4.4, which is 40 percent of our target. So we are having insufficient reserves, which is an issue for the sewer fund. In addition to that, we have volumetric-based rates. These are great. They promote conservation, and they allow customers to control their bill, but from a revenue standpoint, it's revenue instability. So over the last three years, we've seen a 24 percent reduction in water consumption in the winter months as customers have had an opportunity to impact their bill.

Next is inadequate development impact fees from previous loan payments. In 2007, we had roughly $40 million in outstanding debt, and at that time, that was for capacity improvements at the treatment plant, so we created what are called development impact fees to pay for those. That development impact fees revenue has not been realized, so the sewer fund has to make those payments because the debt service has to be paid. Lastly, or then construction cost escalation. Construction cost escalation has outpaced standard goods escalation. What does that mean? For the dollars that we do have, we get less construction than we thought we once would. And then customer nonpayment. So for a typical utility, it's on the range of about 3 to 5 percent for customer nonpayment.

As a sewer-only utility, we are unable to turn off the sewer service when somebody doesn't pay their bill. So as a sewer utility, we're looking in the range of 5 to 10 percent of customer nonpayment. Finance is working on operational methods to recoup that money from putting liens on the property and other different methods. But that takes time, and it's not as easy as shutting off the water when somebody doesn't pay the bill. And so for scale, customer nonpayment of 5 to 10 percent is about 1 to 2 million dollars a year. So those are the big challenges facing the sewer fund. But the main takeaway from this slide is that we are in a position now where we need to catch up and establish a sustainable rate moving forward.

So it's a two-part thing that we need to do for the sewer fund. That catch up and establish a sustainable rate moving forward. So how do we do that? We rely on our adopted planning documents. From the collection system to master planning for the collection system for general plan build-out, the strategic plan for the water pollution control plant, these are our foundational documents that guide the sewer system. Within those, the drivers for the projects that are included in those, they're broken down into three main project drivers. Regulatory, condition, and capacity. So regulatory is our national pollution discharge elimination system. This is the state of California giving the city of Chico permission to take raw sewage, treat it to a certain level, and put it into the Sacramento River.

So you can imagine there are many, many requirements that go with that, and they're only getting stricter by the year. That's our regulatory drivers. Condition-driven, I liken this to replacing the roof on your house. After 25 years, you can save up. It's a known cost, and you can replace it. Or you can wait year by year and take the risk until you see water coming through the drywall. At that time, you have to replace the drywall, you have to replace the attic damage, potentially structural damage, plus the roof. So condition drivers are a matter of risk. And then lastly, capacity. This is to ensure that the system has adequate capacity to serve the general plan 2030 build-out. So when we look at the next five years, the key takeaway from this slide is the number in the lower left there.

It's a $134.5 million capital improvement plan over five years. As you can see, this is roughly 50-50 between regulatory and condition-driven projects. Within that regulatory-driven project, there's a single project that's about a third of the overall pie, and that is a regulatory-driven project that was postponed in the previous rate study. Capacity is a small sliver of that, but it is a critical piece of the pie. So that's the total cost of those plans. That's where that information was obtained. So now we know how much it costs. How does that cost of service get down to the different customer classes? We rely on the State Water Resources Control Board Revenue Program Guidelines, and we use what are called strength characteristics.

And in wastewater, a typical metric is what's called BOD, or biochemical oxygen demand. And the way to kind of think about this is how much oxygen it takes to break down the organics. The picture in the right there is our aeration basin. As wastewater flows through, air flows up, and it breaks down the organics. So I've highlighted residential and restaurant, so you can see that from a strength perspective, restaurants are about three to five times harder to treat than our residential units. And this is due to fats, oils, and greases. And then on the flip side, degreasers and heavy chemicals for cleaning. So let's take a closer look at restaurants in particular, so you can see how those customer classes are affected in their bill.

So restaurants make up just about 1% of all the accounts for the city of Chico. They generate slightly more flow, on the order of 3%, but then that BOD, how hard are they to treat? Of the entire treatment process at the treatment plant, restaurants require 14% of the BOD treatment at the plant. So once you take into account flow, BOD, TSS, and other factors, 6% of all the revenue needed for the city of Chico comes from just this customer class. The outcome is that you have a relatively small number of high-strength dischargers that impact the overall treatment. Earlier today, you may have received an email about breweries, which is another customer class, in particular Sierra Nevada. And they are a very unique customer that has a robust treatment system, and they actually receive monthly bills based on their monthly usage because they have a well and Calwater.

So they are a unique customer that gets billed in a unique class due to their extensive pretreatment, as well as their overall discharge. So now you have seen the background, the total cost, who it gets passed down to, and how. Let's talk about the financing options of how we are going to finance this. So to date, we have presented three options, two cash-funded options and one debt financing option. Option one is that large increase year one, the catch-up, and then the sustainable rate moving forward. Option two is incremental increases over the first five years, but that results in a higher rate in year five because you don't have the time to establish that savings. And then three debt financing options, which I'll go into next.

So for debt financing, we started with a $40 million loan for 3A, and that's because in 2007, that's what we had, so we figured that's a reasonable amount. Roughly double that at 90, and then 65 is a midpoint. For interest, if we are able to obtain state revolving fund low-interest loans, which are highly competitive and have to be regulatory-driven projects, there is the potential that we could get a 3% loan. But if we need to go through the state's iBank for discretionary funding, that's 4.5. So for this study, we included a 4% rate. Loan term of 20 years, annual debt service of $3 to $7 million, and a total interest of $20 to $46 million paid over the life of the loan. So before we leave this slide, I want to acknowledge those 3A, 3B, 3C.

Keep that in your head, 3, 5, 7 million per year for 20 years. That's what we're getting with the debt financing options. So this is the overall revenue requirements that the city is looking at to cover the capital improvement plans. We've got all the options there, and before we talk about the numbers, I want to acknowledge that this is the overall revenue need. Customer class impact will vary by customer class depending on strength. Some will pay more, some will pay less. The overall revenue needs to be these numbers. So depending on the customer class and how many there are in that customer class and their strength, it will vary slightly. So if you were to look at these numbers based on the actual rate schedule, it will be slightly different.

So the first thing to see is a rate increase is required next year. That catch-up is essential. Under all these scenarios, some form of rate increases next year to ensure fiscal sustainability of the sewer enterprise. After that, you want to look at the five-year cumulative change. So over five years, what will the rate increase be? Is it sharp up front, or do we spread that out? And then a critical column is, what are the rate increases we're looking at in the future? If we don't establish that sustainable rate moving forward, there will be rate increases in the future. And we know that because regulatory requirements are coming, capacity improvements are coming, and we can see that. While we don't have a crystal ball, we do have some idea of what's coming in the six- to ten-year range.

So as you look at this chart, and you're trying to consider the pros and cons of each option, option one has 180% increase in year one, very steep. And option 3B has 180% over five years, spreads that out. The debt financing allows the short-term impacts to be less, but it includes long-term impacts. There will be rate increases in the future. So that is the tradeoff between cash funding and debt financing. So now I want to take a look at the rate schedules, which are included in the staff report. And I want to spend a moment here to really acknowledge the numbers. So I focused on a house and a high-strength, high-consumption restaurant class. So as you can see for the residential, a typical customer right now pays around $37 a month.

Under option one, they would go to $98 a month, and then up to $110 over the five-year period. And we recognize that's significant, and so we want to spend a moment here and acknowledge this. As we move through the additional options, option two is a less increase in year one from $37 to $59, but then significantly higher by year five because you don't have that time to establish a savings. This option has not really been identified as an optimal option by the Finance Committee, which I'll talk about later. Option 3A, this is a modest increase year one from $37 to $59 and up to $117 by year five. So slightly less, but it comes with 15 more years of debt service. So there are strings attached to this option.

Next, 3B, which is the $65 million loan, $37 to $59 that first year, and then to $97 by year 2031. But it comes with a debt service and rate increases in the future. So this is looking good. And then our highest debt financing option, which has the lowest near-term impact, has that from $37 to $59 next year. For the average customer, I want to be clear there that this will change depending on how much you use. There is a volumetric component, so this is the average customer. And it's a modest increase of 22% by 2031. But this one comes with debt service and significant rate increases in the future, very large, like on the order of 50 to 100%. So those are big numbers. We acknowledge that. How do those compare regionally?

The very first thing I want you to notice here, well, actually, first, the gray lines in the back are comparable agencies. So those are other agencies that are similar to ours, similar size, and similar treatment processes. If you notice the red line, that's Chico, by far at the lowest and has been for the past 15 years. So one would only think that you would go from being the lowest to up at or near the top. The other high gray lines are Anderson and Redding, which have undergone significant improvements as well. The blue line, you can see the sharp increase. That's the catch-up. And then the sustainable rate moving forward. Three green lines. Option two is not shown. The three green lines are option 3A, 3B, 3C, with the $90 million option, debt financing option is dark green, 65 for the middle green, and then 40 for the light.

But remember, again, they may seem like attractive options, and they are something to consider, but they come with strings. So as you're looking at this and you're comparing short-term versus long-term impact, those are things to consider. We talked about restaurants and the introduction of equivalent dwelling units. So for restaurants, after 2022, you can see that the red line is now in the mix of the other utilities. So restaurants did experience a significant rate increase last time, and we acknowledge that. They are in the range of the others. The problem is, like I talked about, they're 1% of the overall revenue. That's just not enough to fund the entire capital improvement plan. So sewer rates need to increase across the board.

The other gray line at the back there at the top, that's Redding. So if a restaurant were to operate in Redding, it would be a similar cost as proposed under option one. So those are the options that we're looking at. The finance committee has reviewed this in their past two meetings and recommended option one, which is a cash-funded large increase year one, and then small increases moving forward. From here, tonight, we're presenting this information to you. We will request to initiate the Proposition 218 notice, including the scheduling of a public hearing. And then in June, we would come back and we would bring forward a resolution adopting the new rates. And then in August, those new rates would go into effect.

And so we've talked about the background, the challenges that the sewer fund is facing, the capital improvement plan, who's going to pay, depending on their customer class. And so the question for you tonight is not whether or not the sewer fund needs to be, or whether or not a sewer fund needs to be funded, but how to do that in a way that ensures long-term stewardship of the system. And that concludes my presentation. All right. Do you want to take questions from Council before we go to speakers? I'm assuming we have speakers. Anybody want to push their button? Nope. All right. Council Member Goldstein. Thank you. Thank you for that really informative presentation. I guess my first question is somewhere in there.

It was mentioned that development impact fees in the past haven't caught up to be able to fund this. Can you elaborate on that? Certainly. So in 2007, we had approximately $40 million in loan for a capacity-driven project at the treatment plant. Capacity-driven projects are typically paid by new development, which are development impact fees. When you create a development impact fee, you have to make some assumptions about how much development will occur in the short and long term, and the development hasn't occurred based on those projections. But the debt service needs to be paid. So while the development impact fees haven't been realized as they originally forecasted, we still have the debt service that needs to be paid.

So the sewer fund pays for that. Is that what you said? Yeah. And just to clarify that I heard you right. So some of the projected development hasn't occurred that was projected at that time? Either the development impact fees were set too low or the projected development didn't occur. Could be a combination of factors. Oh, okay. So it could be the impact fees were set too low and we didn't achieve enough funding that way or the development didn't occur. Thank you for clarifying. Thanks so much, Mr. Keene again. I'm starting to get this presentation memorized, and that's really exciting. I went over this in Finance Committee, but I think it'd be beneficial for the whole council to hear. But when we were talking about customer nonpayment and how that has been affecting the revenue source and how it's subsequently been addressed by staff, I'm sure we anticipate customer nonpayment to again increase once the sewer rate increases as well.

And I'm curious if staff has been preparing or anticipated those customer nonpayment differences. Thank you for the question. Lost me. We had a kind of gamut of issues that came up with this first rate increase that happened a few years ago. And before these rates were in place, all sewer bills were being billed by Cal Water. So we had to go through some growing pains with our customers, not realizing that they had to pay a separate bill. With that also, we have had to overcome some challenges with data about addresses that we receive from Cal Water, matching what is actually happening in terms of property owners or renters or whoever it is that's paying the bill. So we are overcoming those challenges.

Also, we had to adopt a new outside billing system for rates. So it was a wide gamut of issues. We're still grappling with them, but we think that we've come up with a pretty good resolution going forward. It's not something that's going to happen overnight, but we are addressing it. And we have kind of a system going forward where we're going to be able to assess those bills. We have the ability to assess on liens, either on property taxes or direct liens to the property. So we will be looking towards that. It's a long process if we do it on the property tax bills because it happens once a year. But we also have direct liens abilities in other formats. So we do have plans in place, and we do have kind of the initiative to go forward to resolve those issues that we've discovered kind of in a, you know, just experience over the last couple years.

But we're trying to overcome them. Ms. Martin, thank you so much for the update in progress. I think you guys fail to give yourselves enough credit on all the measures that you've taken to address that. Council Member Ryan O'Brien? So, David, we may need some help from Brendan Vieg on this. But 20 years ago, we were building around 500 housing units annually, split 60-40, 300 single-family, 200 multifamily, and they fluctuated, but that was sort of the average. My recollection is that last year we only built 100 single-family homes. That's roughly correct, isn't it? Yeah, I think there's a little over 100 single-family homes. Yeah. So, you know, we had an assumption that we were going to build 300.

I'm sure there was an assumption that it was going to go, grow up, continue to grow a number of single-family homes. But we had an assumption it was going to be over 300, and it only turned out to be 100. So, that's the major problem, and that has a lot to do with Valley's Edge not going forward. I think when he speaks to the words capacity and general plan, he's speaking more to what the build-out of the general plan would be. So, there may be some temporal issues, but ultimately, we will build out the general plan area, and there will be the need of the sewer facility to meet that need. So, it just didn't happen fast enough to cover the loan payments. So, in essence, the rest of the ratepayers have been paying those capacity loan payments.

And, of course, the assumptions were made in 2007, and we all know what happened in 2008. That didn't probably help either. All right. Any other comments from up here before we go to speakers? All right. How many speakers do we have? We have six. All right. Three minutes each. Okay. I will call the first two speakers, and if you can line up in the middle aisle. Annalise Ulrich, followed by Matt Deppa.

Hello. My name is Annalise Ulrich. I represent MWS Properties. Here in Chico, we manage just under 1,000 units. And also here for MVPOA, Northern Valley Property Owners Association. Like many others, we've experienced some significant cost increases over the past few years. Just for a few, for example, garbage up nearly 300%. Insurance close to 200%. Water another 100%. And now the 180%. So it's just quite a bit, and especially for the first year alone, to absorb that. I understand and support the need to do the repairs and replace failing infrastructure. That's obviously very important. But implementing such a large increase in year one, on top of all the other things I had mentioned, is extremely difficult to absorb.

And will probably have real impacts. So I would strongly encourage the council to consider alternative phasing or reduce the burden of that front cost. I'm also here advocating for tenants. This rising cost is going to directly impact rents and affordability. Chico is already growing concern in this area. And this makes it even harder to keep housing attainable. It's hard to believe that the high increase up front will protect us from further increases down the road. I appreciate your time and consideration. Thank you. Thank you. Matt Deppa, followed by Molly Kofta.

Thank you so much, everybody. Matt Deppa, North Valley Property Association, Sierra North Valley Realtors Association. I know the city has a tough case here, but like Annalise just mentioned, you know, housing providers have a huge burden on us right now to provide housing. And as everybody keeps putting their foot on our throats and on our pocketbooks, how do we keep providing that housing for tenants as well as for ourselves? I think there's a situation here that, yeah, structure is definitely needs to be improved, but there has to be a better way that doesn't affect everybody. I just think that, you know, we've had enough, you know, of costs going up. When can we start pushing back on some of those costs going down?

Garbage is going to be getting refranchised next year, I'm sure, so that'll be more fees to us there. There's a quote out there that says, lack of preparation on your part doesn't constitute an emergency on my part. Five years ago, four years ago, you said, let's increase the water rates to $31 residential, whatever it was for restaurants, that'll solve the problem. Well, here we are now, new increases. What's it going to be in three or four more years when this doesn't work? You need another 200%, 300%. So let's figure out a way to make it work and make it cheap. Let's let everybody keep providing housing because these rates go up. We'll lose the mom and pops, the people that care about tenants.

We'll have corporate landlords, and we all know how we feel about that. So thank you for your time. Thank you. Molly Kopti, followed by Jennifer Morris. Good evening, Madam Mayor, Vieg Mayor Bennett, and members of our City Council. I am here on behalf of the Chico Chamber of Commerce and the business community that we speak for. I would like to express our appreciation for the work that has gone into identifying and addressing the city's sewer infrastructure needs. We recognize the importance of maintaining safe, reliable, and compliant system, and we understand the investment in infrastructure is necessary. At the same time, we are concerned about the impact this will have on our local businesses.

Many of these businesses are navigating rising operational costs across the board. Given the magnitude of this proposed adjustment, we respectfully request at least 30 days to better assess how we may evaluate and move forward in this rate-setting plan. This additional time would allow for further exploration of alternative funding sources, evaluation of alternative approaches to mitigate the impact, and time for the chamber and fellow collaborators to find alternative opportunities to help offset increased costs for businesses, including grants, programs, and other supportive resources. Providing this additional time will allow for more thorough review of available options and help ensure the right balance between necessary infrastructure investment and long-term economic sustainability.

We appreciate your consideration and look forward to continuing to collaborate with the City on solutions that support both critical infrastructure and a strong local economy. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Good evening. I'm here on behalf of the Sierra North Valley Association of Realtors. I got drafted to be a spokesperson. So I'm going to read you a letter from our association president, Becky Johns. Good evening, Mayor and members of council. Sierra North Valley Realtors represents over 650 real estate professionals serving Chico and the surrounding region. As the voice of real estate, our role is to advocate not only for our members, but for the long-term health stability and accessibility of housing in our community.

We want to begin by clearly stating we support the city's responsibility and efforts to maintain and invest in critical infrastructure. Reliable wastewater systems are essential to public health, environmental protection, and the continued growth of Chico. At the same time, our responsibility is to ensure that decisions impacting housing and property ownership are approached with balanced sustainability and community awareness. Housing affordability remains one of the most significant challenges facing our region. Rising operational costs, whether from utilities, insurance, construction, or regulatory requirements, ultimately flow through to renters, homeowners, and prospective buyers. When costs increase too rapidly or without sufficient planning time, you can unintentionally reduce housing accessibility, increase financial strain on residents, slow investments in property maintenance and development, impact overall economic vitality in our community.

Our policy principles emphasize the importance of protecting property owners, promoting affordable housing, and ensuring economic stability through thoughtful and balanced approaches to funding and growth. In alignment with those principles, we respectfully encourage City Council to consider a phased and predictable approach to any rate increases, exploration of alternative funding mechanisms to reduce immediate impacts, clear and transparent communication with stakeholders, opportunities for collaboration with housing providers, businesses, and community Organizations. Chico is the strongest when we work together. We believe infrastructure investment and economic stability are not competing priorities. They are interconnected. With thoughtful planning, we can achieve both.

Appreciate your time, leadership, and your willingness to engage in this important conversation. Thanks very much. Watford Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Watkins Wat lot for me not only that I'm scared for our our small businesses and really really empathize with the effects that the rising cost of living is having on our entire community but it's because because of that that I tried to advocate for option one in the finance committee because of that consistent negligence that we have seen and under financing our sewer enterprise fund I mean we all saw the graphs that Mr. Keene presented and and having that consistently under financed over the last 15 years has just been a pattern of the council kicking the can down the road a little bit on top of that what my colleague councilmember van Overbeek brought up just reimagining what development impact fees were intended and anticipated to support for those 300 funds have been significantly under what we anticipated not only because of some developable developable land not being developed but also because some of the proposals brought forward by the ad hoc growth and and develop development committee are are still being worked upon and we're going to see those day off fees um looked at I think in the next couple of months that isn't on the agenda forecast yet but I I do want to say going forward we I hope that we can reimagine those development and impact fees and try to make sure that those are are supplementing the 300 funds adequately so that they're not being subsidized by everyone in Chico which is what's happening now secondly I know that some municipalities that manage their own sewer funds and some private companies a really easy example is Cal Water PG&E Sacramento sewer district they all have need-based programs that help promote equity and although that might be a little bit too much for staff to take on right now as these changes are going to be substantial I hope we can look at need-based options in the future as a council to say these are the effects that the community has had because of these rate changes and here's how we can dampen the stress it's had on our community and that way we can lessen the volatility of of the fund being supplemented now and still plan for looking at future equity options hopefully that can be agendized sometime in future years that's member we're back yeah we're in this situation because the can was kicked down the road for decades and people were paying 20 or 22 a month and uh the rates weren't raised well the road has ended with the can uh and there's and there's no silver bullet here these rates are going to have to go up a lot and the question is how much and I I don't think we're ready yet and what I found out today is if you remember uh Mr. Keene's excellent presentation we have 160 135 million dollars worth of capital spending we have to address in the next five years 65 of that is regulatory mandates from the state which of course they don't fund 48 million of the 65 is to line the uh ponds with concrete and the reason for lining the ponds with concrete was because is because of a concern about heavy metal content but the results of the testing to know how much metal heavy metal content we have we don't have yet so committing to 40 to the 48 million dollars before we know we need to do it strikes me as premature now whether that 48 million million dollars is going to go isn't going to go away maybe it becomes 24 but until we have some clarity around what exactly the state is requiring us to do I don't think we want to improve rates that fund the worst case scenario I think we want to understand that more clearly I don't think we're ready to make a decision on this council member Winslow well thank you council member and overbeck um it's all reasonable just one one thing um it's it's national clean water act that um is the main element of regulatory compliance believe it's it's the cost and it's just as a um as a point and before I um spill out the untreated effluent in my heart on this I would be interested in staff's response um to one of the comments to dr um dr schaaf janes about the significant industrial users maybe not being properly assessed in this and whether that's worth the reconsideration significant industrial users are in their own separate class we have a pre-treatment program that goes around and looks at those specific users and they have their own permit so those users are treated separately from typical customer classes and they do have to have a permit to discharge so we are aware of what they're putting into their system there's inspections that they have to adhere to and reporting requirements that they have to provide so we do have an industrial waste inspector that handles those and so something changes on their part like we we discover something we didn't know we wouldn't have to go through a new prop 218 process to change their rates to say that again so if if we were to discover something different like that maybe the pre-treatment was less effective than we thought we wouldn't be required to go through another process of resetting rates for them because it is occurring to however we measure the treatment that they do that would be on us to make them adhere to our requirements so if they all of a sudden started putting something gasoline or something random down the drain that would be we would no longer allow that permit to exist so that would burden would fall on the discharger okay okay just one one more question there was a comment or an ask that we we postpone this for a month which doesn't feel like a huge ask to me but also i'm of the opinion that it's and i'll explain that i think it's clear we need to do something here and i don't see much a value on our part kicking the can down the road further um but as far as the their capacity to plan i mean is would that be a significant burden on the city well we're in this position um one thing to consider is that this would be a five-year rated option period just as the previous one was and we're here at four years and the reason is because of the urgency of this situation so certainly we can do additional assessments within 30 days but um we are here because of the condition of the sewer fund thank you mr king um always appreciate your the the concision of your um presentations and um it's really easy to to defer maintenance um people do it a lot um it's a very common thing it's partly an effect of our you know system of us coming back to election every few years is that when it come close to your re-election it feels like a really appealing thing to do to kick the can down the road and we could probably get applause potentially if not here the people who have listened to mr keene's presentation and people at home who didn't see that maybe would think that we're really good for not raising the rate increases and when i ran for office it was it was at this time when we were looking we were recognizing how badly deferred our maintenance was citywide but you know sewers were part of that and there were some people that i that i knew that i was politically aligned with in a lot of ways that saw it as whether they understood it and decided to say otherwise or they didn't understand it they thought that it was convenient to talk about how we we should oppose these rate increases this is somehow like a cash grab or something um and even you know and to one of the public commenters points about the rate increases that happened in 2022 2023 we knew that that was only accounting for what we thought was half of the need we were further deferring this maintenance and then things that changed you know where we're explaining there there's more non-payment than we expected um construction costs escalate and then we had this significant volumetric component where if you reduce your winter water usage you can pay less and it turned out to be a super effective um water conservation program um and that's great but from from our standpoint this does put us in a tougher spot um so i i think that uh i'm glad that thus far the way i feel among like the seven of us on the council um many people might run for council who would like to just defer maintenance in order to score some political points or something but i don't feel like that's the attitude of us and i think that's um something that i appreciate about everybody on here that we can recognize this is in the best distance of the city it's really um we have very few options and we could look at the lightning in it now and then paying 20 to 46 million dollars more in interest in the long run um i'm not a fan of that option but in any case i think it is of the utmost importance that we stay in alignment in favor of responsible Management of our public enterprises council member Goldstein all right i do have more questions for you david if you don't mind um so first following up council member Winslow already essentially asked this but on the industrial topic brought up by one of our speakers um can you help clarify for me are we able like do those cover the same fund if we and are we able to raise fees for industry for our sewers we utilize the state water resources control board guidelines for customer classes so if they fall into a specific customer class then that is the effluent strength that we assume for them and we've had customer classes say hey our discharge is different but accumulating that and obtaining a good sample of what they're discharging over time to base their fees off of is unique we're able to grab samples and make sure that they're compliant but able to establish a rate is the disconnect there so we do lump them into the customer classes that are defined in that table that i showed you okay i'm just wondering if there's any opportunity or if it would be fair to raise fees to some degree for industrial uses um and if there's a way to offset the cost for the residential i think part of the introduction in 2022 of the equivalent dwelling units did just that okay so prior to 2022 i think that wasn't happening and everybody was paying the same cost per gallon now those industrial users are paying more and i showed the restaurants in particular three to five times more per than residential and there's also you know mortuaries is another big one breweries is a big one those are some of the big ones that we have in that customer class okay so you think that we've already addressed that industrial concern to the best we can right now i believe that one user pays in excess of three hundred thousand dollars a year correct okay i could add real quick to council member Goldstein that our significant industrial users their rates do go up as as they're aligned in that particular customer class and council member Winslow's um question a point earlier too we we monitor them heavily they're heavily regulated we have industrial waste inspectors that um test their affluent on a monthly basis they're they're required to submit um tests on most of the most of the time monthly basis sometimes quarterly um but they're heavy regulated we know exactly what they're putting into the system and they do pay their fair share okay that's great do you have another question or two um one of the folks who reached out reached out to us via email asked if there are any um maybe state or federal grants that we could pursue to help offset some of these costs are you aware of any programs like this so unfortunately there are limited grants available for utilities in our position the best that we could get would be low interest loans so the state revolving fund does have low interest loans that we could pursue for the regulatory driven projects and that's something that we would certainly pursue if we are going down the route of debt financing we could potentially look to get in that lottery that takes time it's competitive we would be in a good position due to the nature of the the community here but it's not a guarantee so that's why with the debt financing options we put that four percent because best case is we can get a three percent loan that's a basically a grant funded loan and then worst case is we go through the i-bank at four and a half okay and last question i think council member Hawley also brought this up but the future potential for helping low income people pay for this massive increase in sewer rates um do you know of any programs available for that either statewide or that we could create locally as the utility itself that's certainly something we could explore and examine as the overall revenue generator as the public the net increase would be more to subsidize that other group so that's something that we would have to look into um the legal defensibility of that and then the impacts to those other customer classes so certainly that's something we could explore but it would be a net increase in overall revenue requirements to make those i see okay um well thank you so much for these answers i think i'm i'm done questioning you on this this has been really helpful um oh sorry no worries i was done with anything important i had to say just kidding i'm gonna just make a couple comments um this is a really tough one and i i'm very concerned that if we raise rates by this much it is going to impact everybody homeowners as well as renters who will likely get passed along that cost but the alternative to raising rates immediately is i mean option two they end up going up even further than option one and then if we take on more debt for our city we're still paying that so no matter what we do here we have to pay more for our sewers um and i hope that there are other ways that we can help fund this in the future making sure that our development impact fees are covering more costs than they historically have so that the individual residents aren't having to shoulder all of that themselves um but it seems like we have to make a hard decision here as an elected body and i'm likely going to support what the finance committee and our staff recommend thank you council member O'Brien sorry about that thank you mayor so clearly this is a need um that's not debatable i trust our staff and where the neglect took place all long ago who kicked what can where it really doesn't matter we're tasked as a body to address it however for me to look my constituents in the eye a struggling family a struggling business and impose 180 rate increase i better be sure that we've exhausted every option available to us i want to make sure that we do that as a body you're right council member Goldstein this is a really difficult question i i know we have to do something but i want to make sure when i look that constituent in the eye that we've exhausted every option before i vote for such an increase vice mayor Bennett so i was on the uh the uh finance committee back in 22 and we made some changes in the rates and increased uh all of the charges for the sewer usage uh and i thought we were making a good decision i still think we made a good decision we just didn't make it far enough we thought we were making uh we were improving the situation we did the rates would be even higher if we did not make that decision back in 22 i'm not going to speak to the fact that over the past 20 years the rates have been so low um they couldn't keep up with the expenses and that's what's happened we're we are here because we should have done something better 20 years ago we should have rates increase over time and it didn't happen so and there's no way we can change that we're going to have to accept the fact that this is where we are and make a tough difficult unpleasant decision about how are we going to fix this we can't keep going this in this direction uh if we had to partially shut down the sewer plant um that would be devastating this is devastating uh there is no easy answer and i i i can appreciate everybody's concern about this but we have to make a decision it's time so uh and i think we've probably put this off a little bit sounds like that's the direction it's going but it will come back to us and uh we will be deciding how to proceed forward and we must we must decide we can't just let this keep going um cancel i'm over back i see you in the queue but i'm gonna go just because i haven't spoke yet um i think the elephant in the room besides the fact that this can has been kicked down the road for decades um and not taken care of i think we could get there with the residential but what we are looking at doing to our businesses right now will decimate some restaurants i and all i'm hearing every day is about all of the restaurants we've lost downtown and thank you great state coffee for trusting in us and believing us and loving downtown chico enough to put your business in downtown imagine being that business that just decides to rent in downtown chico whose water is six hundred dollars a month right now and then we're next month when they start doing business we're going to raise it to two thousand like i cannot sleep at night and make that kind of a decision so i don't know what choice we have i don't know what we can do but i've talked to several business owners that they are on the brink you had some of our insurance rates have gone up three hundred percent pg and e bills are up i'm paying four thousand dollars a month for pg and e guys like this it is not an easy time to be in business and if we do this to our businesses you think downtown's hurting and sad right now i would hate to see what's going to happen so i don't know what the answer is i wasn't in um all your guys's amazing meetings thank you so much for the powerpoint it gives us a lot of information but we just had a conversation about you know talking about meeting with our constituents and getting out information better i think at minimum we need to each have a meeting in each of our um districts and let people know what's happening explain to them have a one-on-one conversation and give them time to to digest this like this is the first time unless somebody took the time to go to finance committee which is during the day which a lot of people don't aren't able to go to this is the first time they're hearing about it knowing about it what's happening and so um i'm going to do one in my district um hopefully i can gather some staff support and we can um go and explain to people and have a meeting and let people talk and digest and understand what we're asking them to do why we're asking them to do it and the importance of it because i just i i don't we only had eight speakers tonight that's unheard of on something that we're talking about doing a 180 increase on so yes we're going to kick the count down the road for another few meetings maybe a few months um but not another decade for sure because we just don't have that kind of time and i do understand that so council member van Overbeek yeah i wanted to respond to something council uh person Goldstein said about looking at impact fees if we if we raise the impact fees all that does is raise the cost basis of houses so the people who either buy or those houses or rent those apartments end up paying for that the developers don't pay impact fees that consumers do right so an important thing to understand i i think we're ready are we ready for a motion i've got one more person in the queue but yeah okay council member Hawley yeah thank you mayor Reynolds um i just as someone who was in the finance committee i'll i'll say we kind of have exhausted all options that's why we deferred to staff to come back with other debt increment financing options which were included in this presentation but not found as viable as the interest and 15 plus year liability that we would accrue from that is just too too strenuous but i did have a question for staff i'm not sure exactly the appropriate person to ask but if option one were to be approved today approximately how long would it take for the rate increase to go into effect for the community august august august okay so if we were to approve this today i just want to make it clear to the council because we did receive some emails saying please don't include these months because of such and such um it wouldn't be in action or until aug approximately august sounds like are you ready for a motion yes okay um i don't think we are ready to decide what to do until we get the results of the testing for the heavy metals that could be a 25 million dollar swing in what we're required to do so my motion is that we delay the approval of the fee increase until we get the results of the heavy metal testing i'll second that motion i'd like to make a subsequent substitute thank you oh my god i'd like to make a substitute motion to approve option one i'll second for discussion and i do have a question if we're discussing um how long do we anticipate that the study that council member van Overbeek had mentioned uh how long do we anticipate that will take or until we have the results so we are in active discussions with the region water quality control board on this exact subject we met with them last week and based on the information we have that is where the project is as it is described in this staff report additional results should be available by august um so by then we should have a better idea but when it comes to these types of projects there are many variables that go into it so our understanding is there is potentially a path forward for a slightly reduced scope like you talked about but at this point based on the information we have it is not so that is the time frame and um following up on that so let's say that if we were to approve option one and then we found new results that made it so that we could lower the fee could that still happen if option one is approved certainly proposition 218 provides a maximum so okay if we do a proposition 218 it can be reduced from there right so option one if we approve that would be setting a maximum for rates to increase to in august yes and if for example the project was reduced in half currently projected at 48 million and say it went down to 24 million because some project will be required we are currently discharging water onto the land and there are land discharge requirements so even if it's not 48 million it's going to be something something is going to have to be done it would reduce that year one increase from 180 to 155 so it's not going to change it a ton but it's something and it's moving in that direction so that is the kind of scale that we're talking about for this one particular project under option one scenario okay and if we were to delay and not approve this until we know the results that would probably just delay how long it takes us to increase the rate which then means we pay more in the long run the rate would go up over the five-year rate period for that reason because it would be less time the implementation wouldn't come until say december so it would be a half a year that first year so waiting will only cost long cost more uh is what i'm hearing is the most likely scenario okay thank you david council member O'Brien i saw yours as well no okay council member just just quick quick comment as far as the like public outreach on this i i value that a lot i would be happy to do that same sort of thing i show up to yours or i wouldn't if you don't want me to whatever um i mean if you're not ready to get yelled at then why are you in this job thank you council member Winslow so you want do you want the vote yeah so we have a so on the substitute motion um that was made by council member Hawley seconded by council member Goldstein and that was to go with option number one i'll take that vote now council member Goldstein yes council member Hawley yes council member O'Brien no council member van Overbeek no council member Winslow yes vice mayor Bennett yes mayor Reynolds no okay that carries four three so there's no need to with for option one and there's no need to go back to the original motion okay all right we will take a break and and be back in a few minutes

go back in a few minutes Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Pursuant to the government Thank you. Thank you. Thank you. Mayor Bennett. Thank you. Thank you. Thank you. Thank you. And I want to do you. Thank you. Thank you. Thank you. We have a few. All right. Thank you. You. is the ordinance that the city has with regards to street closures and events.

As of now, there is an event on Saturday, March 28th in the Plaza, and they're going to be closing the streets on Broadway from 3rd to 5th and from 4th to Salem. This closure will be on a Saturday from 10 in the morning to 6 at night. They're going to be bringing in food trucks and pop-up vendors, which are directly competition with our businesses. Utilizing the Plaza, I think, is fantastic. However, when street closures happen, business drops. Saturdays are a larger shopping day for the brick-and-mortars, but pop-ups and food trucks placed in front of businesses creates competition in an already struggling downtown. I understand that we have the Thursday night markets, and several businesses aren't really thrilled with that either, but we deal with it.

It was originally a farmer's market to support the farmers and the brick-and-mortars. Somehow it's turned into an open flea market and artisan's craft fair. After reviewing the ordinance and street closures, I realize that anyone at any time has the ability to close the streets down and bring in direct competition with the brick-and-mortars. I am asking that this ordinance be reviewed and reworked. As a small business owner downtown with the empty, unkept, and overpriced buildings, we need all the support we can get, and closing the streets isn't one of them. Thank you for your time and consideration. Thank you. Adam Fidelli, followed by Anika Rodriguez. Thank you. Hello again. I'm much better off the cuff.

I've been thinking about this a long time. I've been a downtown merchant in my real estate business downtown since 2005. First across the street from the council chambers here, and then now it's on 3rd Street right by the old Starbucks. But anyway, so I've watched a lot of stuff happen and not happen. But I think if we're looking for something quick, I agree with the previous speaker, that we ought to consider let's be like the mall downtown. If you're going to compete with the mall, you've got to be like the mall. What does the mall have? Free parking. I think it's worthwhile. I think the way you avoid abuse is we keep the monitoring system in place. So people have to still punch in their license plate or whatever.

So we're going to be here two hours in the two-hour zone. They don't move. They get ticketed. That's the way we control any abuse of that. So that can be whatever gets decided. But I think that would be a quick and dirty boost for traffic downtown. And then also, you know, we have buildings downtown that are chronically vacant. I mean, vacant the whole long, almost the whole time I've worked downtown. I know we started to address that in the previous council. Some progress has been made, but I think we ought to continue to push on that. And then also encourage the other downtown building owners. A lot of them are pretty damn proud of that space. You know, as far as what they charge or try to charge for rent.

I think we ought to encourage a little moderation. Those are my quick thoughts. Thanks. Thank you. And our last speaker is Anika Rodriguez. Thank you, Council Member O'Brien, for putting this on the agenda. I would really recommend that you guys take this to ad hoc and also have stakeholders from downtown part of your ad hoc committee. I think that the issues that I face on the 200 block of Main Street are going to be completely different issues of somebody on the 300 block of Broadway or somebody in Zone B versus Zone A. I do think that for downtown to have a true revitalization, it needs to be a partnership between the building owners and the business owners. But I would like to see what the city can also contribute to that.

I do know one of my neighbors recently in the last week put up a new sign. It's a beautiful new sign. It's a really small sign. It probably took him, cost him $200 to make himself. But it cost him $888 in permit fees. So I think those are some things that we could look at. Like, how can we reduce the cost of making downtown better for business owners? Like, I know for me, we have been in our space since 2012 and we do not have a sign. And a lot of it is just the fees to do that. We have really good signage within our building that we have produced ourselves. And we have the ability to create an amazing sign ourselves. We have a full workshop in our basement. And just the fees of permits has been something that has, like, been something that has hindered us from doing it.

And we want to be competitive. We want to be like corporate stores. But as a small business owner, we don't have the same kind of capital. So thank you so much for your time. Thank you so much for putting this on the agenda tonight. I'm really excited to see what you guys do. She was our last speaker. All right. Further questions, comments, or? All right. Council Member Hawley. Yeah, I would love to see this digested a little bit in an ad hoc. Again, it doesn't have to be as robust as GND was. And I would also really love to donate more time to this work because it's something I care so deeply about. So there's a whole plethora of issues we could look at just upon reviewing the downtown economic and planning studies that have been curated throughout the decades.

And rather than reinventing the wheel and trying to just come up with a new downtown plan, I would really love to take all of the suggestions that have been curated by consultants and staff throughout the years and reassess the progress that's been made and what are the kind of short-term, easy wins that can come from that, I think would be great. Council Member Goldstein? Yeah, I agree. Glad we're talking about this. Thanks to Council Member O'Brien and our public commenters. We'd love to see whichever way this gets discussed, whether it's at internal affairs or at an ad hoc committee meeting, I think that there could be more productive discussion than what we're able to do here on the dais.

And I just want to point out a couple of things that previously have been brought up that could go into that conversation potentially. Our dear departed, just kidding, Council Member Tom, had previously mentioned some downtown ideas like wayfinding and historic downtown Chico branding, things that I also have been interested in if that's something our business community supports. So there are lots of ideas out there and I really like the idea of in some form one of our existing committees or an ad hoc committee discussing these. Thanks. Council Member O'Brien? So yeah, like I said, I'm fine. I think we have already an internal affairs committee, which would be fine to punt this to. But if you, fellow council members, believe it'd be best in ad hoc, I don't really care.

I think we just need to have that discussion sooner rather than later. And the first meeting that we would call is to get a full situational report as to what's going on downtown. So we fully understand those dynamics, whatever they are. And probably going to be a tough conversation, but we're going to need to hear that. And that's where we're going to start is hearing from those affected most of people that invested their blood, sweat and tears in our downtown. I want to hear from them. I forgot one thing. Can I add it? Yeah, go ahead. This may or may not fit into the committee, but I know that there's the potential for redevelopment of Lost Park eventually. And I don't know what the status of that is, but I've heard some things.

And so I'd love to get more information to the council and or to this committee on that. And if there's, yeah, it might inform such a discussion of what's going to develop in the future. All right. I'll second your motion. You've made a motion, right? No. I didn't, but I can. I just want to make sure that we're all comfortable, whether it's going to be an ad hoc, whether it's going to go to internal affairs. There's pros and cons with both. But like I said, I just think we need to have the conversation sooner rather than later, whatever that platform is. Would we consider sending it to internal affairs, but you could agree to meet sooner and more often in order to facilitate the conversation?

Yeah, I'm sure we can do that. Right, Debbie? Right. Yes, because we have the next one, first of April. And then we can, you can have that conversation and then decide how you want it to move forward. So if Debbie said yes, then that's the case. I just think that would be the easiest. You already have the internal affairs committee. You are already going and then just add on extra meetings. Right. So I'll make that motion to ship this discussion to internal affairs. I'll second that. Motion's Council Member Hawley. Just to be clear. So we're going to start with what you described as a full situational report on downtown. And then we would anticipate like maybe drafting up a list of further things you want to talk about, bringing it back to council.

Once we, you know, Council Member Winslow, once we fully understand, because we heard things tonight that I had not heard before suggestions. So quite frankly, we need to hear from those people invested in our downtown first and then take that and then create the topics from that discussion. Great. Okay. Yeah. No, I like the internal affairs idea partly because I've run, co-run an ad hoc committee. Internal affairs is a Brown Act committee, so it's different. But it also means being a Brown Act committee that it's noticed by city staff. And I will say that there's flexibility in the ad hoc committee, but that also is flexibility where if you don't get an agenda out at a certain time or whatever, it doesn't go to the right people or something, people are mad at you for it.

I kind of like the, I feel like it's flexible enough within the Brown Act that it's worth doing it that way. Well, considering the council has a policy that agendas go out six days in advance. Thank you, Mr. Sorensen. Anyway, we can make sure that the agendas get out and I think that we can do a wide distribution to DCBA, to the chamber. We can try to hit, and then we'll post it maybe on the website as to the first one so that we can get as many business owners and property owners there. I like it. So I'm happy to do that. Thanks, Ms. Presson. Okay. So, Council Member Goldstein? Yes. Council Member Hawley? Yes. Council Member O'Brien? Yes. Council Member van Overbeek? Recuse. Recuse. Oh, he's recused.

I apologize. I forgot to look up. It's so weird not having anything. Council Member Winslow? Yes. Vice Mayor Bennett? Yes. Mayor Reynolds? Aye. And carry 6-0 with one recusal. All right. Item 5.5. My request for council discussion regarding the PBID Opportunity Zone and possible downtown entertainment zones. So I will start with the Opportunity Zone. So that is going to be opening back up in, let me get to my notes here. Most of all the downtown is in the census tract for the Opportunity Zone. It will start taking effect in January of 2027. And there is an extensive amount of work that needs to be done and go into that before it happens. So I am just asking that we allow staff to work with the PBID, I think, is who is going to actually, you know, take that forward for us and allow staff the time to do that.

And hopefully get our downtown designated as an Opportunity Zone, which has a ton of different things. I put it all on the agenda. I can go over it in long form if you want to, but it's all on the agenda. The other one is the entertainment zone for downtown. There has been an amazing group that actually came to the city that came together involving the chamber. And the chamber, I think, started it, and then a bunch of other people came on. And they've been meeting, I don't know, about once a month and having some conference calls. I was like, this is clearly going to take a lot of time for our staff. And so I just wanted to be sure that if this is a direction that we're interested in and having an entertainment zone for our downtown, that we bless that and let staff take off and run and do the hard work.

I think the chamber has offered to do a lot of the legwork that needs to be done and contacting the businesses and letting them know what would need to be done and do a lot of that. So I don't foresee it being a ton on Eric. But our new assistant city manager has been taking the ball and running with that and doing well on it. But I just wanted to bring it to council and make sure everybody was good with that. So with that, I will take questions if anybody has any questions for me. Otherwise, we'll go to speakers. How many speakers? Do we have any speakers? We do. We have three. All right. Three minutes each. Okay. Audrey Taylor, followed by Molly Kofta. Good evening, Mayor and Council. And I just want to say, go Irish.

It's that day. I'm here actually with Chamber Concepts, but I'm also the PBID coordinator in which the city is a member of the PBID, the property-based improvement district for downtown. And the board of directors at the PBID this year has initiated a 2627 platform for initiatives that we just want to share, which goes along with your discussion here. So the board has adopted eight, I'm going to call them building blocks, in three different floors. That first floor is a foundation, which includes our ambassador program, which has been happening since 2017. And those guys are my heroes, cleaning up downtown. The second new initiative is called Block by Block, and that is led by our director, Anika Rodriguez, who is keeping eyes on downtown daily and then reporting those out to either PBID or to Eric or to other people in downtown or the police.

Our third platform and building block is Safe Streets, which will be led by our director, Greg Scott, and joining him will be Doug Gillen, working again, going back to the chief and talk about our safe streets, how do we do them, talk with the university. What are the things that we can do to make sure that customers feel that it's safe downtown, and they will bring their children downtown. On our second floor, which is called our activation floor, is where we're trying to do many small things that make a difference in downtown. That first one is what we called, and you just talked about it, park and go. And we've had a meeting so far with Brendan, and on Tuesday at 8.30 in conference room one, we'll be doing our first discussion about parking and a possible pilot program that we have brought forward.

That committee is led by David Halimi and by Anika Rodriguez also. Our second activation program is called Open Doors. That is led by Carrie Welch, and you saw her up here earlier making a nice announcement. And Open Doors is about the vacant buildings that we have down. How do we fill them? Carrie has a wealth of contact with people of identifying how we can get businesses that fit the spaces that we have in downtown. And we have our next program is Fresh Coat, which is probably our most exciting, and I don't have enough time, but I want to say that the PBID has put up $25,000 to paint buildings downtown, selecting them, and that, as of today, has been matched by $30,000 and a partnership with Sherman Williams for providing the grant.

The last one was our investment ready, which leads into living downtown, and it is the PBID's request that the city put an application into the governor's office for an opportunity zone. I think Council Member Bennett has a quick question for you. So I have questions, so I want you to continue. So I think you left off it. You did our Fresh Coat, and then you've got investment ready and downtown living. Can you just tell us a little bit about those? Yes. Yeah. The investment ready is the application for an opportunity zone. Again, census track, got a lot of numbers on it. It goes from Creek Creek and goes from the highway to the railroad, is eligible for a designation by the federal government.

It has to go to the governor's office. The application is very significant. The governor will start making decisions on which census tracts in the state of California are moved forward starting July 1. That leans into our living downtown. If we don't get capital or have incentives for living downtown and changing our buildings downtown, it will never happen. Those products just do not pencil right now. So we have to figure out how we can bring more capital in for both our businesses and for living. And that's going to be a key tool for us to do that. Thank you. I appreciate you taking the extra time. Okay. And then Molly Kofta, followed by Celeste Kramer. Good evening once again. On behalf of the Chico Chamber of Commerce, I would like to express our support for continued discussion and exploration of entertainment business zones as part of the wider Chico downtown revitalization efforts and beyond.

We see the opportunity to thoughtfully evaluate how designated zones could support increased economic activity and foot traffic in our downtown core and beyond. Expanded opportunities for events, dining, and entertainment experiences. A more vibrant and dynamic environment that supports both businesses and visitors. As this concept moves forward, we encourage the city to take deliberate and collaborative approach to evaluating feasibility, including input from local businesses, property owners, and public safety stakeholders, consideration of operational, regulatory, and enforcement frameworks, and alignment with the broader economic development and downtown revitalization strategies. We believe that if implemented thoughtfully, entertainment business zones serve as a valuable tool to support our local businesses and enhance Chico's overall economic vitality.

The Chamber looks forward to partnering with the city and stakeholders throughout this process to ensure any future framework is both effective and sustainable. Thank you for your time. Hey, Molly. I see that Chico Chamber of Commerce has promoted the entertainment zone concept, and I'm not sure that I fully understand. Would you just explain exactly what it is? Like, you can bring a drink from one place to another. That's kind of what I understand. But is there more? Yeah, I'm happy to elaborate on it. Senate Bill 969 through the state was a partnership with the California Alcoholic Beverage Control to widen the ability for people to, for lack of a better way to describe it, move from business to business within a designated footprint that would allow for longer dwell time in designated areas.

So we've seen from counterparts in other cities, specifically Redding. I feel like we're always kind of looking to the other North State areas for this one. They have established one of these entertainment business zones, and it's been so successful that they've gone ahead and chosen to expand upon it. So, while this is something that's growing, it is only about a year old, it is an opportunity that from the statewide down, they saw as this is one of those economic tools and those innovations that can be used to help to support foot traffic, for lack of a better way to describe it. Thank you. You're welcome. And then we have Celeste Kramer, followed by Lindsay Steinberg. Hi, thank you. I'm the general manager for the DCBA.

I'm relatively new, but I'm excited. I just wanted to say that on behalf of the DCBA, we really look forward to working with the city and help facilitating some of that communication about the entertainment zone and inviting conversations from our business owners, letting them get their questions answered. And just helping the city move this along. Thank you. Thank you. Lindsay Steinberg is our last speaker. So, I'll keep it brief as well. I'm here as an extension of the Chico Chamber Board to say that we really want to help to do the work and to help push this forward for our business community. Thank you. All right. Council Member Winslow? Is that from previous? No? Okay. Council Member Hawley?

Thank you, Mayor Reynolds. I'm just having a full circle moment from our previous agenda item. And although being mindful of oversaturation of adult-oriented businesses is something to be mindful for our downtown, I think now is a really great opportunity to be creative and the kind of changes to our downtown that could stimulate a little bit more business. So, I'm willing to try a whole plethora of things, and this is one of them, and I hope the council supports it, especially when we have an organization volunteering to take on some of the labor. So, I am going to ask the city council in a minute to authorize the forward momentum for the opportunity zone, and it needs to be, there's an application which will need to be filled out.

I believe there's already an organization that is willing to fill out that application. I did not ask if there was a fee, so I'll kind of wait on that a little bit, but I think we need to get the application in as soon as possible so we can take advantage of the opportunity zone 2.0. So, I'll just roll into a request to, I guess, agendize the opportunity zone, and then I'll be making a motion to accept that and move forward. We're already agendized today, so you could just make a motion. So, I'm going to make a motion to move forward with the application, to complete the application for the opportunity zone 2.0 with the federal government and try and see if we can find some money from our government to help us with the downtown activities.

I'll second that. Thank you. And is that just for the opportunity zone or? Yes. Yeah, we got two different ones, so I'm thinking we'll do the, we'll just come separate to make it easy. Cool. Although, and I see Council Member Goldstein and Council Member O'Brien are both on here, so Council Member Goldstein, go ahead. Well, I support both of these initiatives, and I'm grateful that you've brought them forward, Mayor. And I'm grateful to our commenters for supporting. We have, on the entertainment zones concept, we have great weather in Chico, and I think it'll be a really interesting, it was a beautiful day out today. Not that I think everybody needs to be drinking their green beer out on the street, but in general, you know, I've been in many situations where I've been to events at our coffee shops, bars, et cetera, and it gets hot in there, and everybody wants to go outside, but, you know, you can't bring your beer outside.

So a regulated environment where people have more options to be consuming their product they buy downtown, I think that's a great opportunity for us to potentially support businesses downtown and make it more fun and create more foot traffic. So very happy that we're talking about entertainment zones, and I hope it goes well if we move forward with it, and then opportunity zones. Also, I am excited about this concept. Council Member O'Brien. Thank you, Mayor. I do support this, but on the entertainment zone piece, and I'm sure they will be heavily involved. I would want the police chief and the police department monitoring this to make sure that we're doing this right. I know everyone involved will do just that, but we have a little bit of a history downtown with some issues with alcohol.

I can speak to that history, and I want to make sure we don't repeat any of the past mistakes, but I know that will not be the case moving forward, and I know the police department will be working in close proximity to this, so I'm fully confident we will do this right. Council Member Winslow. I'm all for the extra eyes on it, being conscientious of the history and the ways that things can go wrong, but just thinking about it, like you can take your drink outside means less drinks unattended, and that means safer bar experiences overall. So there's benefits to this, I think. Yeah, and I'll just final to say that we have been close in touch with our chief of police, and he's talked to Redding and very clear on what is required, and we will continue to keep the police department informed and abreast and make sure that we're all on board in doing this the safest way possible.

As far as the numbers on drinking and how far down they are, I think all of our downtown businesses would be excited just for people to come back down and drink because drinking's down like 40% right now, and then I want you to take your drink and go over to Leanne's lovely little store and pick out a super cute outfit or go and get a dress from Anika. Like, imagine, and then you could stop and go into it, dump it out, and then go into another place and get another one and travel somewhere else. So I think it'll be great, and I obviously support it, and I think we have a motion and a second. So, and was the motion just for the application for the Opportunity Zone 2.1? We did, but we can... You can include everything.

We can include everything if you want, or do you want to make that a friendly amendment to include pursuing the Opportunity Zones and the Entertainment Zone? Okay. Will you accept my friendly amendment? Yes. Okay. Yes. Okay. Awesome. Council Member Goldstein? Definitely, yes. Council Member Hawley? Yes. Council Member O'Brien? Yes. Council Member van Overbeek is recused. Council Member Winslow? Aye. Vice Mayor Bennett? Yes. Mayor Reynolds? Aye. Carries 6-0 with one recusal. Sorry, I was reading the next item and just realized that somebody has departed, but anyways. Then 5.6 after the item added afterwards, and this will be a report from Mary Jo Alonzo, our Housing Program Manager. Welcome, Mary Jo.

No, he's gone. No, he left. He left. He's having dinner or something. Oh. He told us before. Yeah. All right. Mary Jo, welcome. Thank you. Good evening, Mayor, Vieg Mayor, and Council. Thank you for considering this item at tonight's meeting. Last week, staff identified the need for Council authorization for the City Manager to execute loan and related documents between the City of Chico and Turning Point Commons, LP, related to funding for the rehab of an existing 66-unit affordable housing project, which is owned by Community Housing Improvement Program, CHIP. CHIP has been a longstanding partner with the City in the development and preservation of affordable housing. City Council previously approved funding for this project last budget cycle, and this item before you tonight requests authorization for the City Manager to execute the loan agreements and all related documents necessary to implement the funding.

The funding will be used to support the rehab and preservation of the 66 affordable units, which supports the City's HUD Consolidated Plan and Action 6.2.2 of the housing element. Staff recommends approval of the minute order to authorize the City Manager to execute any and all documents necessary to implement the previously approved funding. Thank you, and I'm happy to answer any questions that you might have. I don't see any questions. How many speakers do we have? We do not have any. All right, Council Member Goldstein. I'm excited about this. I remember canvassing at this area during my campaign and one of my constituents later asking me why there seemed to be a vacant building at this affordable complex, so I'm excited to hear that we'll be rehabilitating it.

So thank you. All right, well, I will move to approve. Second. Second. Okay. Council Member Goldstein. Yes. Council Member Hawley. Yes. Council Member O'Brien. Yes. Council Member van Overbeek is, he's actually absent at this, for this one. Council Member Winslow. Aye. Vice Mayor Bennett. Yes. Mayor Reynolds. Aye. Carry 6-0 with one absence. All right, reports and communications. The following reports and communications items are provided for Council's information. No actions can be taken on items under this section unless the Council includes them on a subsequent agenda. City Manager's report? Nothing further tonight. Nothing further. All right. We have a sunshining draft MOU for information, shelter crisis declaration, and Council Member requests.

According to AP&P 1010, Council Members may verbally request an item to be agendized on a future meeting. After stating what the item would be, a majority of Council vote is needed for staff to agendize. Do we have any Council Member requests? No? I have one. I would like to agendize a discussion of what opportunities we have to mitigate public nuisances that we have been seeing reported by various citizens without violating the Warren Agreement. I know court enforcement has received several notices. We've been copied on a lot of those, and I think it would be worth having a conversation that the public could hear and be part of to see if there's anything that we can do to help mitigate some of these public nuisances.

Okay. I'll second that as a motion. All right. We have a motion and a second. Council Member Goldstein? Yes. Council Member Hawley? No. Council Member O'Brien? Yes. Council Member van Overbeek is absent. Council Member Winslow? Yes. Vice Mayor Bennett? Yes. Mayor Reynolds? Aye. Carries five with one no and one absent. All right. That is it. We will adjourn to our co-cession on March 17. No. April. April 7th, 2 o'clock. April 7th, at a time to be determined, probably 2 o'clock. Thank you.

April.