HomeMy WebLinkAboutStaff Report 6657
City of Palo Alto (ID # 6657)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 4/19/2016
City of Palo Alto Page 1
Council Priority: City Finances
Summary Title: Storm Drain Fee Increase for FY2017
Title: Adoption of a Resolution Amending Utility Rate Schedule D -1 (Storm
and Surface Water Drainage) Reflecting a 3.2 Percent Consumer Price Index
Rate Increase to $13.03 Per Month Per Equivalent Residential Unit for Fiscal
Year 2017
From: City Manager
Lead Department: Public Works
Recommendation
Staff recommends that the Finance Committee recommend that Council adopt
the attached resolution (Attachment A) amending Utility Rate Schedule D-1
(Storm and Surface Water Drainage), to implement a 3.2% rate increase
consistent with the applicable Consumer Price Index – Urban Consumers,
increasing the monthly charge per Equivalent Residential Unit by $0.40, from
$12.63 to $13.03 for Fiscal Year 2017.
Background
On April 26, 2005, a majority of Palo Alto property owners approved a ballot
measure authorizing an increase in the monthly Storm Drainage Fee to fund
storm drain capital improvements and augmented maintenance. Council certified
the results of the ballot proceeding on May 9, 2005. The approved ballot
measure contained an annual fee escalator clause that permits the Council to
raise the Storm Drainage Fee each year to account for inflationary cost increases.
Specifically, the ballot measure stated:
City of Palo Alto Page 2
“In order to offset the effects of inflation on labor and material costs, the
proposed fee increase would be subject to annual increases beyond the initial
$10.00 per Equivalent Residential Unit (ERU) rate as of July 1 of each year, starting
in 2006. Inflation adjustments would be based on the lesser of the local rate of
inflation (based on the change in the Consumer Price Index [CPI-U] for the San
Francisco-Oakland-San Jose CMSA, published by the United States Department of
Labor, Bureau of Labor Statistics) or 6 percent. The City Council would have the
authority and discretion to implement inflation adjustments on an annual basis as
part of the City budget process.”
On May 9, 2005, Council adopted a resolution increasing the Storm Drainage rate
schedule to $10.00 per month per ERU, effective June 1, 2005. The Council
approved rate for FY 2016 is $12.63 per month per ERU.
Discussion
Staff has determined from Bureau of Labor Statistics records that the CPI-U for
the San Francisco-Oakland-San Jose CMSA increased by 3.2% between December
2014 and December 2015. As the CPI-U rate is substantially lower than 6%,
consistent with the ballot measure, staff recommends that the Storm Drainage
Fee be increased by the CPI-U in order to keep fund revenues consistent with
general cost increases and to provide sufficient funds for planned storm drain
capital expenditures. In particular, the increased revenue is needed to cover
construction costs for the remaining storm drain capital improvement projects.
Approval of the rate increase will help to ensure that staff can complete all seven
of the capital projects specified in the 2005 ballot measure before the fee
increase sunsets in June 2017. A table summarizing projected rate increases for
all of the City’s utilities for the period of FY 2017 through FY 2021 is attached for
reference (Attachment B). In order to enact the Storm Drainage Fee increase,
Council must adopt the attached resolution amending Utility Rate Schedule D-1
(Storm and Surface Water Drainage). The new rate for the Storm Drainage Fee
will be $13.03 per month per ERU. Single-family residential properties are billed a
monthly amount based on parcel size, in accordance with the following table:
City of Palo Alto Page 3
RESIDENTIAL RATES (Single-Family Residential Properties)
PARCEL SIZE (sq. ft.) ERU FY2016 RATE FY2017 RATE
< 6,000 sq. ft. 0.8 ERU $10.11/month $10.43/month
6,000-11,000 sq. ft. 1.0 ERU $12.63/month $13.03/month
> 11,000 sq. ft. 1.4 ERU $17.68/month $18.25/month
Commercial, industrial, institutional, and multi-family residential properties are
billed on a monthly basis at a rate of 1.0 ERU for each 2,500 square feet of
impervious surface on the parcel.
Resource Impact
The 3.2 percent increase in rates is expected to increase annual revenue to the
Storm Drainage Fund by approximately $194,000 and, if recommended, will be
included in the Public Works Department Storm Drainage Fund FY 2017 proposed
operating budget. When the storm drain rates approved by property owners via
the 2005 ballot measure sunset on June 1, 2017, rates will revert to $4.25 per
month per ERU unless higher rates are approved through a new ballot measure
process. Staff has been working with a city manager-appointed blue ribbon
committee of Palo Alto residents to develop the scope and timing of a storm drain
ballot measure to be presented to property owners later this year.
Timeline
The Storm Drainage Fee increase will take effect on July 1, 2016. Storm drain
rates will revert to $4.25 per month per ERU on June 1, 2017 unless higher rates
are approved through a new ballot measure process.
Environmental Review
Adoption of changes to utility rate schedules does not represent a project under
the California Environmental Quality Act (CEQA).
Courtesy Copies
Storm Drain Oversight Committee
Palo Alto Chamber of Commerce
Attachments:
A - Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage)
(PDF)
City of Palo Alto Page 4
B - Overview of Projected City of Palo Alto Utility Rate Increases (PDF)
NOT YET APPROVED
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Resolution No. ______
Resolution of the Council of the City of Palo Alto Amending Utility Rate
Schedule D-1 (Storm and Surface Water Drainage) to Increase Storm
Drain Rates by 3.2% Per Month Per Equivalent Residential Unit for
Fiscal Year 2017
The Council of the City of Palo Alto RESOLVES, as follows:
SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule D-1 (Storm and Surface Water Drainage) is hereby amended to read in
accordance with sheet D-1-1, attached hereto and incorporated herein. The foregoing Utility
Rate Schedule, as amended, shall become effective July 1, 2016.
SECTION 2. The Council finds that this rate increase is being imposed to offset the
effects of inflation on labor and material costs pursuant to the annual inflationary fee escalator
provision of the Storm Drainage Fee ballot measure, which was approved by a majority of Palo
Alto property owners on April 26, 2005.
SECTION 3. The Council finds that the revenue derived from the authorized
adoption enumerated herein shall be used only for the purpose set forth in Article VII, Section
2, of the Charter of the City of Palo Alto.
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NOT YET APPROVED
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SECTION 4. The Council finds that modification and approval of this change to the
Utility Rate Schedule D-1 (Storm and Surface Water Drainage) for the purpose of meeting
operating expenses is statutorily exempt from California Environmental Quality Act (CEQA)
review, pursuant to Public Resources Code Section 15273(a).
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
__________________________ _____________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ _____________________________
City Attorney City Manager
_____________________________
Director of Public Works
_____________________________
Director of Administrative
Services
GENERAL STORM AND SURFACE WATER DRAINAGE
UTILITY RATE SCHEDULE D-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-2016
Supersedes Sheet No.D-1-1 dated 7-1-2015 Sheet No. D-1-1
A. APPLICABILITY:
This schedule applies to all storm and surface water drainage service, excepting only those
users and to the extent that they are constitutionally exempt under the Constitution of the
State of California or who are determined to be exempt pursuant to Rule and Regulation 25. B. TERRITORY:
Inside the incorporated limits of the city of Palo Alto and land owned or leased by the city.
C. RATES: Per Month:
Storm Drainage Fee per Equivalent Residential Unit (ERU) ........................................................ $13.03
D. SPECIAL NOTES:
1. An Equivalent Residential Unit (ERU) is the basic unit for computation of storm
drainage fees for residential and non-residential customers. All single-family residential
properties shall be billed the number of ERUs specified in the following table, based on
an analysis of the relationship between impervious area and lot size for Palo Alto
properties.
RESIDENTIAL RATES (Single-Family Residential Properties
PARCEL SIZE (sq.ft.) ERU
<6,000 sq.ft. 0.8 ERU
6,000 - 11,000 sq.ft. 1.0 ERU
>11,000 sq.ft. 1.4 ERU
All other properties will have ERU's computed to the nearest 1/10 ERU using the
following formula:
No. of ERU = Impervious Area (Sq. Ft.)
2,500 Sq. Ft. 2. For more details on the storm drainage fee, refer to Utilities Rule and Regulation 25.
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Attachment B
Rate Adjustments for All Utilities: FY 2017 Proposed, FY 2018 to FY 2021 Projected
Utility FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Electric Utility 11% 10% 2% 0% 1%
Gas Utility 8% 9% 7% 1% 1%
Wastewater 9% 10% 9% 7% 6%
Water Utility 6% 9% 9% 6% 2%
Refuse1 9% 8% 5% 3% 3%
Storm Drain 3.2% 2% to 3% 2% to 3% 2% to 3% 2% to 3%
Bill Change (%) 8% 9% 6% 4% 2%
($/mo) $20.80 $23.45 $18.49 $11.16 $7.77