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Home My WebLink AboutStaff Report 10147City of Palo Alto (ID # 10147) Finance Committee Staff Report Report Type: Action Items Meeting Date: 4/16/2019 City of Palo Alto Page 1 Summary T itle: Storm Water Management Fee Increase for FY2020 Title: Recommendation That the F inance Committee Recommends the City Counci l Adopt a Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) Increasing the Storm Water Management Fee by 4.5 Percent to $14.68 Per Month per Equivalent Residential Unit for F iscal Year 2020 From: City Manager Lead Department: Public Works Recommendation Staff recommends the Finance Committee recommends that the Council adopt the attached resolution (Attachment A) amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage), to implement a 4.5% rate increase consistent with the applicable Consumer Price Index, increasing the monthly charge per Equivalent Residential Unit by $0.63, from $14.05 to $14.68 for Fiscal Year 2020. Background On April 11, 2017, a majority of Palo Alto property owners approved a ballot measure authorizing a monthly Storm Water Management Fee to fund storm drain capital improvement projects, enhanced maintenance the of storm drain system, storm water quality protection programs and more. Council certified the results of the ballot proceeding on April 17, 2017. The approved ballot measure contained an annual fee escalator clause that permits the Council to raise the Storm Water Management Fee each year to account for inflationary cost increases. Specifically, the ballot measure stated that: “In order to offset the effects of inflation on labor and material costs, the maximum rate for the Storm Water Management Fee (and each component of the Storm Water Management Fee) will be increased annually each July 1 (beginning July 1, 2018), by the lesser of (i) the percentage change in the Consumer Price Index [CPI] for the San Francisco-Oakland-San Jose CSMA, published by the United States Department of Labor, Bureau of Labor Statistics during the prior calendar year;or (ii) 6%. The City Council would have the authority to set the rate for the Storm Water Management Fee (and each component of the Storm Water Management Fee) at any rate that is less than or equal to the inflation adjusted maximum rate.” City of Palo Alto Page 2 On June 11, 2018, Council adopted a resolution to implement the Storm Water Management Fee to be $14.05 per month per ERU, effective July 1, 2018. Discussion Staff has determined from Bureau of Labor Statistics records that the local CPI for the San Francisco-Oakland-San Jose CMSA increased by 4.5% between December 2017 and December 2018. The CPI increase is substantially lower than 6%, therefore consistent with the ballot measure, staff recommends that the Storm Water Management Fee be increased by the CPI amount of 4.5% to keep fund revenues consistent with general cost increases. Over time, the cost of capital improvement program projects adjustment as well as annual salary and benefits adjustment are likely to be higher than the annual CPI increase. The recommended increase will help to ensure adequate funding to implement the capital improvement program projects and provide all the services outlined in the ballot measure. To enact the Storm Water Management 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 Water Management Fee will be $14.68 per month per Equivalent Residential Unit (ERU).For single-family residential properties, ERU equivalents are estimated and billed a monthly amount based on parcel size, in accordance with the following table: RESIDENTIAL RATES (Single-Family Residential Properties) PARCEL SIZE (sq.ft.)Equivalent Residential Unit (ERU) < 6,000 sq.ft.0.8 ERU 6,000-11,000 sq.ft.1.0 ERU > 11,000 sq.ft.1.4 ERU For commercial, industrial, institutional, and multi-family residential properties, monthly bills are based on a rate of 1.0 ERU for each 2,500 square feet of impervious surface on the parcel. Timeline The Storm Water Management Fee increase will take effect on July 1, 2019. Resource Impact The 4.5 percent increase in rates is expected to increase annual revenue to the Storm Drainage Fund by $320,800. A subsequent adjustment will be included in the development of the FY 2020 Operating Budget, subject to City Council approval. Environmental Review Adoption of changes to utility rate schedules is statutorily exempt from review under the California Environmental Quality Act (CEQA)pursuant to CEQA Guidelines 15273(a) (Rates, Tolls, Fares, and Charges).Additionally, staff concludes that the inflation related changes in the Storm Water Fee will not negatively impact environmental protection or sustainability goals. City of Palo Alto Page 3 Attachments: ·Attachment A: RESO Amending Utility Rate Schedule for Storm Surface Water FY2020 NOT YET APPROVED 1 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 Water Management Fee Rates by 4.5% Per Month Per Equivalent Residential Unit for Fiscal Year 2020 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, 2019. 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 Water Management Fee ballot measure, which was approved by a majority of Palo Alto property owners on April 11, 2017. 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. / / / / / / / / / / / / / / / / / / / / / / NOT YET APPROVED 2 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), as a modification of a rate or charge for the purpose funding capital projects and operating expenses necessary to maintain service within existing service areas. PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ _____________________________ Assistant 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 7-1-2019 Supersedes Sheet No.D-1-1 dated 7-1-2018 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) ............................................ $14.68 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. {End}