HomeMy WebLinkAboutStaff Report 12169
City of Palo Alto (ID # 12169)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 4/20/2021
City of Palo Alto Page 1
Summary Title: Storm Water Management Fee Increase for FY2022
Title: Adoption of a Resolution Amending Utility Rate Schedule D-1 (Storm
and Surface Water Drainage) Reflecting a 2.0 Percent Consumer Price Index
Rate Increase to $15.34 Per Month Per Equivalent Residential Unit for Fiscal
Year 2022
From: City Manager
Lead Department: Public Works
Recommendation
Staff recommends that the Finance Committee recommend that the City Council adopt the
attached resolution (Attachment A) amending Utility Rate Schedule D-1 (Storm and Surface
Water Drainage), to implement a 2.0% rate increase for the Storm Water Management Fee
consistent with the applicable Consumer Price Index, increasing the monthly charge per
Equivalent Residential Unit (ERU) by $0.30, from $15.04 to $15.34 for Fiscal Year 2022.
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 of the 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
consider raising 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.”
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On June 22, 2020, Council adopted a resolution to implement the Storm Water Management
Fee to be $15.04 per month per ERU, effective July 1, 2020; this reflected a 2.5% from prior
year rates.
Discussion
Staff has determined from Bureau of Labor Statistics records that the local CPI for the San
Francisco-Oakland-San Jose CMSA increased by 2.0% between December 2019 and December
2020. As the CPI rate is substantially lower than 6%, consistent with the ballot measure, staff
recommends that the Storm Water Management Fee be increased by the CPI in order to keep
fund revenues consistent with general cost increases and to provide sufficient funds for
planned storm water management capital and operating expenditures, including thirteen
capital improvement projects identified in the 2017 Storm Water Management Fee 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 $15.34 per month per ERU. Single-
family residential properties are billed a monthly amount based on parcel size, in accordance
with the following table:
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
Commercial, industrial, institutional, and multi-family residential properties are billed monthly
at 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, 2021.
Resource Impact
The 2.0 percent increase in rates is expected to increase annual revenue to the Stormwater
Management Fund by approximately $152,000 and, if recommended, will be reflected in the
Public Works Department Stormwater Management Fund Fiscal Year 2022 Operating Budget
revenue.
Stakeholder Engagement
Staff presented the 2.0% rate increase to the Storm Water Management Oversight Committee
on April 1, 2021 (Agenda and Meeting Packet) as a preliminary proposed base budget item for
the development of the Fiscal Year 2022 Stormwater Management Fund Operating Budget. The
Committee consists of seven members from the public and was established to review proposed
stormwater management capital improvements and operating programs to be funded from the
Stormwater Maangement Fees and to monitor expenditures of the fund.
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Environmental Review
The Finance Committee’s recommendation to Council to consider adopting this change to the
Storm Water Management Fee to meet operating expenses, purchase supplies and materials,
meet financial reserve needs and obtain funds for capital improvements necessary to maintain
service is not subject to the California Environmental Quality Act (CEQA), pursuant to California
Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec.
15273(a).
Attachments:
• Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage)
Attachment A
6055501 1
NOT YET APPROVED
Resolution No. _______
Resolution of the Council of the City of Palo Alto Amending Utility Rate
Schedule D-1 (Storm and Surface Water Drainage) Increasing the Storm
Water Management Fee by 2.0 Percent Per Month Per Equivalent
Residential Unit for Fiscal Year 2022
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, 2021.
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.
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Attachment A
6055501 2
SECTION 4. The Council finds that the adoption of this resolution changing the Storm
Water Management Fee to meet operating expenses, purchase supplies and materials, meet
financial reserve needs and obtain funds for capital improvements necessary to maintain service
is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public
Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a).
After reviewing the staff report and all attachments presented to Council, the Council
incorporates these documents herein and finds that sufficient evidence has been presented
setting forth with specificity the basis for this claim of CEQA exemption.
INTRODUCED AND 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 7-1-2021
Supersedes Sheet No.D-1-1 dated 7-1-2020 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) ............................................ $15.34
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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