HomeMy WebLinkAboutStaff Report 2302-0957Item No. 3.Page 1 of 3 1
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Finance Committee
Staff Report
From: Kiely Nose, Assistant City Manager
Report Type: Action Item
Lead Department: Public Works
Meeting Date: March 7, 2023
Report #: 2302-0957
TITLE
Adoption of a Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water
Drainage) Reflecting a 4.9 Percent Consumer Price Index Rate Increase to $16.76 per Month Per
Equivalent Residential Unit for Fiscal Year 2024.
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 4.9% rate increase consistent with the
applicable Consumer Price Index, increasing the monthly charge per Equivalent
Residential Unit (ERU) by $0.78, from $15.98 to $16.76 for Fiscal Year 2024.
BACKGROUND
On April 11, 2017, a majority of Palo Alto property owners approved a ballot measure adopting
a monthly Storm Water Management Fee to fund storm drain capital improvement projects,
enhanced maintenance of the storm drain system, and storm water quality protection
programs. The ballot measure authorizes the Council to consider raising the Storm Water
Management Fee each year to account for inflation and subject to a maximum annual increase
of 6 percent. Specifically, the ballot measure states:
“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.”
On June 13, 2022, Council adopted a resolution to implement the Storm Water Management
Fee to be $15.98 per month per ERU, effective July 1, 2022.
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ANALYSIS
According to Bureau of Labor Statistics records, the CPI for the San Francisco-Oakland-San Jose
CMSA increased by 4.9 percent between December 2021 and December 2022. This CPI increase
is lower than 6 percent, and therefore consistent with the ballot measure, staff recommends
that the Storm Water Management Fee be increased by 4.9 percent to allow fee revenues to
keep pace with general cost increases and to provide sufficient funds for planned storm water
management capital and operating expenditures. 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 $16.76 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.
FISCAL/RESOURCE IMPACT
The proposed 4.9 percent fee increase is expected to increase annual revenue to the
Stormwater Management Fund by approximately $400,000 and, if adopted, will be reflected in
the Public Works Department Stormwater Management Fund Fiscal Year 2024 Proposed
Operating Budget revenue. The Storm Water Management Fee increase will take effect on July
1, 2023.
STAKEHOLDER ENGAGEMENT
The proposed rate increase was discussed at a meeting of the Stormwater Management
Oversight Committee on February 2, 2023.
ENVIRONMENTAL REVIEW
Council action on the proposed resolution is not a project subject to CEQA review because it is a
fiscal activity which does not involve any commitment to any specific project which may result
in a potentially significant physical impact on the environment. (CEQA Guidelines Section
15378(b)(4)).
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ATTACHMENTS
Attachment A: Rate Schedule D-1
Attachment B: Resolution Amending Utility Rate Schedule D-1
APPROVED BY:
Brad Eggleston, Director of Public Works/City Engineer
Report #: 2302-0957