HomeMy WebLinkAboutStaff Report 2402-2614CITY OF PALO ALTO
Finance Committee
Special Meeting
Tuesday, April 23, 2024
5:30 PM
Agenda Item
1.Adoption of a Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water
Drainage) Reflecting a 2.6% Consumer Price Index Rate Increase to $17.20 Per Month Per
Equivalent Residential Unit for Fiscal Year 2025
Finance Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Public Works
Meeting Date: April 23, 2024
Report #:2402-2614
TITLE
Adoption of a Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water
Drainage) Reflecting a 2.6% Consumer Price Index Rate Increase to $17.20 Per Month Per
Equivalent Residential Unit for Fiscal Year 2025; CEQA Status – Not a Project
RECOMMENDATION
Staff recommends that the Finance Committee recommend that Council adopt the attached
resolution amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage), to
implement a 2.6% rate increase consistent with the applicable Consumer Price Index, increasing
the monthly charge per Equivalent Residential Unit (ERU) by $0.44, from $16.76 to $17.20 for
Fiscal Year 2025.
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 improvements
projects, enhanced maintenance of the storm drain system, and storm water quality protection
programs. Council certified the results of the ballot proceeding on April 17, 2017. The approved
ballot measure authorizes the Council to raise the Storm Water Management Fee each year to
account for inflation subject to a maximum annual increase of 6%. 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.”
On June 19, 2023, Council adopted a resolution to implement the Storm Water Management
Fee to be $16.76 per month per ERU, effective July 1, 2023.
ANALYSIS
Staff has determined from Bureau of Labor Statistics records that the local CPI for the San
Francisco-Oakland-San Jose CMSA increased by 2.6% between December 2022 and December
2023. 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. To enact the Storm
Water Management Fee increase, Council must adopt the attached resolution (Attachment A)
amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage). The new rate for the
Storm Water Management Fee will be $17.20 per month per ERU. Single-family residential
properties are billed a monthly amount based on parcel size, in accordance with the following
table:
Table 1: Residential Rates (Single-Family Residential Properties)
Parcel Size (sq.ft.)ERU
< 6,000 0.8 ERU
6,000-11,000 1.0 ERU
> 11,000 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 2.6% increase in rates is expected to increase annual revenue to the Stormwater
Management Fund by approximately $213,000 and, if recommended, will be reflected in the
Public Works Department Stormwater Management Fund FY 2025 Operating Budget revenue.
The Storm Water Management Fee increase will take effect on July 1, 2024.
STAKEHOLDER ENGAGEMENT
The Stormwater Management Fee increase was discussed and reviewed during the March 14,
2024, Stormwater Oversight Committee meeting, which is open to the public to attend.
ENVIRONMENTAL REVIEW
Council action on the proposed resolution is not a project subject to review under the California
Environmental Quality Act (CEQA) 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)).
ATTACHMENTS
Attachment A: Draft Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water
Drainage)
Attachment B: Draft Rate Schedule D-1 effective 7-1-2024
APPROVED BY:
Brad Eggleston, Director Public Works/City Engineer
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 2.6% Per Month Per Equivalent
Residential Unit for Fiscal Year 2025
A. In April 2017, a majority of property owners approved a ballot
measure adopting a monthly Storm Water Management Fee to fund
storm drain capital improvements projects, enhanced maintenance of
the storm drain system, storm water quality protection programs, and
related activities.
B. The ballot measure allowed for annual increases to the fee based on
lesser of the local rate of inflation (based on changes to the Consumer
Price Index for the San Francisco-Oakland-San Jose region as published
by the Bureau of Labor Statistics) or 6%.
C. According to the Bureau of Labor Statistics, the Consumer Price Index
for the San Francisco-Oakland-San Jose region increased by 2.6%
between December 2022 and December 2023.
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, 2024.
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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NOT YET APPROVED
2
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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.
15378(b)(4). 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
_____________________________
NOT YET APPROVED
3
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 7-1-2024
Supersedes Sheet No.D-1-1 dated 7-1-2023 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 Water Management Fee per Equivalent Residential Unit (ERU)..........................$17.20
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 ERUs 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 Water Management Fee, refer to Utilities Rule and
Regulation 25.
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GENERAL STORM AND SURFACE WATER DRAINAGE
UTILITY RATE SCHEDULE D-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-2024
Supersedes Sheet No.D-1-1 dated 7-1-2023 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:
Stormwater Management Fee per Equivalent Residential Unit (ERU)........................................$17.20
D. SPECIAL NOTES:
1. An Equivalent Residential Unit (ERU) is the basic unit for computation of stormwater
management 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.
GENERAL STORM AND SURFACE WATER DRAINAGE
UTILITY RATE SCHEDULE D-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-2024
Supersedes Sheet No.D-1-1 dated 7-1-2023 Sheet No.D-1-1
{End}