HomeMy WebLinkAboutStaff Report 2501-4082CITY OF PALO ALTO
Finance Committee
Regular Meeting
Tuesday, March 04, 2025
Agenda Item
1.Recommend City Council Adoption of a Resolution Amending Utility Rate Schedule D-1
(Storm and Surface Water Drainage) Reflecting a 2.4% Consumer Price Index Rate
Increase to $17.61 Per Month Per Equivalent Residential Unit for Fiscal Year 2026; CEQA
Status – Not a Project Staff Presentation
Finance Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Public Works
Meeting Date: March 4, 2025
Report #:2501-4082
TITLE
Recommend City Council Adoption of a Resolution Amending Utility Rate Schedule D-1 (Storm
and Surface Water Drainage) Reflecting a 2.4% Consumer Price Index Rate Increase to $17.61
Per Month Per Equivalent Residential Unit for Fiscal Year 2026; 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 2.4% rate increase consistent with the applicable Consumer Price Index, increasing
the monthly charge per Equivalent Residential Unit (ERU) by $0.41, from $17.20 to $17.61 for
Fiscal Year 2026.
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 storm drain system, storm water quality protection
programs and more. Council certified the results of the ballot proceeding on April 17, 20171.
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
1 City Council, April 17, 2017; Agenda Item #3; SR #7937,
https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=77400
lesser of (i) the percentage change in the Consumer Price Index (CPI) for the San
Francisco-Oakland-San Jose CSMA (Consolidated Statistical Metropolitan Area),
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 17, 2024, Council adopted a resolution to implement the FY 2025 Storm Water
Management Fee to be $17.20 per month per ERU, effective July 1, 20242 .
ANALYSIS
Staff has determined from Bureau of Labor Statistics records that the local CPI for the San
Francisco-Oakland-San Jose Combined Metropolitan Statistical Area (CMSA) increased by 2.4%
between December 2023 and December 2024. 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 amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage)3 .
The new rate for the Storm Water Management Fee will be $17.61 per month per ERU. Single-
family residential properties are billed a monthly amount based on parcel size, in accordance
with Table 1.
Table 1: 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.
2 City Council, June 17, 2024; Agenda Item #29; SR #2404-2842,
https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=82898
3 Utility Rate Schedule D-1, Effective July 1, 2024; https://www.cityofpaloalto.org/files/assets/public/v/1/public-
works/flood-and-storm/storm-water-management-program/rate-schedule-d-1-effective-7-1-2024.pdf
FISCAL/RESOURCE IMPACT
STAKEHOLDER ENGAGEMENT
ENVIRONMENTAL REVIEW
ATTACHMENTS
APPROVED BY:
NOT YET APPROVED
1
0280007_20250220_028ca
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 2.4% Per Month Per Equivalent Residential Unit
for Fiscal Year 2026
R E C I T A L S
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 2.4% between December 2023 and December 2024.
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, 2025.
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
0280007_20250220_028ca
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
_____________________________
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 7-1-2025
Supersedes Sheet No.D-1-1 dated 7-1-2024 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) .......................... $17.61
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.
{End}
March 4, 2025 www.cityofpaloalto.org
STORMWATER MANAGEMENT FEE
FY 2026 Proposed Rate
3
•A Base Component ~ 55% fund ongoing stormwater management
programs
•Litter and Water Pollution Prevention Programs
•Engineering
•Storm drain system maintenance and emergency response
•Projects and Infrastructure Component ~45% -sunsets on June 1, 2032
•New capital projects (13 voter approved projects)
•Storm system replacement and rehabilitation
•Green stormwater infrastructure and innovative programs
•Debt service for past capital projects ends payment in FY2024
Stormwater Management Fee
2
Capital Projects
funded by the
Stormwater
Management Fee
4
5
Proposed Rate
•2.4% increase in alignment with the applicable Consumer Price Index
Financial Impact
•Increases monthly charge per Equivalent Residential Unit (ERU) by $0.41 from
$17.20 to $17.61
•Increases estimated annual revenue by approximately $211,000
FY 2026 Proposed Rate Increase & Impact