HomeMy WebLinkAboutStaff Report 163-05On December 6, 2004, Council approved a resolution proposing an increase in the monthly
Storm Drainage Fee from $4.25 to $10.00 per Equivalent Residential Unit (ERU) and a
resolution establishing the procedures and timeline for a protest hearing and ballot proceeding
for the Storm Drainage Fee increase (CMR.:508:04). On January 19, notices were mailed to all
property owners subject to the fee. The notices contained information on the public hearing,
property-specific information on the amount of the proposed fee increase, a description of how
the fee was calculated and how the proceeds from the fee would be spent, and instructions for
filing a formal protest to the fee increase (Attachment A). Staffhas also developed a web site
containing detailed information on the proposed fee increase, (www.cityofpaloalto.org/stormdrain)
and established a dedicated phone line (617-3183) to field questions on the matter. In addition,
staff has attended meetings of various community groups and neighborhood associations to discuss
the proposed Storm Drainage Fee increase with their members.
DISCUSSION
To comply with the provisions of Proposition 218, detailed procedures were adopted by Council
for the public hearing and mail ballot proceeding. The protest hearing is the next step in the
process. Property owners have the opportunity to appear before Council to register their
concerns and protest the proposed fee increase. The proceedings will be governed by the
Council-approved guidelines, which are highlighted below:
• Written protests must be legibly signed by an eligible property owner (as determined by a
"master list"), identify relevant parcel(s), and state grounds for protest. Council may waive
irregularities, as it deems fit.
• The City Clerk must endorse each written protest to verify the date of its filing. No protests
received after the close of the public hearing on March 7, 2005 will be accepted.
• At the hearing, Council will hear all objections and take and receive documentary evidence
pertaining to the proposed fee increase.
• At the end of the hearing the City Clerk will report the number of valid written protests so
that the Council can determine whether a majority protest has been received.
If Council determines, at the close of the public testimony portion of the public hearing, that
written protests have been received from property owners representing a majority of the parcels
subject to the proposed fee increase, the Mayor shall declare the proceedings closed, and the fee
increase shall not be approved. . If Council determines that less than a majority of property
owners have submitted written protest, the Council may adopt a resolution calling for the mailing
of ballots to eligible property owners (Attachment B).
Assuming that Council calls for a mail ballot proceeding, the ballots will be mailed to property
owners on April 4, 2005. Ballots for the Storm Drainage Fee ballot proceeding will consist of a
single question that requires a checkmark either for or against the proposed fee increase. The
ballots will be supplemented with a summary of the balloting procedures and a description of the
proposed fee and storm drain spending plan (Attachment C). Ballots must be received by the
City Clerk no later than 8 p.m. on April 26, 2005. Ballots received after 8 p.m. will not be
included in the vote tabulation. A postage-paid return envelope included with the ballot will
ensure accurate counts and facilitate the balloting process for voters. Council will certify the
results of the mail-in ballot vote on May 9,2005.
CMR.:163:05 Page 2 of4
RESOURCE IMPACT
Property owner approval of the proposed fee increase would have the following financial
impacts:
• The monthly Storm Drainage Fee for developed properties would increase from $4.25 to
$10.00 per Equivalent Residential Unit.
• The General Fund's current $800,000 direct subsidy to the Storm Drainage Fund would be
eliminated, and the City would prepay approximately $3 million of the fees for City-owned
properties. This would reduce the Budget Stabilization Reserve (BSR) and affect the
potential surplus contribution to the Infrastructure Reserve (IR). Since BSR policy is to
maintain itself at 18.5 percent of operating expenses, a contribution to the IR in the year of
prepayment may not be likely. This should be offset in future years as the General Fund
would experience a reduction in costs and a potential surplus due to pr~payment of fees.
There is a potential opportunity cost for the prepayment. Should the City's return on its
portfolio exceed the rate of inflation on the fee increase, the General Fund may forego
interest income. This amount depends on the rate of inflation and interest rates.
• Council would need to identify new non-storm drain funding source(s) for City contributions
to the San Francisquito Creek Joint Powers Authority and the San Francisquito Watershed
Council and would need to consider whether or not to fund curb and gutter repairs.
POLICY IMPLICATIONS
Staff's recommendations are consistent with the Comprehensive Plan: Policy N-24 states that
the City should "improve storm drainage performance by constructing new system
improvements where necessary and replacing undersized or otherwise inadequate lines with
. larger lines or parallel lines.". Program N-36 further states that the City should "complete
improvements to the storm drainage system consistent with the priorities outlined in the City's
1993 Storm Drainage Master Plan, provided that an appropriate funding mechanism is identified
and approved by the City Council."
TIMELINE
The timeline for the protest hearing and storm drain mail ballot proceeding is outlined in
Attachment D to this report.
ENVIRONMENTAL REVIEW
Consideration of financing options for storm drainage program operational enhancements and
capital improvements does not require additional California Environmental Quality Act (CEQA)
review. Individual storm drain infrastructure improvement projects will be subject to additional
environmental review as they are developed.
ATTACHMENTS
Attachment A: Public Notice of proposed Storm Drainage Fee increase
Attachment B: Resolution calling a special mail ballot proceeding for April 26, 2005, to submit
a Storm Drainage Fee increase to owners of parcels of real property subject to
the fee
Attachment C: Storm Drainage Fee increase ballot and supplemental information
Attachment D: Timeline for protest hearing and storm drain mail ballot proceeding
CMR:163:05 Page 3 of4
Attachment A
REVISED NOTICE OF PUBLIC HEARING
CITY OF PALO ALTO STORM DRAINAGE FEE
TO: «Situs Street Address» --
ASSESSOR'S PARCEL NO. «Assessors Parcel Number»
«Assessee»
«Assessee2»
«In Care of Name» ---«Mailing_Address»
- -
«Mailing_City _and_State» «Mailing_Zip _Code»
FROM: Donna Rogers, City Clerk
Dear Property Owner:
DATE: January 19,2005
NOTICE IS HEREBY GIVEN that the City Council"will hold a public hearing on a proposed storm drainage
fee increase for properties within the City of Palo Alto.
" As a result of a mailing error with the initial notices, this revised notice is being issued, and the public fu " hearing has been rescheduled to the 7 of March, 2005, at 7:00 p.m., or as soon thereafter as the matter
may be heard, in the Council Chambers, City Hall, 250 Hamilton A venue, Palo Alto, California, at which time the
Council will consider the proposed fee increase and hear all persons interested in the matter.
The public hearing is being held in accordance with Article XIIID of the California Constitution (Proposition
218) and with procedures adopted by resolution of the City Council on December 6, 2004. The procedures may be
accessed on the City's web site at: www.cityofpaloalto.org/stormdrain.
Any owner of a parcel of real property subject to the proposed fee increase may object to the proposed fee by
filing with the City Clerk, at or before the hour fixed for hearing, a written protest containing a legible signature of
that property owner, identifying the parcel by address or assessor's parcel number and stating the ground or grounds
of protest. Any protest letters that have already been submitted to the City Clerk by property owners will be
counted unless they are withdrawn. The property owner may appear at the hearing and be heard on the matter.
If the City Clerk does not receive written protests from a majority of property owners subject to the proposed
fee increase before the close of the public testimony portion of the public hearing, the City Council may authorize a
mail ballot proceeding on the question of whether to approve the fee increase. Under this scenario, ballots would be
mailed to all property owners whose parcels are subject to the fee.
The storm drain system is a Palo Alto utility, and the storm drainage fee is collected through monthly City
utility bills. The current and proposed monthly storm drainage fee for your property is shown below.
Current Fee Proposed Fee*
«Current Fee» «Proposed y ee»
Utility Account Information
«UAlinel»
«UAline2»
«UAline3»
* Commencing with the effective date of Council adoption, following voter approval. The fee for fiscal years
2006-2007 and beyond may be adjusted annually for inflation (at the discretion of the City Council) by the
Consumer Price Index or 6%, whichever is lower.
DESCRIPTION OF PROPOSED STORM DRAINAGE FEE INCREASE
Reason for the Proposed Fee Increase. The storm drainage fee was established by the City Council in 1989 as a means to
fund storm drain capital improvements, maintenance, and storm water quality protections programs. Although several key storm
drain projects have been implemented, significant additional drainage improvements are needed throughout the City. The fee was
last increased in 1994. Revenues under the current fee structure are inadequate to fund current operations, which has necessitated a
subsidy from the General Fund for the past several years. The proposed increased fee would pay for the following items:
A. Seven proposed storm drain capital improvement projects
A detailed description and map of the proposed capital improvement projects are provided below.
B. Proposed funding for enhanced maintenance of the City's storm drain system
1. $500,000 budgeted annually (subject to annual adjustment for inflation) to replace and/or rehabilitate deteriorated
components of the City's storm drain system, including pipelines, catch basins, and manholes.
2. $90,000 budgeted annually (subject to annual adjustment for inflation) to fund additional storm drain maintenance
resources, .including staff and/or contract services, to perform services including, but not limited to, storm drain cleaning,
minor storm drain repairs, and/or video inspection of storm drain pipelines.
C. Funding of innovative projects
$125,000 budgeted annually (subject to annual adjustment for inflation) for innovative projects to reduce the amount of storm
water runoff and environmental pollutants that enter storm drains and creeks.
D. Funding of storm water quality protection activities
$100:000 budgeted annually (subject to annual adjustment for inflation) to pay for existing services related to storm water
quality protection currently funded through the Wastewater Treatment Fund. .
E. Funding of additional engineering staff
$115,000 budgeted annually .(subject to annual adjustment for inflation) for an additional staff engineer to assist with
implementation of the recommended storm drain capital improvements.
PROPOSED STORM DRAIN CAPITAL IMPROVEMENT PROJECTS
1. Construct pump station at 96" storm drain outfall to San Francisquito Creek
. (estimated cost = $4.5 million)
A 1250-acre area in the northeastern portion of the City drains through a single 96" outfall pipe into San Francisquito Creek
downstream of Highway 101. High creek levels prevent this pipe from draining freely, causing storm runoff to back up and pond in
streets and gutters. Street flooding frequently occurs on streets throughout the Green Gables, Crescent Park, and Walnut Grove
neighborhoods.
Installation of a pump station at the 96" outfall is the initial step in improving drainage in this watershed. The pump station will
alleviate chronic street flooding by allowing the streets to be drained regardless of the creek level. This work will be carefully
coordinated with the Santa Clara Valley Water District and the San Francisquito Creek Joint Po.wers Authority in order to avoid any
negative flooding impacts on San Francisquito Creek.
2. Install new storm drain pipelines to increase drainage capacity on Channing and Lincoln Avenues (from
Channing/Heather to Lincoln/Alma) (estimated cost = $4.6 million) .
The existing Channing Avenue box culvert between Heather Lane and Newell Road is at a higher elevation than the tributary storm
drains that feed into it at Newell Road and from De Soto and Walter Hays Drives. This hydraulically inefficient condition causes
the upstream pipes to back up and water to pond onto the street surface at mUltiple locations upstream of the Newell Road/Channing
Avenue intersection. Drainage in the Professorville neighborhood is extremely poor due to undersized storm drain pipelines.
Installation of new storm drains along Channing and Lincoln Avenues will provide needed drainage capacity. The Green Gables,
Walnut Grove, Community Center, and Professorville neighborhoods will benefit from this proposed project.
3. InstaU Southgate neighborhood storm drain system (estimated cost = $2.0 million)
The Southgate neighborhood drains to a single storm drain inlet at the comer of Mariposa and Sequoia Avenues. There are no
underground storm drain pipelines to serve the neighborhood, and there are many sections of uneven curb and gutter that pond water
during rain events.
The recommended infrastructure improvements include the construction of additional storm drain inlets, new pipelines, and curb
and gutter repairs to eliminate street flooding in the Southgate neighborhood.
4. Extend Gailen AvenuelBibbits Drive storm drain outfall to the Adobe Storm Water Pump Station (estimated cost = $650
thousand)
A 280-acre watershed in the Charleston Terrace, Greenhouse, and Greenmeadow neighborhoods is served by a 36" stonn drain that
flows by gravity into Adobe Creek behind Bibbits Drive. Once the water level in Adobe Creek rises, the pipeline carmot drain by
gravity. Subsequently, water begins ponding on Bibbits Drive and Gailen Avenue, and causes back-ups upstream in the drainage
system.
The recommended infrastructure improvements involve the construction of 1,800 feet of 36" storm drain to connect the existing
gravity outfall to the Adobe Pump Station. Connection of this watershed's drainage system to the pump station will allow the
streets to be drained regardless of the creek level.
5. Connect the Clara Drive storm drains to the Matadero Storm Water Pump Station
(estimated cost = $900 thousand)
Clara Drive currently drains to Matadero Creek by gravity. Street flooding occurs during even moderate storm events, with the
extent of the ponding increasing with the creek level.
Conn~ction to the pump station will allow Clara Drive to drain regardless of the creek level.
6. Construct improvements to the Matadero Storm Water Pump Station and instaU new storm drain pipelines to increase
drainage capacity leading to the Matadero Storm Water Pump station
(estimated cost = $3.0 million)
A 1200-acre area of southeastern Palo Alto drains to Matadero Creek via the Matadero Storm Water Pump Station. Much of the
land in this watershed, particularly the eastern portion near Highway 101, is lower than the creek water level during storm events.
Without the pump station, this area would be unable to drain until the creek recedes, several hours after the rainfall stops. Problems
in this watershed, which encompasses the Midtown and Palo Verde neighborhoods, include the capacity of the pump station and the
storm drain pipelines leading to it.
The recommended infrastructure improvements include upgrades to the Matadero Pump Station and tlle construction of new storm
drains feeding the pump station. Storm drains along Loma Verde Avenue, the former Seale-Wooster Canal right-of-way north of
Colorado Avenue, and the former Sterling Canal right-of-way east of Maddux Drive and Kenneth Drive are undersized and need to
be replaced with larger pipelines or supplemented with parallel pipelines.
7. InstaU storm drainage improvements along southbound Alma Street (estimated cost = $1.5 million)
There are several locations along southbound Alma Street that do not have adequate storm drain capacity. Due to nonexistent or
undersized storm drains, excess storm nmoff ponds along the roadway edge, causing dangerous road conditions for motorists.
The recommended infrastructure improvements include tlle construction of numerous new catch basins along the southbound side of
Alma Street and installation of approximately 4,400 linear feet of new storm drain pipelines to properly drain this heavily traveled
roadway.
Applicability of the Fee. The proposed fee increase would apply to all properties subject to Utilities Rate Schedule
D-l and Utility Rule and Regulation 25, which includes all developed properties within the City of Palo Alto that drain into City
storm drain facilities.
How the Fee Increase Is Calculated. The City's storm drainage fee structure is based on the amount of impervious
surface area on a property, which is indicative of the amount of rainfall runoff a property will produce. The basic billing unit, the
Equivalent Residential Unit (ERU), is equal to 2500 square feet of impervious surface area. The ERU definition was based on a
sampling of single-family and duplex residential properties in the City, in which the typical impervious surface area of such
properties was found to be 2500 squary feet. Currently, all single-family residential properties (developed parcels with either one or
two single-family detached housing units or one two-unit attached dwelling structure, commonly known as a duplex) are billed one
ERU per month. Commercial, industrial, institutional, government, and multi-family residential properties are bille.d at a rate of one
ERU per 2500 square feet of impervious area.
The proposal to increase the storm drainage fee involves two components. First the charge per ERU would be raised from
four dollars and twenty-five cents ($4.25) to ten dollars ($10.00) per month. Second, the impervious surface area would no longer be
presumed to be one ERU for all single-family residential properties. Instead, those properties would be placed into one of three ERU
tiers based on the size of the parcel (see table below). Commercial, industrial, institutional, government, and m"Ulti-family residential
properties would continue to be charged based on actual impervious surface area, but at the increased rate of $10 per ERU
:\(:;;.,/.:.2 '<:.';.PROP9SEJ)iRE:SIPEN;IaAL:Ml'ES(Single,.Fa:miiY&DWl~i),': ;;j{//'" ... ;". \. · ..• ·i,-)
PARCEL SIZE (sq.ft.) ERU" PROPOSED RATE
Less than 6,000 sq.ft. 0.8 ERU $8.00
6,000-10,999 sq.ft. 1.0 ERU $10.00
11,000 sq.ft. or greater 1.4ERU $14.00
Annual Inflation Adjustment. In order to offset the effects of inflation on labor and material costs, the proposed fee
increase would be subject to annual adjustments beyond the initial $10.00 per ERU rate as of July 1 of each year, starting in 2006.
Inflation increases would be based on the lesser of the local rate of inflation (based on the change in the Consumer Price Index [CPI]
for the San Francisco-Oaldand-San Jose CSMA, published by the United States Department of Labor, Bureau of Labor Statistics) or
6 percent. The City Council would have the discretion whether or not to implement inflation adjustments on an annual basis as part
of the City budget process .
. Sunset Provision. The proposed storm drainage fee increase would sunset twelve (12) years from the date the fee increase
is implemented, as the storm drain capital improvements to be funded by the increase would be completed by that time.
Oversight Provision. The City Council would appoint an oversight committee to monitor and review the proposed storm
drain capital improvements and insure that the money raised from the increased storm drainage fee is spent in accordance with the
resolution approved by the City Council on December 6, 2004. The oversight committee would report its findings to the City
Council at least annually.
Rate. Assistance Program. The City's existing Rate Assistance Program, which provides a 20% discount to qualified low-
income utility customers, would apply to the storm drainage fee.
Pay-as-you-go Funding of Capital Improvements. The storm drain capital improvements to be funded through the
proposed storm drainage fee increase would be paid for on a pay-as-you-go basis, without debt fmancing.
Up-front Payment of Storm Drainage Fees by City of Palo Alto. In order to accelerate the construction of the proposed
storm drain capital improvements, the City of Palo Alto would pre-pay in advance the storm drainage fees attributable to City-owned
properties for a period of twelve years, upon approval of the increased storm drainage fee.
Should )'ou have any questions about the public hearing, please call or write to: Donna Rogers, City Clerk, P.O. Box
10250, Palo Alto, CA 94303. Telephone: (650) 329-2571.
For questions about the proposed fee increase, you may call Matt Raschke in the Public Works
Department at (650) 617-3183 or visit the City's web site at: www.cityofpaloalto.orglstormdrain.
1/19/2005
NOT YET APPROVED
(b) Provided notice of the proposed fee increase to the
rec?rd owners of all parcels to which the proposed fee
increase would apply;
(c) Heard all objections, protests, or other written
communications from any owners of real property subj ect
to the fee;
(d) Taken and received oral and documentary evidence
pertaining to the proposed fee increase;
(e) Remedied and corrected any clerical error or informality
in the report;
(f) Corrected any minor defects in the proceedings;
(g) Revised and corrected any of the acts or determinations
of any City officers or employees, as contained therein;
and is fully informed of this matter.
SECTION 2. The Council hereby confirms the report
referred to in Section 1 and each of the proposed fee increases
therein.
SECTION 3. The Council determines that written protests
have not been received from property owners representing a
majority of the parcels subject to the proposed fee increase.
SECTION 4. The Council hereby calls a special mail
ballot proceeding, to be held solely by mail ballot, for the
purpose of submitting the fee increase to a vote of the property
owners of parcels subject to the proposed fee increase. The date
of the mail ballot proceeding shall be Tuesday, April 26, 2005.
The City Clerk must receive ballots no later than 8:00 p.m. on the
date of the ballot proceeding.
SECTION 5. At the special ballot proceeding called
by this resolution, the following question shall be submitted to
the property owners eligible to vote:
Shall the monthly Storm Drainage Fee for developed residential
and non-residential properties be increased to $10.00 per
Equivalent Residential Unit (ERU) for a period of 12 years,
subject to annual adjustment for inflation up to a maximum of
six percent per year?
The storm drainage fee will be used to improve local drainage
and prevent street flooding by funding:
high-priority storm drain system capacity upgrades,
drainage system repairs,
enhanced storm drain maintenance, and
storm water quality protection activities
DYES o NO
· ::.~. -
2. Annual inflation adjustments to proposedfee increase
In order to offset the effects of inflation on labor and material costs, the proposed fee increase
would be subject to annual increases beyond the initial $10.00 per ERU rate as of July 1 of each
year, starting in 2006. Inflation adjustments would be based on .the lesser of the local rate of
inflation (based on the 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) or 6 percent. The City Council would have the authority and discretion to implement
inflation adjustments on an annual basis as part of the City budget process.
3. Twelve year sunset provision for proposed fee increase
The proposed storm drainage fee increase would sunset twelve (12) years from the date the fee
increase is implemented, as the storm drain capital improvements to be funded by the increase
would be completed by that time.
4. Oversight provision for proposed fee increase.
The City Council would appoint an oversight committee to monitor and review the proposed
'storm drain capital improvements and insure that the money raised from the increased Storm.
Drainage Fee is spent in accordance with this resolution. The oversight committee would report
its findings to the City Council at least annually.
5. Applicability of the Rate Assistance Program
The City's existing Rate Assistance Program, which provides a 20% discount to qualified low-
income utility customers, would apply to the Storm Drainage Fee.
6. Pay-as-you-go funding of capital improvements
The storm drain capital improvements to be funded through the proposed Storm. Drainage Fee
increase would be paid for on a pay-as-you-go basis, without debt fmancing.
7. Up-front payment of Storm Drainage Fees by City of Palo Alto
In order to accelerate the construction of the proposed storm drain capital improvements, the
City of Palo Alto would pre-pay in advance the Storm Drainage Fees attributable to City-owned
properties for a period of twelve years, upon approval of the increased Storm Drainage Fee.
4/4/2005 Page 2
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