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2002-11-12 City Council (4)
City of Palo Alto C ty Manager’s Report TO: FROM: HONORABLE CITY COUNCIL CITY MANAGER DEPARTMENT: PUBLIC WORKS DATE: SUBJECT: NOVEMBER 12, 2002 ,CMR:443:02 STUDY SESSION REGARDING RECOMMENDATIONS OF THE BLUE RIBBON STORM DRAIN COMMITTEE This report is provided as background information for the Council study session. No action is required. BACKGROUND On March 18, 2002, Council approved staff’s recommended conceptual strategy for identifying a funding mechanism for future storm drain improvements and enhanced storm drain maintenance and storm water quality protection programs. The approved strategy included the appointment by the City Manager of a Blue Ribbon Committee of residents and business representatives to review storm drain funding needs. In April 2002, staff contacted members of the public to solicit participation on the Storm Drain Committee (Committee). The City Manager appointed fifteen residents, business representatives, and community leaders to the Committee (see list of Committee members, Attachment A). The Committee members live inneighborhoods throughout the City and have expertise and personal interest in a variety of fields. Council member Hillary Freeman served as Council liaison to the Committee. The Committee had its first meeting on May 3, 2002 and met for two hours on a bi- weekly basis through the end of August. During September and the first week of October, the Committee met weekly and increased the duration of their meetings. The Committee met’ 15 times for a total of 37 hours. The Committee meetings were open to members of the public, who had the opportunity to ask questions and offer comments during the Committee’s discussions. Information about the Committee meetings, including agendas, meeting summaries, and briefing materials, was posted on a weekly basis to a special page on the City’s web site: http://www.city.palo-alto.ca.us/stormdrain!. At the first seven meetings, staff presented detailed information to the Committee on a variety of topics relevant to storm drainage, including existing programs, storm drain funding, Proposition 218, recommended storm drain capital improvements, and enhanced CMR:443:02 Page 1 of 6 storm drain maintenance and storm water quality protection programs. During the remainder of the meetings, the focus switched to the Committee’s internal discussion and analysis of the issues. Following the series of meetings, the Committee developed a summary report containing its findings and recommendations to the City Manager for future storm drain funding (Attachment B). To provide a basis for comparison, staff has prepared a table listing the major differences between the elements of the year 2000 storm drain ballot measure and the Committee’s recommendations (Attachment C). The City Manager transmitted the Committee’s report to the community through a press release issued on October 22, 2002. Members 0fthe Committee will be present at the study session to address the Council and answer questions regarding their report. DISCUSSION System Improvements: The Committee is recommending a storm drain capital improvement program totaling $44.4 million (Year 2002 dollars) to be inaplemented over 30 years. According to its report, "the proposed improvements will protect previously flooded residences and businesses and ponded roadways from further damage from stories up to the 10-year level". In 1993, staff workedwith an engineering consultant to prepare a Stoma Drain Condition Assessment and an updated Storm Drain Master Plan. The Storm Drain Condition Assessment involved the detailed inspection of the e×isting storm drain system in order to identify deteriorated system components (pipelines, manholes, catch basins, etc.) in need of repair or replacement. The Storm Drain Master Plan documents the segments of the City’s storm drain system that need to be upsized in order to convey the runoff from a 10- year storm, as identified through computer modeling of the drainage network. Based on the findings of these two studies and field.observations of storm drains during rainfall events, staff recommended storm drain improvements totaling approximately $75 million (2002 dollars) to increase the capacity of the system and to repair or replace deteriorated infrastructure. The Committee’s recommended $44.4 million capital improvement program includes those projects that would address the most severe drainage capacity and infrastructure rehabilitation needs throughout the City. A table of detailed project descriptions (Attachment D) and a map showing the locations of the proposed projects (Attachment E) are attached to this report. The remaining projects on staff’s recormaaended list ($30,6 million) would address lower-priority drainage system deficiencies identified through computer modeling for which there is not a documented history of street flooding. Deferral of these remaining.projects will not markedly reduce the overall benefits of the proposed storm drain capital improvement program. The Committee recommended the establishment of a contingency fund of approximately $2 million to pay for a number of CMR:443:02 Page 2 of 6 these projects (or other storm drain capacity upgrade projects) to remedy remaining drainage problems identified by staff after completion of the initial set of recommended projects. The Cormnittee is recommending that a number of ongoing and enhanced maintenance and storm water quality improvement programs should be funded through the Storm Drainage Fund. Recommended program enhancements include enhanced maintenance (additional staffing and funding for curb and gutter replacement), environmental programs (funding for compliance with storm water discharge permit requirements, elimination of subsidies from the Wastewater Treatment Fund for storm drain-related activities, and funding for innovative projects that reduce storm runoff and pollutants), funding for future system replacement (establishment of sinking funds for future condition assessments, pump station equipment replacement, storm drain rehabilitation, and storm drain capacity upgrades), and additional engineering staff to implement the recommended capital improvement projects. Payment for System Improvements: The Committee’s recommended capital improvements and storm drain programs would require an increase in the Storm Drainage Fee from its present $4.25 per month for average single-family residential customers to $13.90 per month. Staff believes that Council should consider the option of increasing the monthly fee incrementally over several years in order to lessen the impact to ratepayers. The storm drain capital improvements projects would be paid for on a pay-as-you-go, front-loaded basis. The City Council would have the discretion to increase the Storm Drainage Fee beyond the approved initial rate on an annual basis as part of the City budget process, but not to exceed the local rate of inflation or 6%, whichever is less. The City’s existing Rate Assistance Program (RAP), which provides a 20% discount to qualified low-income utility customers, would apply to the Storm Drainage Fee. The City Attorney advises that a social policy-based discount must be funded by the General Fund. Because Proposition 218 limits fees to the proportional cost of service to each parcel, the gap created by the discounted RAP fees cannot be spread over the other fee payers. ~. The Storm Drainage Fee rate structure for single-family residential properties would be modified to create three rate categories, based on parcel size, while keeping the weighted average at $13.90 per month. The Storm Drainage Fee should be levied uniformly throughout the City of Palo Alto. Finally, a fee reduction appeal process would be in place for those property owners, who can demonstrate that the runoff from their properties drains directly to a creek or another city’s storm drain system or who can demonstrate that they have constructed improvements to their properties to retain storm runoff. Sunset and Oversight Provisions: The Cormnittee is recommending that the increase in the Storm Drainage Fee attributable to capital improvement projects should sunset fifteen years from the date of the rate increase election and the remainder of the fee increase should sunset 30 years from the CMR:443:02 Page 3 of 6 election date. The Comrnittee also recommends that an oversight committee be appointed by the City Council to monitor and review the storm drain capital improvements. The Oversight Committee should report at least annually to the City Council. Finally, the Conmaittee recommends that the City Council should appoint a storm drain citizens committee ti~ re-examine storm drain funding issues no later than five (5) years prior to the sunset dates. This is an area where staff.believes further consideration may be helpful. Staff believes that the dual sunset period provision is overly complicated and unnecessary. The Committee advocated that property owners be asked to reauthorize the portion of the Storm Drainage Fee increase attributable to capital projects after fifteen years. At this point, approximately one-half of the recommended capital projects will have been completed. The Committee members believed that property owners should be able to decide whether or not to proceed with the remainder of the projects after observing and assessing the implementation of the initial projects. Staff believes that the need for all of the projects has already been established, and that the proposed oversight committee can ensure that the work is performed in an effective and efficient manner. Staff believes, instead, that the entire fee increase should remain in effect for a period o.f 30 years. Policy Issues: The Committee reconmaends that past General Fund subsidies to the Storm Drainage Fund and storm drainage expenses advanced by the City’s Wastewater Treatment Fund not be repaid. It also recommends that funding for the San Francisquito Creek Joint Powers Authority be paid from City sources other than the Storm Drainage Fund, and that a portion of the Storm Drainage Fee, not to exceed $125,000 per year in years 1 through 6 of the program and $250,000 per year thereafter, be used to fund innovative projectsthat reduce the amount of storm runoff and environmental pollutants entering the storm drain system. Finally, the Committee recommends that the Storm Drainage Fund election should be held in the fall of 2003 so that there will be sufficient time for public information and education. Although staff concurs with the Committee’s assessment that public outreach and education will be a key factor in determining the outcome of any future storm drain vote, there is concern regarding the proposed timing of the election. Staff believes that an effective outreach effort can be completed prior to the fall of 2003. The continuing General Fund subsidy of the Storm Drainage Fund is a significant financial burden that diverts funding from other potentially valuable projects and programs. Council may want to consider the fiscal impacts to the General Fund when deciding upon a final timeline for a storm drain election. Administrative Matters: The Cormnittee had the following additional recomrnendations: CMR:443:02 Page4 of 6 Specifics of the proposed Newell Road pump station and attendant storm drain pipelines should be considered by the Oversight Committee and City Council prior to the start of any construction based upon a review of the information then available regarding San Francisquito Creek flood management projects. The Public Works Department should collect and monitor data on the performance of the storm drain system, noting where the problem areas are and updating the existing performance model in order that upgrades and repairs can then be reprioritized as necessary. The City should encourage Santa Clara County to take steps to alleviate the frequent flooding of the Oregon Expressway underpass at Alma. Staff concurs with all of these. NEXT STEPS Staff will return to Council in January 2003 to seek approval of a specific funding proposal for storm drain funding. To allow for more detailed review and analysis, staff recommends that this issue be discussed by the Finance Committee prior to final resolution at the full Council. Staff will incorporate feedback from the Council study session into its recommendation. The Storm Drain Committee identified the need for extensive public outreach and education prior to any future storm drain election. During its dialog with staff, Committee members gained an appreciation for the complexity of the technical and financial issues inherent in the City’s storm drainage program and observed that there is currently very little public awareness of the issues. The Committee expressed its belief that the lack of clear, understandable information was a contributing factor in the defeat. of the Year 2000 storm drain ballot measure. The Committee advised the City Manager that it felt it would be highly beneficial to retain the services of a consultant who specializes in education and outreach. Staff concurs with the Committee’s conclusion that public outreach and education is an essential starting point for a successful election. Staff issued a Request for Proposals (RFP) to public relations firms in early September seeking assistance in presenting the storm drain funding proposal to the public. Three proposals were submitted, and staff is in the process of evaluating the submittals and selecting a firm. Finally, Attachment F lists the mandatory steps for a property owner election conducted in accordance with Proposition 218. As discussed above, staff also recommends that adequate time be ailotted for public outreach and edUcation in planning the timeline for a storm drain election. CMR:443:02 Page 5 of 6 ATTACHMENTS Attachment A - Attachment B Attachment C - Attachment D - Attachment E - Attachment F - List of Storm Drain Committee members Storm Drain Committee Summary Report Differences Between Year 2000 Ballot Measure and Storm Drain Committee Recommendations Description of proposed storm drain capital improvement projects Map of proposed storm drain capital improvement projects Proposition 218 Property Owner Election Process and Timeline PREPARED BY: DEPARTMENT HEAD: JOE TERESI GLENN S. ROBERTS of Public Works CITY MANAGER APPROVAL: Assistant City Manager Storm Drain Committee Members CMR:443:02 Page 6 of 6 Attachment A Storm Drain Committee Name Larry Klein, Chair Richard Alexander .Vivian B!Qmenkamp Lorraine Brown Elizabeth Dahlen Walt Hays Leannah Hunt Stepheny McGraw Skip McIntyre John Melton Hal Mickelson Trish Mulvey Susan Rosenberg John Tarlton Joe Villareal Affiliation Attorney Attorney League of Women Voters of Palo Alto Community Activist Civil/Environmental Engineer Retired Residential .Realtor Retired Insurance Broker Retired Palo Alto Chamber of Commerce Retired Canopy & Trees for E1 Camino Project Commercial Property Manager Mayfield Resident and Business Association Council Liaison: Hillary Freeman Attachment B STORM DRAIN COMMITTEE REPORT To The City Manager The Storm Drain Committee is pleased to provide this Report recommending a package of ’ storm drain system capital projects and enhanced storm drain maintenance and storm water quality operating expenditures to be paid for by increases in the Storm Drainage Fee. (The basic decisions of the Committee were by a vote of 12 to 2 with Richard Alexander and Elizabeth Dahlen dissenting for the reasons set forth in their minority reports. Votes on individual items were unanimous except as otherwise indicated.) " Background Palo Alto’s Storm Drainage System Storm drains carry rainwater and other water runoff to creeks in order to eliminate localized flooding and ’°ponding" during storm events. The storm drainage system is separate from the Sanitary sewer system which carries waste from indoor drains to the wastewater treatment plant. The nationally accepted design standard for storm drain systems is that they should be able to handle a 10-year storm - one which has a ten percent (10%) chance of occurring in any given year. Based on local meteorological records, a 10-year storm for Palo Alto will produce 1.62 inchesof rainfall over a six hour period. Our storm drain system was constructed piece-meal over the past 100 years and falls far short of the 10-year storm standard. Older portions ofPalo Alto’s storm drainage system are adequate to handle only a 2-year storm and a few neighborhoods, such as Southgate, have no storm drains at all. In February 1998 Palo Alto experienced what is generally considered to be.a 70-year storm. San Francisquito Creek overtopped its banks, causing significant damage to property (estimated at $28 million) and disruption of people’s lives. Such a.storm is far beyond the Capacity of any storm drainage system. The improvements we recommend in this report will not address future creek overflows; that is the goal of separate flood protection project efforts of the Santa Clara Valley Water District for Adobe, Barron and Matadero Creeks and of the San Francisquito. Creek Joint Powers Authority (JPA). Paying for the Storm Drains in Palo Alto Before 1990 Palo Alto did not have a dedicated budget for storm drain system maintenance or improvements. In that year the City established the Storm Drainage Fund, supported by monthly Storm Drainage Fees on the utility bill, For single-family residential properties the fee was based on one city-wide rate, the Equivalent Residential Unit (ERU), and the Commercial/industrial rate was a multiple of the ERU based on the amount of impervious surface of the commercial/industrial property. Since 1994 the Storm Drainage Fee has been $4.25 per month per ERU. The City’s Effort to Upgrade the System In 1993 Palo Alto commissioned a revision of the City’s 1965 Storm Drain Master Plan. While the City Council was considering the recommendations contained in the Master Plan revision, the voters of California passed Proposition 218, which requires ballot approval by a majority of property owners for any municipal storm drain fee increases. In Fall 2000 the City presented to its property owners a package of storm drain capital improvements to increase system capacity, totaling $48 million (in 2000 dollars) to be paid by a Storm Drainage Fee increase to $9.00 per ERU per month. That measure failed by a vote of 63% to 37%. Present Status In recent years Storm Drainage Fund revenue has been insufficient to pay for basic maintenance and storm water quality protection programs and there, has been no money for.any. .................................... significant construction. For the past three years the Storm Drainage Fund has required an annual $900,000 subsidy from the City’s General Fund, at the expense of other City programs, and an additional $i 00,000 subsidy from the Wastewater Treatment Fund, just to stay even with basic programs. "Blue Ribbon" Storm Drain Committee You appointed the Storm Drain Committee in April of this year to advise you~ the City CounCil, and most importantly, the citizens of Palo Alto on the need for storm drain capital improvements and enhanced maintenance and storm water quality protection programs. The Committee consists of residents, business representatives, and community leaders from various neighborhoods throughout the city. If the Committee found a need for such capital improvements and programs, it was also charged with recommending the scope, size and timing of a storm drain funding proposal to be submitted for property owner approval. The Committee began its deliberations on May 3, 2002 and met on a bi-weekly basis through the end of August. During September and the first week of October it met weekly. The Committee met 15 times for a total of 37 hours. The Committee received information from City staff members in the public works and administrative service departments, the City Manager’s office and the City Attorney, as well as interested members of the community. We discussed existing storm drain funding, the staff’s recommendations regarding capital improvements, storm drain maintenance and storm water quality protection needs, the requirements of Proposition 218 and a number of policy . issues related to storm drain programs and funding. The Committee considered and debated the matters brought to them by the staff as well as items introduced by Committee members. -2- Recommendations The Committee reached the conclusions and makes the recommendations set forth below. System Improvements The storm drain capital improvements on Attachment 1 should be funded. (Dahlen voted against certain capital improvements.) The total cost of such projects is $44.4 million (Year 2002 dollars). We expect that these improvements will protect previously flooded residences and businesses and "ponded" roadways from further damage from storms up to the 10-year level. These improvements are also intended to reduce road/sidewalk/curb/gutter repair costs by reducing subsoil water saturation and to increase traffic safety during storms. .... 2 ............The ongoing and e.nhanced maintenance and st0~.~rm. ,wate_~..qu.@ty improvement programs described on Attachment 2 should be funded through the Storm Drainage Fund, o Payment for System Improvements The capital improvements and storm drain programs described above would requi~e an increase in the Storm Drainage Fee from its present $4,25 per month for average single- family residential customers to $13.90 per month (an increase of $115.80 per year). Proposition 218 requires that this proposed increase be approved by a majority of property owners in a mail ballot election. The storm drain capital improvements projects should be paid four on a pay-as-you-go, front loaded, ibasis (in order to compensate, other, aspects of the long term storm drain plan, such as system renewal, would be "back loaded"). This pay-as-you-go strategy will result in-a lower monthly Storm Drainage Fee since there will be no bond financing costs, and the "front loading" will allow 95% of the capital improvements, to be completed within 24 years. A spread-sheet showing these cash flows in more detail is Attachment 3 to this report. In order to offset the effects of inflation, the City Council should have the discretion to ¯ increase the Storm Drainage Fee beyond the approved initial rateon an annual basis as part of the City budget process, but not to exceed the local rate of inflation or 6%, whichever, is less. The City’s existing Rate Assistance Program (RAP), which provides a 20% discount to qualified low-income utility customers, should apply to the Storm Drai,nage Fee. The Storm Drainage Fee rate structure for single-family residential properties should be modified to create three rate categories, based on parcel size (less than 6,000 square feet; between 6,000 and 11,000 feet; and greater than 11,000 square feet) while keeping the weighted average at $13.90 per month. The Storm Drainage Fee should be levied uniformly throughout the City of Palo Alto. -3, 12. 13. 14. 15. 16. As is currently the case, a fee reduction appeal process to City staff should be in place for those property owners who can demonstrate that the run-off from their properties drains directlyto a creek or another city’s storm drain system and that they have complied with all applicable permit and other legal requirements for such drainage. In addition, this appeal process should apply to those property owners who can demonstrate that they have constructed improvements to their properties to retain storm runoff onsite. In keeping with the present policy; the reduction in fees would not apply to that portion of the monthly fee attributable to City wide programs. Sunset and Oversight Provisions The increase in the Storm Drainage Fee attributable to capital improvement projects ($4.57 per month in year 15) should sunset fifteen years from the date of the rate increase election, and the remainder of the fee increase should sunset 30 years from the .electi0n d~at~ ,(approved 8-4, Alexander, Brown, Dahlen and Klein opposed; the four minority votes and two others voted for an across the board 15 year sunset.) An oversight committee should be appointed by the City Council to monitor and review the .storm drain capital improvements and to insure that the money raised from the increased Storm Drainage Fee is spent in accordance withthe statements made to the public in the property owner election. The Oversight Committee should report at least annually to the City Council. The City Council sh6uld appoint a storm drain citizens committee to re-examine storm drain funding issuesno later than five (5) years prior t° the sunset dates. Policy Issues Past General Fund subsidies to the Storm Drainage Fund should not be repaid. As noted above, since 1999 the existing Storm Drainage Fee of $4.25 per month has not been sufficient to pay for the storm drain costs, and the remainder of those costs (equal to about $2.00 per month in the Storm Drainage Fee) have been paid from the City’s General Fund. Similarly,. certain expenses advanced by the City’s Wastewater Treatment Fund, which more properly belong in the Storm Drainage Fund, should not be reimbursed. Funding for the San Francisquito Creek Joint Powers Authority should be paid from City sources other than the Storm Drainage Fund. (Mulvey opposed.) A portion of the Storm Drainage Fee, not to exceed $125,000 per year in years 1 through 6 of the program and $250~000 per year thereafter, should be used tO fund innovative projects that reduce the amount of storm runoff and environmental pollutants entering the storm drain system. (Basic idea approved 9-1, with Alexander opposed) (four members of the Committee, Mulvey, Rosenberg, Dahlen, and Villareal would set the maximum at $250,000 per year throughout the program) The Storm Drainage Fund election should be held in the fall of 2003 so that there will be sufficient time for public information and education. -4- Administrative Matters 17.An alternative point of discharge for the Newell Road pump station and attendant storm drain pipeline projects may be necessary after investigation of possible citing and permitting constraints. This matter should be considered by the Oversight Committee and City Council prior to the start of any construction based upon a review of the information then available including the interaction of these projects with potential San Francisquito Creek flood management projects. 18.The Public Works Department should collect and monitor data on the performance of the storm drain system, noting where the problem areas are and updating the existing performance model in order that upgrades and repairs can then be reprioritized as necessary. 19.The City should encourage Santa Clara County to take steps to alleviate the frequent flooding of the Oregon Expressway underpass at Alma. Storm Drain Committee Members Larry Klein, Chair Richard Alexander Vivian Blomenkamp Lorraine Brown Elizabeth Dahlen Walt Hays Learmah Hunt Skip McIntyre Stepheny McGraw John Melton Hal Mickelson Trish Mulvey Susan Rosenberg John Tarlton Joe Villareal (Although committee members Hays, and Mickelson were absent from the final meeting of the Committee they have read and reviewed this report and wish to be recorded as supporting the Committee’.s recommendations. Committee member McIntyre was also absent from the final meeting and, although he previously indicated general approval of the Committee’s decisions, he should not be considered as having approved or disapproved of this report.) October 22, 2002 Palo Alto, California -5- ATTACHMENT 1 STORM DRAIN COMMITTEE’S RECOMMENDED LIST OF STORM DRAIN IMPROVEMENT PROJECTS PHASE 1 (CRITICAL PRIORITY): Project Name Pump station evaluation and upgrades Relocate & pump 96" outfall into San Francisquito creek " Newell Road pipeline, outfall, and pump station (System cc) Harker Street pipeline (System CC) Lincoln Avenue pipeline (System BB) Parallel/Replacement pipelines (System BB) Extend Gailen Ave./Bibbits Dr. outfall to Adobe Pump Station Improve drainage along southbound Alma Street Connect Clara Drive drains to Matadero Pump Station Southgate n~ighborhood drainage Balance of preciously identified rehabilitation projects from 1993 condition assessment PHASE 2 (MODERATE PRIORITY): Project Name Chaucer Street pipeline Kellogg Avenue pipeline Pitman Avenue pipeline Parallel pipes Parallel/Replacement pipelines (Loma Verde/Sterling Canal/Seale-Wooster Canal) Install pipelines to connect siphons West of Foothill Expressway, Location Citywide North Palo Alto Green Gables Commtmity Ctr. Professorville Professorville Charleston Terr. Alma Street De Anza Southgate Citywide Cost (20025M) $3.13 $3.13 $4.43 $2.54 $2.36 $1.83 $1.10 $1.28 $0.58 $1.88 $4.38 SUBTOTAL =$26.64 Location Cost (2002 $M) Crescent park $0.19 Community Ctr.$1.79 Crescent Park $3.90 Ortega $0.63 Midtown/South PA $7.50 Various areas $2.50 Foothills $1.25 SUBTOTAL =$17.76 TOTAL (PHASES 1 & 2) = $44.40 -1- ATTACHMENT 2 STORM DRAIN COMMITTEE’S RECOMMENDED LIST OF STORM DRAIN ENHANCED MAINTENANCE AND WATER QUALITY OPERATING EXPENDITURES Enhanced Maintenance Annual funding, ranging from $200,000 in year 1 to $800,000 (2002 dollars) in year 7 and subsequent years, s~hould be provided in the Storm Drainage Fund for the replacement of damaged curbs and gutters since curbs and gutters are essential to storm water flow into the underground pipe system. Unitary curb and gutter replaced as part of sidewalk repairs should be paid for with sidewalk replacement funds. Annual funding of $90,000 should be added to the Storm Drainage Fund budget to fund additional storm drain maintenance resources (either ~staff or contract services). Environmental Programs o Mandated ~torm water quality protection program costs should be funded by the Storm Drainage Fund. All costs directly related to land development projects should be recovered through building/grading permit fees. ° ° Annual funding of $100,000 should be added to the Storm Drainage Fund budget to pay for existing services related to storm water quality protection currently funded through the Wastewater Treatment Fund: The Wastewater Treatment Fund budget should be reduced by $100,000 so that there is no net increase in overall City spending for these existing services. Annual funding ($125,000 for years 1 through 6, $250,000 thereafter [2002 dollars]) should be added to the Storm Drainage Fund for innovative projects that reduce the amount of storm water runoff and environmental pollutants entering storm drains and creeks. Future System Replacement For prudent financial planning purposes the storm drainage system should have "sinking funds" built in to its rate structure so that funding will be available to replace parts of the system as they wear out. In order to implement this sound strategy the .following annual contributions (2002 dollars), commencing in year 7, should be deposited into individual dedicated sinking funds: -1- 6.Periodic comprehensive storm drain system condition assessments: -- $50,000. 7.Pump station equipment replacement: -- $110,000. 8.Storm drain system replacement!rehabilitation -- $1,000,000. 9.Storm drain capacity upgrades contingency -- $125,000 (years 1 through 6) $100,000 (thereafter) .... Capital Improvement Related 10.Funding for one additional staff engineer ($115,000 per year) should be added to the Storm Drainage Fund in order to implement the recommended capital improvements. -2- ~I~ORITY R~PORT: ~y Richard Alexander The good news is the street drains are in ’~fairly good condition," according to Public Works Director Glenn Roberts speaking at the Drain Committee Meeting on October 4, 2002. When asked to clari~j his statement, he said, "We do.’~ have any major replacements coming up in ~he next several years." The bad news is that the $345 million "blue ribbon" ¯drain proposal-by ....... ¯ .................... the City Manager’s Committee while expensive, does not solve flooding, such as the t 998 flood that destroyed homes and displaced families, businesses and schools, and it places the full responsibility for allthe costs,of streetdrain pipes, curbs and gutters on residents, with nothing paid bountiful the city from its extremely bountiful general operating revenues. The Committee’s chief success is that the recommended spending over the next 30 years is a strong indictment of the city having done nothing to maintain storm drains for the last 30 years. The chief failure is that the Committee refused to ask the most Critical question-" Why should Palo AItans be charged for all the costs of street drains as a "utility" in the first place? The new spending plan makes up for 30 years of neglect by city officials by tripling the monthly street drain charges to raise ST million dollar a year, star~ing in 2004, for thirty years, That’s $2t0 million, but with a built=in CPI inflator ~he annual "assess~e~ ~ax" grows eve~ year. Assuming 3 percen~ i.fla~io, for 30 years ~he ~o~al charge will be There is a t % chance the San Francisquito Creek will carry 7,860 cubic feet of water a second [CFS] following a storm, in 1998 the Creek gushed with 7,t00 CFS and there were similar massive flows in the Barron, iVlatadero and Adobe Creeks. When flooding like that occurs, drains that empty into the creeks back up.. Calling them "storm" drains doesn’t change the fact that when storms hit, they don’t work= Creek flooding is under the jurisdiction of, and now being studied by, the Joint Powers Authority and the Army Corps of Engineers for the San Francisquito Creek and the Santa Clara Valley Water District for the A~i0b’e; Barronand Nlatadero creeks.-.it is not a problem we can ........................... solve on our own. This $345 million proposal is only intended to prevent temporary ponding on roads, parking lots and yards, when a ten.year rai, drops 1.62 inches in 6 hours, and to speed up the time to get the water into the drains, That’s the stated goal ofthis $345 million program: ~ ponding due to heavy rains. Ponding is separate and distinct from flooding. ~=nvironmentalists say that street ponding, while troublesome for . traffic, ’ is beneficial because it slows water flowing to the creeks and prevents uncontrolled overhanking. To minimize temporary street ponding,the Committee recommends increased pumping to suction water uphill and into the Bay. However, the timing, location and piping needed for new pumps depends on creek decisions by the Joint Powers Authority, Army Corps of ~ngineers and the Water l~istrict. New pumps may not be necessary. In fact, pumping stations are turned off during creek flooding and the street drainage system stops working altogether, it simply fills. New pumps are not going to help us with flooding, with the flood agencies to make sure we do not buy pumps we may not need or not be able to use effectively. in the past the Council should have provided Glenn Roberts, Director of Public Works and a fine professional engineer, with the resources to ¯ do his job. The street drains have been ignored because many City Councils for many years have not been watching the store. That situation has been made worse by treating street drains as a "utility." The City Manager’s Committee was asked to recommend a long-term overhaul of the street drains and a budget to accomplish that. The Committee declined to consider whether street drains should be a utility as a question outside of the City Manager’s assignment and the purview of the Committee’~i This issue merits serious public discussio.. The $345 million proposal is a good overview of what Palo Alto should have been doing during thelast 30 years, but it assumes that the City of Palo Alto’s general operating fund will pay-nothing and that proper~y owners will pay ailthe costs of street drains: staff salaries [retirement, health, dental, vacations, and sick leave], emergency response charges, cleaning, pipe replacement, pump purchase and maintenance, water quality compliance, permit fees, consultants to videotape.and prepare computerized models of drain deterioration, reserves for future needs, a contingency fund for emergencies, and a fund to encourage innovation in solving street drain needs. The Committee also decided that virtually all of the costs of curbs and gutters shouJd be included in the storm drains fee, even though rol|ed curbs and gutters are properly pa~ of ~he sidewalk system. The Committee rated DPW construction proposals based on a t993 computer model and inspection of the drain system,. No current data were available for making a 30 year proposal, Some decisions were driven by personal anecdote, as opposed to hard data. Some assumptions were changed without basis in fact, such as assuming the engineering life of a concrete pipe was different from the standard or that curbs and gutters could be replaced at a rate different from that reported by the engineers. The final product is far from pe~ect or reliable over the next 30 years, but it is a reasonable starting point for public discussions; .................................................. The Committee’s 30 year "sunset" clause on maintenance charges and a t5 year "sunset" clause after $44 million has been spent or= construction reveals a disappointing attitude by a narrow majority of the Committee. By a one vote margin the Committee refused to give voters the opportunity to review .the accuracy of its predictions in 5 or t 0 years to make sure Committee guesstimates were correct and the program was on track. This decision by this narrow majority, rejecting sound public policy considerations and a stern warning of its implications, demonstrates a cavalier elitism that is regrettabie.- The total bill of $2t 0 million at 3% inflation results in annual individual charges of $166,80 [$13.90 per month] starting in 2004 and increasing to $393 [$32,76 per month] in 2033, The proposed exaction is extremely high in comparison to other towns. Sunnyvale, Los Altos, and Mountain View do not charge residents. They pay for street drains with general revenues. Others charge a fraction of Palo Alto’s $5t annual fee: Campbell $t 9, Cupertino $t2, Los Gatos $20, and Monte Sereno $16. San Jose charges $40 per year. After Prop t3 passed, some cities were unable to obtain two-thirds votes for new taxes. They created enterprise funds which only require 5t % voter approval for ==special assessments." Whether called ==assessments," ’=enterprise charges’~ or =~ees for services," these charges are simply a tax legally imposed by a 5t % majority. Palo Alto has led the state in per capita income and never ==needed" additional income from enterprise funds; From 199t to 200t, property tax revenues grew~from $7.5 million to $t0.5 million and.sales tax~’ ...................... revenues jumped from $13 million to $2t .3 million, thanks to the Stanford Shopping Center and a booming downtown. Since 1979 city income has grown at twice the rate of inflation, if Palo Aito’s t979 income of $22 million merely had increased with inflation, the city’s budget would have been $54 million by 2002, instead it skyrocketed into the stratosphere to $130 million, largely for staff salaries. By classifyi.g street drains, sanitary sewers and garbage collection as =’utilities," the city moved these revenues and expenses from the general operating budget and freed up general operating revenues to be spent by the Council on special interest groups, more employees . and huge staff salaries. That’s why, even though we have always I~een flush with cash, our infrastructure is dilapidated. Year after year, politicians have caved in to every staff demand for more employees and increased salaries. ~Palo Alto truly has government of the staff, by the staff and for the staff, but little for infrastructure. Ask City Hall why it spends more per person than any other city or why we need 800 employees. Council members will tellyou it is because we have ~better services." Ask city officials what "better services" we have now, that we did not have in t979, and nobody can say. Mayor Ojakian could not answer that question in June and he still does not know. Neither does Cogncilmember Jim Butch whose response to the inquiry was that the staff is "extremely intelligent, thoughtful and dedicated." Unfortunately, we have about twice as many dedicated staff as needed. = In1979 ~U~tOWri~of 55,000 had approximately379.employees ................. ............. paid by the general operating budget, in 2002 with 60,000 people, we now have approximately 800 full time employees paid by the general operating fund. it does not compute. if Nordstroms told you. that the cost of a $125 pair of Shoes was $250 because you lived in Palo Alto, you would be livid. But that is exacUy what is happening with city spending. Palo Altans are paying twice as much as they should, and not only is there little to show for it, there is no explanation provided why spending is at this level. There always has been more tha. enough money to maintain the street drains out of the general operating budget. Both the $44 million for street drain construction and $156 million for routine operations, maintenance and replacement of pipes, curbs and gutters can easily be paidout of the general operating fund. ’ With a budget of $t 30 million, a 5% annual allocation of $6.5 million to pay for street drains is fair and appropriate, That is what Palo Alto should do. are paid before ~an~s." The same rules apply ~o city government. will stop dissipating our municipal inheritance on ~ants" and who will be stewards of the public treasury today, so that we can have a sustainable community tomorrow and leave a better Palo Alto than we received. To do that we need to rescue Paio Alto from excessive spending,~ ................................ If your child told you his or her college bill was twice as much as a classmate’s bill, you would find out why. If your mechanic told you the charges were double the estimate, you would find out why. The same common sense applies to running this city and these considerations are central to a thorough public discussion before the storm drains issue is presented to voters in the Fall of 2003. City Council Members and all candidates in 2003 must answer these questions: . why is Palo Alto spending four times more than 20 years ago? ¯ why has the number of city employees doubled in 20 years when the population has stayed nearly the same? ¯ what are the specific services, if any, that we have now, that we did not have in 1979, that justify a $130 million budget? ¯ how much has been spent or, consultants in the last 10 years? . why does this wealthy city have special assessment taxes for street drains when other cities charge nothing or a small fraction of what Palo Alto charges? answer these simple questions is a violation of the public To have a sustainable community tomorrow, we need to take action our basic infrastructure, is irresponsible. Richard Alexander 435 Santa Rita 94301 ra@alexander|aw.com Minority Report of Elizabeth Dahlen Elizabeth Dahlen’s minority report will be presented orally to the City Council. Attachment C Attachment D oo ~ ’c~ 0 © r~ r~ Attachment E o o O r" 0 0 ~ © @@ I o, Attachment F Proposition 218 Property_ Owner Election Process and Timeline Start 4 weeks 1 week 7 weeks 4 weeks Finance Committee review of Storm Drainage Program and related financing plan Council adoption of ordinance authorizing mail ballot process and resolution establishing procedures for protest hearing/election (Need 4 weeks to allow for processing of FC minutes) Legal notices/brochures mailed; start of 1 st 45-day noticing period Protest hearing (Need at least 45-day protest period) Ballots mailed 3 weeks 2 weeks 3weeks Ballots due back to City Clerk (Need at least 45 days between protest hearing and election day) Council certification ot~ election results (Need time to process staff report) Effective date of new rate 24 weeks elapsed time