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HomeMy WebLinkAbout2000-07-31 City Council (14)City of Palo Alto Manager’s Report TO:HONORABLE CITY COUNCIL ATTENTION: FINANCE COMMITTEE FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE SERVICES DATE:JULY 31, 2000 CMR: 337:00 SUBJECT:UPDATE ON THE PUBLIC EDUCATION PROGRAM RELATED TO THE STORM DRAINAGE FEE INCREASE AND PROPOSED EXTENSION OF THE RATE ASSISTANCE PROGRAM TO INCLUDE THE STORM DRAINAGE FEE RECOMMENDATION Staff recommends that Council direct staffto return to Council with a proposed extension of the current Utilities Ratepayer Assistance Program to include the storm drainage fee. BACKGROUND On March 3, 1999, staff presented a report to the Finance Committee describing a proposal for financing the next phase of storm drainage improvements. The report discussed the current financial status of the Storm Drainage Fund, the effects of Proposition 218 on the City’s ability to raise property-related fees, and staffs proposal for storm drainage infrastructure improvements. The report included a detailed discussion of an enhanced operations and maintenance program, and proposed work associated with San Francisquito Creek. Staff also presented a long-term financing plan to fund storm drainage needs through an increase in the storm drainage fee. The Finance Committee gave staff direction on prioritization of the recommended infrastructure improvements to address identified deficiencies. Staff has since completed a compliance analysis of Proposition 218, redefined the scope of needed storm drain improvements, and prepared a proposed rate structure and rate increase proposal (CMR 222:00) to finance storm drain operations and the next phase of the storm drainage capital improvements. To ensure that property-owners and the public are well informed regarding the need for a storm drain fee increase, the Finance Committee requested additional information on the educational component of the City’s outreach program. During the June 5 Council study CMR:337:00 Page I of 5 session staff presented its public outreach program to the Council. Staff assured Council that the City’s public education program was designed to sufficiently educate property-owners about the storm drainage system and the need for capital improvements. The City’s outreach program employs a multi-faceted approach to public education that includes use of printed materials and community meetings combined with the use of Intemet technology to educate voters. The outreach program ensures that all property owners will have an opportunity to make an educated decision regarding the proposed fee increase. A discussion of the City’s public outreach and education program is discussed below. DISCUSSION PUBLIC OUTREACH At Council direction, an extensive public education and outreach program was undertaken. The public education component includes development of an informational brochure, implementation of a storm drain web site, a utility bill insert describing the storm drain fee proposal, a cable television presentation, implementation of a dedicated storm drain telephone number, and a series of scheduled public meetings to allow for voter comment and inquiry. Outreach efforts will continue until the storm drain election process is completed. A brief discussion of the City’s education effort follows: Dedicated Telephone Number: Staffhas responded to approximately 100 telephone calls that have been placed to the storm drain line. Property owners have asked for information and clarification on a wide range of storm drain related issues. Storm Drain Web Site: The City’s web site has received 299 hits since its .implementation. Staff continues to respond to e-mail inquiries from the public regarding general storm drain project questions, meeting dates, and technical issues related to the storm drain network. Cable Television Presentation: A cable television presentation is planned for broadcast prior to the election. The City’s senior engineer for storm drain projects will discuss the project in detail and provide an overview of issues related to the storm drainage project. Neighborhood Associations/Service Clubs: Letters were mailed to local neighborhood associations and service clubs, offering to provide a speaker for a presentation and discussion of the proposed storm drain increase. The League of Women Voter’s has agreed to host a meeting to discuss the storm drain fee increase. The meeting is scheduled for 7:30 p.m. on August 29 in the Council Chambers. Community Meeting_s: City staff has held three meetings with the community concerning the City’s proposed storm drainage fee increase. Staff from Public Works Engineering and Administrative Services answered questions and responded to comments from the public about the proposed fee increase, the election process, and the new rate structure as it relates CMR:337:00 Page 2 of 5 to Proposition 218. Some of the most frequently asked questions with staffs response are discussed below: Issue Why is the City proposing to double the current fee? Response:There has not been a fee increase since 1994. To cover the current cost of the storm drain program, fees must be increased. To make capital improvements that will improve flooding and ponding conditions and contribute to the initial Joint Powers Authority effort for San Francisquito Creek, the fee must increase to $9.00. The fee is proposed to rise from $4.25 to $9.00 in the first year and second years. In the third year the fee will increase to $10, and each succeeding year the fee aay increase by the Consumer Price Index (CPI). Staff further explained that should the increase not be required during any given year, the Council can defer the CPI increase for that year. Issue:There is no sunset provision to the proposed fee increase. What happens to the money raised when the project is completed? Response:Currently, there are no sunset provisions to end the proposed fee. Ongoing maintenance, water quality and capital improvements will still be necessary in the year 2031. Futhermore, the provisions of Proposition 218 would require voters to approve an increase if the fee was ever abated. To avoid further deterioration of the storm drain system, scheduled maintenance, rehabilitation, improvements, and replacement of pipes and equipment are necessary. Issue:Why is the proposed rate structure for residential properties divided into six categories and why has the City taken into consideration the actual impermeable area of a specific residential lot? Response:Under Proposition 218, the law that mandates how the fee can be implemented, the fee charged to residents must be proportional to the cost of delivering the service. The current flat rate for all residential properties did not meet the "proportional to use" requirement. A tiered rate based on lot size and the amount of impermeable area on the lot was developed. A 5 percent random sample of properties using actual measurements of impermeable area was used to develop the proposed rate structure. The sampling represents a pragmatic and cost -efficient method of developing a rate system that is equitable and fulfills Proposition 218 requirements. CMR:337:00 Page 3 of 5 During the June 5 Council study session, Council indicated a desire for the City to provide rate assistance to financially disadvantaged residents. Staff also received inquiries about rate assistance during meetings with the community. Staff recommends expanding the current Utilities Residential Rate Assistance Program (RAP) to include the storm drain fee. Council approved the Rate Assistance Program in May 1993. The program currently provides assistance to approximately 352 residents. The program provides rate relief (15 percent discount) for utility customers who lack adequate financial resources or those requiring water, gas or electrical services for medical reason such as use of a kidney-dialysis machine or respirator. To qualify for the RAP, a resident must provide proof of financial hardship or provide a physician’s letter certifying that the resident has a medical necessity which requires additional amounts of utilities service. Proof of financial need can be provided by dependence upon at least one of the following entitlements: -Supplemental Security Income -USDA Food Stamp- with written verification from the welfare office. -Veteran and Survivor Pension Benefits. -Cal Works Program (formerly AFDC)-with copy of the most recent "Notice of Action" from the County Department of Social Services. Assistance to low income residents- (Based on 150% of Federal Poverty Level) with proof of most recent tax return. Based on the number of residents currently participating in the program, cost for the storm drain fee subsidy will be approximately $5,700. However, as the program is advertised, residents not presently participating in the rate assistance program may apply for the subsidy and substantially increase the cost. The cost of expanding the RAP to include storm drain fees can be funded by either the Storm Drain Fund or the General Fund. If Council approves the staff recommendation, staff will return with an implementing resolution. RESOURCE IMPACT Expansion of the RAP to include the storm drain fee will result in an increase in costs of approximately $5,700 per year. Staff will make a recommendation regarding the funding source prior to implementation. After the election an adjustment will be proposed as part of the 2000-01 Midyear Financial Report. POLICY IMPLICATIONS This recommendation is consistent with Council direction to provide utilities rate assistance to residents who are financially disadvantaged. CMR:337:00 Page 4 of 5 June 16 August 7 September 26 October 2 November 2000 Notices of protest hearing were mailed Protest hearing for proposed storm drainage fee increase Storm drainage fee election Storm Drain election certified by Council Fee increase implemented ENVIRONMENTAL REVIEW Consideration of financial options does not require California Environmental Quality Act (CEQA) review. Individual projects will be subject to environmental review as they are further developed. PREPARED BY: Joyce White, Senior Financial Analyst DEPARTMENT HEAD: Directo~AAAdministrative Services CITY MANAGER APPROVAL:,~ EMILY HARRISON Assistant City Manager CMR:337:00 Page 5 of 5