PUBLIC WORKS DEPARTMENT
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-5732
TELEPHONE: (408) 777-3354
CUPERTINO.GOV
CITY COUNCIL STAFF REPORT
June 2, 2026
Subject
Approval of Fiscal Year 2026-27 renewal of the 1992 Storm Drain Fee (with no increase) and renewal of the 2019 Clean Water and Storm Protection Fee with a 3% increase.
Recommended Action
1. Adopt Resolution No. 26-XXX (Attachment A) approving the renewal and collection of the 1992 Storm Drain Fee with no increase in rates for Fiscal Year (FY) 2026-27.
2. Adopt Resolution No. 26-XXX (Attachment B) approving the renewal and collection of the 2019 Clean Water and Storm Protection Fee with a 3% increase in rates for FY 2026-
27. Executive Summary
The City is subject to regulations implemented locally by the California Regional Water Quality Control Board - San Francisco Bay Region (Water Board) through the Municipal Regional Stormwater National Pollutant Discharge Elimination System (NPDES) Permit, commonly referred to as the Municipal Regional Permit (MRP.) In order to provide the services and resources necessary to meet MRP requirements, the City has established two property-based fees to help cover the costs of compliance. These two fees are the 1992 Storm Drainage Service Charge Fee (1992 Fee) that is $12 per year for a single-family home, and the 2019 Clean Water and Storm Protection Fee (2019 Fee) that is approximately $48 per year for an average single- family home. The fees must be renewed every year by the City Council and appear on property tax bills. The 2019 Fee can be increased by CPI up to a maximum of 3% in any single year, however the 1992 Fee has no mechanism to enable an increase. Given the need for ongoing compliance and infrastructure repair, staff recommend an increase at CPI of 3% which will generate approximately $35,555 more revenue and cost the average homeowner an additional $1.44 per year. The fees are billed via property tax bills or billed directly as necessary.
Background
In 1992, the City established the 1992 Storm Drain Fee to help cover the cost of complying with stormwater pollution prevention permit requirements that were then in effect. Permit requirements continued to increase, and revenue from the 1992 fees were no longer covering costs. The 2019 Fee, a property-related fee subject to Proposition 218, was approved by Cupertino property owners in 2019 and was authorized by Council on July 17, 2019 for inclusion on the 2019-2020 Property Tax bills. The fees must be renewed every year following review by the City Council. The last renewal was brought to the City Council on June 3, 2025, with approval of the 1992 Fee at no increase and approval of the 2019 Fee at a 2.38% increase.
Given the ongoing cost of MRP compliance and the need for infrastructure repairs, staff recommend increasing the 2019 Fee for 2026-2027 by 3%. The calculated CPI increase is actually
3.04%, but the terms of the 2019 Fee ordinance limit annual increases to 3%. If the CPI increase exceeds 3% in a given year, the City may increase rates by no more than 3%; however, any CPI amount above 3% may be carried forward and applied in a future year when the CPI increase is less than 3%, subject to Council approval.
Reasons for Recommendation and Available Options
City of Cupertino’s Stormwater Pollution Prevention Program The City’s Stormwater Pollution Prevention Program (also known as the Nonpoint Source Program) is mandated by the State of California (State) and United States Environmental Protection Agency (EPA) regulations implementing the Federal Clean Water Act. Regulations by the EPA and the State require cities to take specific actions to eliminate or control pollutants in water that belongs to the State. These regulations are implemented locally by the California Regional Water Quality Control Board - San Francisco Bay Region (Water Board) through the Municipal Regional Stormwater National Pollutant Discharge Elimination System (NPDES) Permit, commonly referred to as the Municipal Regional Permit (MRP.) Additional details of the City’s compliance activities are provided in the Engineer’s Report (Exhibit A to each of the resolutions located in Attachments A and B).
Information about the City’s stormwater pollution prevention program is also available at www.cupertino.org/cleanwater, which includes links to a variety of resources and guidance including an interactive creek map, a link to the City’s most recent annual report submitted as required to the Water Board, information for developers and contractors, and education on less toxic pest control.
Two property-based fees have been established to help cover the costs of compliance:
1992 Storm Drainage Service Charge Fee (1992 Fee)
In 1992, the City established the 1992 Fee to help cover the cost of complying with stormwater pollution prevention requirements that were then in effect. The 1992 Fee is applied to each property in the City, with exceptions for those owned by certain entities, such as properties owned by the government, utility agencies, and schools, which were exempt under the laws at the time the fee was approved. The fee is collected by the Santa Clara County Tax Collector on behalf of the City and is subject to annual review by the City Council. The Fee consisted of three rates, which were based on type of land use of each parcel as follows: 1) $12 for residential parcels; 2) $144/acre for apartments, commercial and industrial parcels; and 3) $36/acre for unimproved and recreational parcels.
The Fee has no mechanism to enable an annual increase. As such, the revenue collected from the 1992 Fee has not increased since it was established and has remained at approximately $375,000 per year. However, regulatory requirements, stormwater system maintenance expenses, wages, and permit fees have not remained static since 1992, and the cost of compliance has risen over the years. When the first MRP was approved and implemented in 2009, and again when the second permit was adopted in 2015, permit requirements increased significantly. The third reissuance of the Municipal Regional Permit (MRP 3.0) was adopted on May 11, 2022, with an effective date of July 1, 2022, and further increased requirements. In 2019, The cost of compliance significantly exceeded the revenues from the 1992 fee and was creating a draw upon the City’s General Fund by over $600,000 per year. Renewal of the 1992 Fee is recommended in FY 2026-27.
2019 Clean Water and Storm Protection Fee (2019 Fee)
The 2019 Fee, a property-related fee subject to Proposition 218, was approved by Cupertino property owners in 2019 and was authorized by Council on July 17, 2019, for inclusion on the 2019-2020 Property Tax bills. The 2019 Fee was calculated starting from the average acreage of a median single-family residential parcel and a benchmark amount of impervious surface. Details of the rate structure analysis can be found in the Fee Report attached to the 2019 Fee Ordinance (Attachment C).
The 2019 Fee may be increased annually by Council to meet expenses of the Nonpoint Source Program. The potential increase is tied to the annual change in Consumer Price Index (CPI) as of December each year, up to a maximum of 3% in any single year. The CPI change, allowable increase, and fee impact are shown in the table below.
CPI change for the
period December 2024
to December 2025
Maximum annual
increase allowed
by fee ordinance
Additional revenue
the 3% increase will
generate
Fee increase for
medium residential
parcel per year
3.04% 3% $35,555 $1.44
Current rates and the proposed increased rates for a medium sized parcel (the most common single-family parcel size) are shown in the tables below.
Current Annual Rates:
Single-Family Residential *
Small (Under 0.13 acre) 39.58$ per parcel
Medium (0.13 to 0.22 acre) 48.07$ per parcel
Large 0.23 to 0.40 acre) 60.15$ per parcel
Extra Large (over 0.40 acre) 115.15$ per parcel
Condominium 1 (1 story) 39.58$ per parcel
Condominium 2+ (2+ stories) 12.97$ per parcel
Non-Single-Family Residential **
Multi-Family Residential 33.42$ per 0.1 acre
Commercial / Retail / Industrial 43.70$ per 0.1 acre Office 33.42$ per 0.1 acre
Church / Institutional 28.28$ per 0.1 acre
School (w/playfield) 20.56$ per 0.1 acre
Park 7.72$ per 0.1 acre
Vacant (developed) 2.58$ per 0.1 acre
Open Space / Agricultural
* Single-Family Residential category also includes du- tri- and four-plex units ** Non-SFR parcels are charge per the tenth of an acre or portion thereof *** Low Impact Development Adjustment only applies to condominium and non-single- family properties.
Land Use Category Fee
no charge
Low Impact Development Adjustment *** 25% Fee Reduction
Annual Rates With 3% Increase:
Single-Family Residential *
Small (Under 0.13 acre) 40.77$ per parcel
Medium (0.13 to 0.22 acre) 49.51$ per parcel
Large 0.23 to 0.40 acre) 61.95$ per parcel
Extra Large (over 0.40 acre) 118.61$ per parcel
Condominium 1 (1 story) 40.77$ per parcel
Condominium 2+ (2+ stories) 13.36$ per parcel
Non-Single-Family Residential **
Multi-Family Residential 34.42$ per 0.1 acre
Commercial / Retail / Industrial 45.01$ per 0.1 acre Office 34.42$ per 0.1 acre
Church / Institutional 29.12$ per 0.1 acre
School (w/playfield) 21.18$ per 0.1 acre
Park 7.95$ per 0.1 acre
Vacant (developed) 2.65$ per 0.1 acre
Open Space / Agricultural
* Single-Family Residential category also includes du- tri- and four-plex units ** Non-SFR parcels are charge per the tenth of an acre or portion thereof *** Low Impact Development Adjustment only applies to condominium and non-single- family properties.
Land Use Category Fee
no charge
Low Impact Development Adjustment *** 25% Fee Reduction
2019 Clean Water and Storm Protection Fee Incentive Programs The City continues to offer a cost-share program for low-income residents. Eligible residents will receive a 20% reduction in their annual fee. The cost-share program is funded by the General Fund because revenues from the 2019 Fee are restricted from being used for a cost- share (e.g., funding a reduced rate for other property owners). An online application form is available
1 and applicants are also welcome to call 408-777-3236 or email staff for assistance at [email protected].
Fee Reduction for Commercial and Multi-family Low Impact Design Features As allowed by the 2019 Fee Ordinance, 267 commercial and multi-family properties that had already installed low-impact design (LID) elements such as bioswales, capture basins, and bioretention facilities, were assigned a 25% fee reduction, consistent with the fee schedule, after the fee was adopted. Installation of new LID features under the requirements of C.3 in the MRP (stormwater treatment measures in new development and redevelopment projects) qualifies additional properties for the same reduction. There is no change to this fee reduction for qualifying properties.
1 Cupertino.org/watercostshare
Audit and Review of Programs
Pursuant to the 2019 Fee Ordinance, expenses and revenues are audited annually by an independent auditor. The final AUP report for calendar year 2025 is attached as Attachment D and no exceptions were noted.
Sustainability Impact
The 1992 Fee and 2019 Fee support water pollution prevention and water conservation (NPDES) activities. Significant sustainability benefits include the reduction or elimination of pollutant discharges, which could degrade local creeks and threaten the supply of clean water, as well as the capture of rainwater, which can be used as a resource. Green Stormwater Infrastructure use engineered features to mimic natural processes that allow stormwater to infiltrate the groundwater system instead of entering the storm drain system, enhancing climate change resilience.
Fiscal Impact
The combined revenues from the 1992 Fee and 2019 Fee generate approximately $375,000 and $1.15M per year respectively, received into Fund 230 Environmental Management/Clean Creek/Storm Drain. Projected expenses by the end of the fiscal year are expected to come in under the approved budget, but will exceed the revenues generated by the 1992 Fee and the 2019 Fee as shown in the table below. The proposed budget for FY 2026-27 as shown in the table reflects full staffing, adjusted staffing allocations, maintenance projects on aging infrastructure for storm protection, installation of drain inlet treatments, and the other activities that ensure compliance with the MRP.
Nonpoint Source Program Revenue and Expenses
FY 2025-26 FY 2026-27 (proposed)
Fund Balance (previous FY) $716,171 $154,109
Revenue 1992 Fee $375,675 $375,675
Revenue 2019 Fee (on tax roll) $1,086,481 $1,086,481
Revenue 2019 Fee (manually billed) $96,650 $98,693
CPI increase to 2019 Fee Included above $35,555
Total Program Funding $2,274,977 $1,750,513
Total Program Expenses
(projected/budgeted) $2,120,868 $2,029,087
Remaining Fund Balance at end of
FY (projected) $154,109 $(278,574)
In recent years, the shortfall between the APN fee revenues and the program expenses has been covered by the balance in Fund 230 330-301. As the City is projecting to exhaust the remaining fund balance by the end of FY 2025-26, the 3% increase is recommended. (See table above).
City Work Program (CWP) Item/Description
None.
Council Goal:
Fiscal Strategy, Environmental Sustainability, Quality of Life California Environmental Quality Act
No California Environmental Quality Act impact.
_____________________________________
Prepared by: Ursula Syrova, Environmental Programs and Sustainability Manager Nicole Lee, Environmental Programs Assistant
Reviewed by: Chad Mosley, Director of Public Works
Floy Andrews, Interim City Attorney
Approved for Submission by: Tina Kapoor, City Manager
Attachments:
A – Draft Resolution 1992 Fee
B – Draft Resolution 2019 Fee
C – Clean Water and Storm Protection Fee Ordinance with Fee Report D – Calendar Year 2025 AUP