EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: June 21, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Patrick Heisinger, Interim City Manager
BY: Patrick Heisinger, Interim City Manager
SUBJECT: Update and Next Steps following SMLAFCo Adoption of the Municipal Service Review for the City of East Palo Alto, East Palo Alto Sanitary District, and West Bay Sanitary District
Recommendation
By motion, it is recommended that the City Council:
1. Receive the staff report.
2. Direct staff to return to the City Council at a later date with potential options for proceeding toward resolution of this issue.
Introduction
On April 5, 2022, the San Mateo Local Agency Formation Commission (SMLAFCo) released the circulation Draft Municipal Service Review (MSR) for the City of East Palo Alto (City), the East Palo Alto Sanitary District (EPASD), and the West Bay Sanitary District (West Bay). On April 19, the East Palo Alto City Council received a presentation on the Draft MSR from SMLAFCo Executive Officer Rob Bartoli. On May 3 and June 7, 2022, the City Council directed the Interim City Manager (Attachment 1) and the Mayor (Attachment 2) to send the attached letters to SMLAFCo to serve as the City’s official response to the Draft and Final MSR, respectively, At the June 7, 2022, City Council meeting, staff was directed to schedule a workshop regarding possible next steps upon SMLAFCo’s adoption of the MSR.
On June 15, 2022, by a 6-1 vote, SMLAFCo adopted the MSR, determinations and recommendations for each entity, and reaffirmed the spheres of influence for the City, EPASD and West Bay.
On or around June 13, 2022, EPASD sent a survey (Attachment 3) to property owners in East Palo Alto. The survey asking property owners six questions regarding their overall impression of EPASD’s services and their desire to see their rates increased. Staff response to the EPASD survey is detailed below.
Background
The Final SMLAFCo MSR is the product of more than a year of work in preparation, public review, numerous public meetings, and written comment. It thoroughly documents the failure of the EPASD to proactively plan for the needs of current residents and resident serving development. In essence the failure of EPASD to meet the needs of current and future residents precludes implementation of goals established in the General Plan to improve the fiscal health of the City and quality of life of our residents. These include Council and resident established goals of “self-determination, affordable housing, fiscal stability, community participation, equity and justice to become a City that is welcoming of all people regardless of race, ethnicity, language, age, or educational level.”
Now that SMLAFCo has adopted the MSR, the City has options with regard to determining the best path forward. Options include:
• No change.
• EPASD could decide to dissolve and cease operations, which would require the City to partner with another entity to provide sanitation services. • City could pursue establishing EPASD as a Subsidiary District.
Staff recommends the City Council place an item on a future agenda or schedule a Special Meeting during which staff may provide detailed information describing each of the options identified above.
Staff Response to EPASD Survey
Staff is disappointed that EPASD chose to issue a survey to property owners that seems to intentionally misrepresent the SMLAFCo process and instill anxiety in current rate payers about unknown aspects of the process. The table below provides the survey questions, as well as staff’s clarifications and responses to each.
STAFF RESPONSE TO EPASD SURVEY
Question Staff Response
In general, how willing would you be to pay
more in annual sewer charges, which are
collected on the property tax bill, to update
and expand the City’s sewer system
capacity in the affected areas in order to
support these development projects?1
The structure of the question clearly shows
bias.
There is no proposal by the developers or
the City that rate payers subsidize
improvements to support new development.
The developers are requesting that
connection fees be based on a fair share
formula because some of the
improvements necessary are to improve
the system for existing rate payers.
This question could be perceived as
misleading.
Next, please indicate how much more you
would be willing to pay in annual sewer
charges, which are collected on the
property tax bill, to update and expand the
City’s sewer system capacity in the affected
areas in order to support the development
projects listed on the prior page?
Please see above. In addition, the District is
responsible for establishing sewer service
charges subject to Proposition 218. It is
nonsensical to ask rate payers how much
more they are willing to pay when the rates
should be based on the actual cost of
service, sewage treatment and capital
improvements.
Further, the MSR stated the current sewer
rates are not sufficient to pay for
maintenance of the existing infrastructure.
Do you have a favorable or unfavorable
opinion of the East Palo Alto Sanitary
District?
No comment.
And, in general, how satisfied are you with
your sewer service?
No comment.
LAFCO may initiate a dissolution of the
District and hand over the District to the
City of East Palo Alto. Rate payers would
be required to pay approximately $45
million to serve development projects. This
means each rate payer would be required
to pay approximately $10,000 to serve
development projects. Will you support this
initiative?
Incorrect. LAFCo will not initiate dissolution
of the District. An application may be
initiated by voters, landowners or the City of
East Palo Alto. In reviewing a proposal,
LAFCo must consider impacts on existing
rate payers.
Further, the $10,000 figure quoted in the
question is not based on any reality. If
every unit and commercial property in the
city were to pay $10,000 for sewer
services, the sum would be close to
$80,000,000. This mischaracterization is
reckless and unkind due to the fact that
some property owners have expressed
anxiety since receiving the survey.
As a reminder, your responses will be
confidential and your identity will not be
shared with East Palo Alto Sanitary District
officials. However, if you would like to be
added to the District’s email list to receive
updates o District news, please enter your
email address below:
No comment.
To demonstrate how survey questions could be manipulated to instill fear in property owners, the City could have countered with a survey that would have the following questions:
1. As a rate payer, are you concerned about the decline in your property values in the event that the East Palo Alto Sanitary District sewer infrastructure were to fail due to lack of maintenance upkeep?
2. Development projects undergo an extensive public process to seek approval by the City Council and provide tax funding for essential City services. Do you support the EPASD position that City-approved development projects not move forward, thereby reducing funding for essential City services and obstructing new housing, jobs opportunities and neighborhood serving facilities such as health clinics?
3. As a rate payer, do you support the fact that the East Palo Alto Sanitation District pays their board members 5-6 times more than other boards?
4. As a rate payer, do you support the fact that EPASD does not seek grants or lowinterest loans from Federal, State, or other entities in order to ensure that sewer infrastructure is improved and maintained to avoid failure?
5. As a rate payer, do you support the fact that EPASD has no reliable Capital Improvement Plan that identifies specific improvements necessary to improve the sanitation system infrastructure?
6. As a rate payer, do you support the fact that at this time, EPASD has ultimate land-use authority over all development in the City rather than the City Council?
7. As a rate payer, are you able to access videos of EPASD Board meetings, written staff reports, the LAFCo MSR, etc on the District’s website to stay informed of District business?
Fiscal Impact
No fiscal impact.
Public Notice
The public was provided notice by making the agenda and report available on the City’s website and on a bulletin board located at City Hall: 2415 University Avenue, East Palo Alto.
Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.
Attachments
1. City’s Response Letter to Draft MSR
2. City’s Response Letter to Final MSR
3. Survey