MSR Updates –Draft Final Report
City of East Palo Alto, EPASD, WBSD
June 6, 2022
4. City of East Palo Alto 96
Drinking water quality is determined by a combination of historical violations reported by the EPA since 2015 and the percent of time that the City was in compliance with Primary Drinking Water Regulations in 2020. The City has not had any violations recorded since 2015. The City was in compliance with drinking water regulations 100 percent of the time in 2020.
Indicators of distribution system integrity are number of breaks and leaks in 2020 and rate of unaccounted for water loss. In 2020, the City experienced 13 main and service line breaks and leaks.
Distribution system water losses are the physical water losses from the water distribution system and the supplier storage facilities, up to the point of customer consumption. The total differential between water supply and metered water use is categorized as unaccounted-for-water; however, this category includes unbilled water uses such as system flushing, leak repair flushing, hydrant leaks, and street sweeping. In order to isolate the water loss attributed to the distribution system, the City has estimated water losses using the Department of Water Resources (DWR) Water Audit Method. Of the total demand of 550 MG in 2017, 477 MG were attributable to metered consumption and 73 MG were estimated to be the non-revenue water demand, which includes unmetered consumption and distribution system water loss. Of the 73 MG of non-revenue water in 2017, 50 MG was estimated to be attributed to water losses, which equates to water loss of 9.1 percent for the City’s system.229 Water loss of under 10 percent is generally considered within industry standard for water systems.
SUMMARY OF CITY OF EAST PALO ALTO MSR DETERMINATIONS
Growth and Population Projections
4-1: The City of East Palo Alto’s population has remained fairly static over the last two decades, fluctuating minimally from year to year. Most recently, there has been a slight decline in population from 2018 to 2020. The Census 2020 estimates that the population of the City was 30,034 as of April 2020.
4-2: Over the period from 2020 to 2040, ABAG projects 17.7 percent population growth, which equates to 0.8 percent compound annual growth. Based on the City’s Census 2020 population and ABAG’s projected growth rate, the City is projected to have a population of 35,363 in 2040. 4-3: As of December 2021, the City had 20 unconstructed development projects in some phase of the application and construction process consisting of 1,469 dwelling units and 4,635,139 square feet of nonresidential building space. A majority of the larger developments are located in the 229 EPA, UWMP, 2021, p. 34.
MSR Updates –Draft Final Report
City of East Palo Alto, EPASD, WBSD
June 6, 2022
4. City of East Palo Alto 97
Ravenswood/4 Corners TOD Specific Plan area. There are several mixed-use proposals, the largest of which are Four Corners, the Landing, and East Palo Alto Waterfront. 4-4: Regional Housing Needs Allocation mandates have an impact on the City’s new development and intensification of density contributing to population growth. ABAGs most recent Regional Housing Needs Allocation (RHNA) for the City of East Palo Alto for the period from 2023-2031 is 829 units, almost double the previous allocation.
4-5: In addition to the substantial number of sizeable developments, the City is experiencing intensification of uses on properties with existing dwelling units where a number of accessory dwelling units are being added. SB 9, which streamlines the permitting process for accessory dwelling units, will likely prompt a greater number of ADU additions. 4-6: Lack of EPASD sewer collection system capacity is an impediment to development in the City.
Developers have indicated concerns that the costs to connect are prohibitively expensive and that EPASD has been unwilling to discuss financing options to make connection more feasible.
Efforts to-date to resolve this issue have been largely unsuccessful. Constrained development and growth deprive the City and its residents of increased tax revenues to maintain and improve public services, reduces future affordable housing and ability to meet RHNA housing allocations, and limits growth in job opportunities.
The Location and Characteristics of Disadvantaged Unincorporated Communities Within or Contiguous to the Agency’s SOI
4-7: According to the Department of Water Resource’s Disadvantaged Communities mapping instrument, there are no communities within or contiguous to the City’s SOI that meet the definition of a disadvantaged unincorporated community. However, there is a single Block Group (060816121002) within the City’s incorporated territory to the west of Highway 101 that meets the definition of disadvantaged. The area has an estimated population of 2,232 with a median household income of $45,731.
Present and Planned Capacity of Public Facilities and Adequacy of Public Services, Including Infrastructure Needs and Deficiencies
4-8: Based on ISO ratings, response times, and stations per 1,000 population served, Menlo Park Fire Protection District’s serviced provided within East Palo Alto appear to be adequate.
Additionally, the City of East Palo Alto indicates it is satisfied with Menlo Park Fire Protection District’s response times and that the District meets its outlined service goals. 4-9: Law enforcement services are marginally adequate given the low clearance rate of property crimes within the City, which is likely attributable to staffing constraints within the Police MSR Updates –Draft Final Report
City of East Palo Alto, EPASD, WBSD
June 6, 2022
4. City of East Palo Alto 98
Department. Additionally, the two police facilities are considered to some extent sufficient as identified by Police Department staff; however, no specific infrastructure needs were identified. 4-10: The City has indicated that the current availability of parks and open space is not sufficient to meet demand. No parks exist in the Weeks, Kavanaugh, and Westside neighborhoods within EPA, despite having a higher population density that primarily consists of younger families residing in multi-family structures without backyards. With current and projected population estimates, service adequacy will not be sufficient unless an estimated 79 acres of parkland are added to the cityscape.
4-11: The City provides adequate solid waste management services as indicated by per capita and per employee disposal rates that are well within its target disposal rates as dictated by the State.
However, waste management services face challenges throughout the County, including 1) a decline in the recyclables market from contaminated sources, 2) new organics diversion requirements that will require major new programs, and 3) dwindling capacity at the Ox Mountain landfill.
4-12: There are deficiencies in the City of East Palo Alto’s stormwater collection system There are two significant challenges to implementing planned improvements—lack of funding for $37.5 million in infrastructure needs and location constraints limiting system expansion and rerouting alternatives. Improvements are necessary in order to reduce the risk of flooding. 4-13: The City’s PMS report has described pavement conditions as very good, with an average PCI of 71 out of 100. However, congestion and conditions that impact other modes of transportation continue to be a concern. In particular, there are areas without walkable sidewalks and many areas lacking sufficient capacity for bike lanes leading to high incidents of accidents. 4-14: Wastewater services provided by EPASD and WBSD within City of East Palo Alto appear to be adequate based on the analysis in this report; however, as described in the Growth and Development section of this chapter, availability of wastewater capacity for new development is a critical issue for the City. Necessary capacity enhancements are making connection to EPASD’s collection system exceptionally costly, which is deterring potential developers and preventing some approved developments from being completed. Several options exist for financing of necessary capacity enhancements that may be agreeable to all parties. 4-15: Indicators of water distribution service adequacy, including the State Water Resources Control Board system evaluation, drinking water quality, and distribution system integrity demonstrate that the City provides adequate service levels. While the City has been able to address water supply capacity constraints that were preventing development, there continue to be needs for MSR Updates –Draft Final Report
City of East Palo Alto, EPASD, WBSD
June 6, 2022
4. City of East Palo Alto 99
water storage for emergency backup supply and pipeline expansions to meet industry standards.
Financial Ability of Agencies to Provide Services
4-16: The City of East Palo Alto is in good financial position; however, the City is experiencing structural budget deficits that will deplete reserves over time. 4-17: Development projects delayed by lack of sewer infrastructure capacity obstructs the ability to pursue economic development as one means to improve financial conditions and help achieve the City’s fiscal resiliency goals.
Accountability for Community Service Needs, Including Governmental Structure and Operational Efficiencies
4-18: The City generally meets legal requirements intended to ensure transparency and accountability; however, there appears to be room for improvement in City Council compliance with ethics training requirements and timely filing of Form 700s. 4-19: East Palo Alto should consider taking on EPASD as a subsidiary district to enable funding of capital projects to address deficiencies and capacity constraints that encourages development.
In order to limit demands on city staff, the City may wish to contract with West Bay Sanitary District for operations and maintenance of the system.
Recommendations
• Ethics Training - It is recommended that the City make City Council ethics training information readily available on its website.
• Form 700 - It is recommended that the City ensure its Council Members comply with Form 700 filing requirements.
• Intergovernmental Relations – Restart and continue regular public meetings between representatives of the City of East Palo Alto and the East Palo Alto Sanitary District. While staff level cooperation related to development planning is ongoing, involvement by board and council members assure efficient and effective coordination between the City and District related to infrastructure financing and other matters. These meetings should be live streamed, recorded and promptly posted to facilitate public outreach and transparency. These meetings could be focused on specific topics such as development projects and infrastructure finance. The meetings should be conducted with equal support and staff time from both the City and EPASD.
MSR Updates –Draft Final Report
City of East Palo Alto, EPASD, WBSD
June 6, 2022
4. City of East Palo Alto 100
• Development Environmental Review - Include analysis regarding impacts on the wastewater collection system, in addition to the wastewater treatment system, in CEQA review documents associated with new developments.
• Budget Forecasting – Prepare and periodically update a long-term budget forecast to assist with financial planning, including projected pension obligations. • Infrastructure improvements – It is recommended that the City continue to work towards addressing identified needed infrastructure improvements for both stormwater and drinking water, including identifying potential funding mechanisms. • Park Planning – The City should continue its effort to develop a Parks Master Plan for recreation, parks and open space in the City and work to address the lack of these facilities in many areas of the City.
MSR Updates –Draft Final Report
City of East Palo Alto, EPASD, WBSD
June 6, 2022
5 East Palo Alto Sanitary District 150
SUMMARY OF EAST PALO ALTO SANITARY DISTRICT MSR DETERMINATIONS Growth and Population Projections
5-1: As of 2020, based on the number of residential connections served and the average household size in the cities served, it is estimated that EPASD’s population is approximately 26,622. 5-2: It is assumed that EPASD’s growth will closely mirror that of the City of East Palo Alto. Based on the current population estimate within the District and ABAG’s growth projections through 2040, it is projected that there will be 31,335 residents within the EPASD in 2040, an increase of approximately 4,700 residents.
5-3: As of December 2021, there were 20 unconstructed development projects within EPASD in some phase of the application and construction process consisting of 1,469 dwelling units and 4,635,139 square feet of nonresidential building space. A majority of the larger developments are located in the Ravenswood/4 Corners TOD Specific Plan area. 5-4: In addition to the substantial number of sizeable developments, the City is experiencing intensification of uses on properties with existing dwelling units where a number of accessory dwelling units are being added. Recent changes in state law allowing a streamlined permitting process for accessory dwelling units (ADUs) will likely prompt a greater number of ADU additions. However, 12 ADUs have been stalled as they have been unable to get approval for connection to EPASD’s system.
5-5: Lack of EPASD sewer collection system capacity is an impediment to development in the City.
Developers have indicated concerns that the costs to connect are prohibitively expensive and that EPASD has been unwilling to discuss financing options to make connection more feasible.
Efforts to-date to resolve this issue have been largely unsuccessful. Constrained development deprives the City and its residents of increased taxes and other revenues to maintain and improve public services, reduces future affordable housing and ability to meet RHNA housing allocations, and limits growth in job opportunities.
The Location and Characteristics of Disadvantaged Unincorporated Communities Within or Contiguous to the Agency’s SOI
5-6: According to the Department of Water Resource’s Disadvantaged Communities mapping instrument, there are no communities within or contiguous to the District that meet the definition of a disadvantaged unincorporated community, as the District only serves incorporated portions of the City of East Palo Alto and the City of Menlo Park. However, there is a single Block Group (060816121002) within District’s territory to the west of Highway 101 that MSR Updates –Draft Final Report
City of East Palo Alto, EPASD, WBSD
June 6, 2022
5 East Palo Alto Sanitary District 151
meets the definition of disadvantaged. The area has an estimated population of 2,232 with a median household income of $45,731.
Present and Planned Capacity of Public Facilities and Adequacy of Public Services, Including Infrastructure Needs and Deficiencies
5-7: While sufficient treatment capacity exists to meet the needs of current and a portion of future demand, EPASD reports an inadequate collection system capacity to serve increased flows expected from pending development applications. EPASD faces significant financial challenges to fund capacity enhancements to eliminate the potential for sewer overflows that are compounded by proposed new connections. Large-scale capacity enhancements are costly and difficult to complete in a piecemeal fashion as development occurs. 5-8: Based on overflow rates, infiltration and inflow, regulatory compliance, preventative maintenance practices, speed of response times to customer reports of issues, and the number and type of complaints related to wastewater services, EPASD provides an adequate level of wastewater collection services to existing ratepayers.
5-9: Infrastructure capacity needs are appropriately identified in EPASD’s 2021 Addendum to the 2015 Master Plan Update. EPASD focuses on assessing the current condition of the piping and replacing or relining pipe as needed, and EPASD asserts that current collection system capacities are adequate to serve existing ratepayers; this position appears contrary to the results of the 2021 Addendum that predict surcharging and sewer overflows under peak wet weather flows.
EPASD states that the 2021 Addendum is a theoretical model and EPASD has not experienced a sewer overflow in the past ten years.
EPASD budgets $1 million annually towards “Construction Replacement” (not including developer contributions); actual capital expenditures have been less. The 2021 Addendum identifies 110 segments to be upsized to ensure that the system is not operating at a surcharge or at risk of overflows during a storm event.
5-10: Information on the age of the collection infrastructure conflicts, as identified by the RWQCB in its most recent inspection; this data was not provided by EPASD when requested for the preparation of this MSR. It is recommended that the District document the age of its system and conduct comparative analysis to determine what percentage of the effective life of the segment has been used as input to develop long-term CIP priorities and schedule. 5-11: There is a need to comprehensively update EPASD’s primary planning documents, such as the Master Plan, Sewer Rate Study, and Capacity Charge Study to meet the current needs of EPASD, taking into consideration existing circumstances that have surfaced, and enhancing transparency for rate payers, members of the community, developers, and others regarding the full extent of MSR Updates –Draft Final Report
City of East Palo Alto, EPASD, WBSD
June 6, 2022
5 East Palo Alto Sanitary District 152
current and future infrastructure needs and associated financing requirements and funding sources. These updates can document and communicate plans to cost-effectively manage EPASD infrastructure maintenance and replacement, address the potential for sewer overflows from existing uses during storm events, and assure that existing ratepayers do not subsidize costs incurred to serve new development.
Financial Ability of Agencies to Provide Services
5-12: EPASD’s strong financial position and healthy reserves are the outcome of property tax revenues that supplement services charges, and a relatively low-cost structure. This financial position enables EPASD to maintain low annual charges to ratepayers compared to other sanitary districts.
5-13: However, the District’s priority to maintain low rates can adversely affect services and infrastructure by hampering the District’s ability to implement best practices and address existing system capacity deficiencies to reduce risks of sewer overflows from existing uses. Low rates that do not account for the need to address projected surcharging and potential sewer overflows can adversely affect ratepayers financially in the long run. Lack of staff resources contributes to an inability to provide clear, up-to-date, and transparent information to ratepayers, the City of East Palo Alto, property owners and developers, and other stakeholders; and produces insufficient financial planning to establish cost-effective and equitable infrastructure financing to facilitate plans adopted by the City of EPA which represents a majority of EPASD residents.
5-14: The lack of future development capacity indirectly affects ratepayers who are also residents of the City of East Palo Alto, as the inability to serve new development reduces growth in City revenues for services and financial resiliency, provides fewer affordable housing opportunities, and constrains the community’s commercial base and job growth.
Accountability for Community Service Needs, Including Governmental Structure and Operational Efficiencies
5-15: EPASD generally complies with legal requirements to ensure accountability and transparency.
Improvements include ensuring Board Members are up-to-date on ethics training and that all policies and procedures are readily available on its website. Staff reports for District meetings are often not provided, or the narrative for agenda items provides minimal information about the proposed meeting topic or recommended action by the Board. 5-16: The compensation and benefits offered to EPASD’s governing body is exceptional compared to neighboring sanitary districts and even compared to compensation of the City of EPA’s Council MSR Updates –Draft Final Report
City of East Palo Alto, EPASD, WBSD
June 6, 2022
5 East Palo Alto Sanitary District 153
Members. EPASD should consider aligning board compensation with that of similar service providers.
5-17: Transitioning EPASD into a subsidiary district of the City of East Palo Alto is a governance structure option that may benefit the City and its residents by facilitating funding of capital projects to address existing risks of sewer overflows during storm events, and capacity constraints that impede City of EPA planning and achieving City objectives that also benefit most EPASD residents as citizens of the City of EPA.
Recommendations
1. Ethics Training - It is recommended that EPASD ensure that board members receive the required ethics training every two years.
2. Policies and Procedures - These policies are not readily accessible on EPASD’s website, and in order to ensure transparency, it is recommended that the District make available all policies on its website.
3.Update Capacity Charges -- The update should reflect current development trends and recent CIP cost updates to assure that development pays its share of expansion costs without burdening existing ratepayers. The capacity charges can help fund required infrastructure and provide a mechanism for developer reimbursement if oversizing is required that benefits other developers.
4.Develop CIP Financing Plan – Consistent with best practices EPASD should prioritize improvements and identify financing mechanisms to fund existing deficiencies and future capacity needs over time. The Plan should create a standard, transparent approach for new development applications that does not require time-consuming, costly individual negotiations and custom agreements for each development.
5.Pursue Grants and Low-Interest Loans – A revised CIP will be essential to pursuing grants and low-interest loans. Infrastructure Act funds may provide opportunities to implement the CIP at a lower cost to ratepayers. EPASD should collaborate with other districts, the City of EPA, and/or affordable housing developers to improve prospects for obtaining funds.
6.Evaluate and Consider Using Revenue Debt for Major Long-Term Capital Improvements – Major improvements can be funded more cost-effectively, and costs spread to future ratepayers rather than entirely existing ratepayers. Debt payments and potential impacts on rates should be MSR Updates –Draft Final Report
City of East Palo Alto, EPASD, WBSD
June 6, 2022
5 East Palo Alto Sanitary District 154
carefully considered as part of an overall funding plan to pay for improvements that serve existing ratepayers. The use of debt, and/or other funding sources, must respect the principle that existing ratepayers do not subsidize new development.
7. Facilitate New Development without Burdening Existing Ratepayers – The 2021 Addendum provided an allocation between existing system capacity constraints during a storm event, and expansion required for new development that can dictate an equitable allocation and financing plan consistent with legal requirements.
8.Improve Transparency of Budget and Financial Documents – A clear, well-documented budget with explanations of changes, risks, and activities would improve financial transparency. The budget should better correlate with annual audited financial reports, for example, by including depreciation. Financial reports should correlate with funds reported in budgets. Annual debt obligations should be clearly documented in the budgets and should correlate with information in audited financial reports.
9.Budget Forecasting – Periodically update the long-term budget forecast most recently prepared in the 2019 Rate Study to reflect changing financial conditions and projections of costs and revenues.
10. Intergovernmental Relations – Restart and continue regular public meetings between representatives of the City of EPA and EPASD. While staff level cooperation related to development planning is ongoing, involvement by board and council members is essential for efficient and effective coordination between the City of EPA and EPASD related to infrastructure financing and other matters, including the Ravenswood Specific Plan. These meetings should be live streamed, recorded and promptly posted to facilitate public outreach and transparency. These meetings could be focused on specific topics such as development projects and infrastructure finance. The meetings should be conducted with equal support and staff time from both the City and EPASD.
11. Update Sewer Rates – The update should reflect the costs “needed to fund projected operating expenses, help fund high priority improvements to the District’s aging sewer collection system, pay for the District’s share of operating and capital improvement costs for the regional wastewater treatment plant, and support safe and reliable service” as outlined in the 2019 Rate Study. The update should balance the need to maintain affordable sewer rates against the importance of maintaining and improving services and infrastructure for the health and well-being of EPASD ratepayers.
MSR Updates –Draft Final Report
City of East Palo Alto, EPASD, WBSD
June 6, 2022
5 East Palo Alto Sanitary District 155
12. Independent Review of EPASD Hydraulic Analysis and Proposed Improvements – EPASD states that the hydraulic analysis of the 2021 Addendum only indicated that the system is adequate for existing customers, however it cannot serve future developers. This statement appears to contradict the 2021 Addendum that predicts sanitary sewer overflows (SSOs) could occur at 38 manholes due to surcharge conditions in many of its pipes during a peak storm event under existing land use conditions and existing customers. 382 An independent engineering analysis
should be conducted to review the hydraulic analysis and assumptions to reconcile the apparent inconsistencies between predicted sewer overflows under existing conditions and EPASD’s position that the system currently is adequate. The analysis would include an update of hydraulic assumptions including flows from ADUs and residential units. 382 Addendum to the March 2015 East Palo Alto Sanitary District Master Plan Update, Freyer & Laureta Inc., Final – April 28, 2021, Tables 3-5.
MSR Updates –Draft Final Report
City of East Palo Alto, EPASD, WBSD
June 6, 2022
6. West Bay Sanitary District 176
SUMMARY OF WEST BAY SANITARY DISTRICT MSR DETERMINATIONS Growth and Population Projections
6-1: Based on the number of residential connections served and the average household size in the cities served, it is estimated that WBSD has a population of approximately 55,701. 6-2: Based on the current population estimate within the District and ABAG’s growth projections extended through 2040, it is projected that there will be 65,029 residents within the District in 2040.
6-3: Growth within WBSD is primarily located in the Bayfront Area of Menlo Park. Recently approved and developments under review are all located within the City of Menlo Park. Existing development projects propose a total of 3,522 dwelling units and 3,927,394 in nonresidential building square feet, indicating potential for substantial growth.
The Location and Characteristics of Disadvantaged Unincorporated Communities Within or Contiguous to the Agency’s SOI
6-4: According to the Department of Water Resource’s Disadvantaged Communities mapping instrument, there are two communities within or contiguous to the District’s SOI that, while not unincorporated, meet the definition of a disadvantaged community. Block Group (060816117003) within the City of Menlo Park east of Highway 101 meets the definition of disadvantaged. The area has an estimated population of 1,237 with a median household income of $45,481. Block Group (060816117001) is also within the City of Menlo Park east of Highway 101. It has an estimated population of 2,272 and has a median household income of $51,150.
Present and Planned Capacity of Public Facilities and Adequacy of Public Services, Including Infrastructure Needs and Deficiencies
6-5: WBSD reported that there is generally sufficient collection capacity to serve existing demand; however, some basins are at capacity. Because the District’s Master Plan is almost 10 years old and many improvements have been made since the hydraulic assessment was conducted, it is unclear the degree to which flows are at or nearing capacity and which segments are most impacted. The District is compiling a new Master Plan in 2022 to identify existing conditions after capital improvements, any areas of concern, and capital projects to address these areas. 6-6: Similarly, because WBSD’s flow projections are outdated it is unclear what infrastructure needs are necessary to meet projected demand. The Master Plan Update in 2023 is anticipated to provide up-to-date flow projections and recommended capital improvements to meet future demand and serve as a planning tool for the next 10 years to 2033. The new master plan will MSR Updates –Draft Final Report
City of East Palo Alto, EPASD, WBSD
June 6, 2022
6. West Bay Sanitary District 177
consider the prior pipeline replacement and rehabilitation work and will include a new hydraulic model study.432
6-7: Based on overflow rates, infiltration and inflow, regulatory compliance, preventative maintenance practices, speed of response times to customer reports of issues, and the number and type of complaints related to wastewater services, WBSD provides an adequate level of wastewater collection services.
6-8: WBSD appropriately plans for infrastructure needs in its Capital Improvement Program.
Resources for capital improvement of the system are determined by field evaluations performed on an on-going basis. The objective of the CIP is to systematically replace and or rehabilitate approximately 1.5 percent of system pipelines every year, in addition to completing already planned pump station and pipeline improvements. The District has planned funding for Capital Improvement Program projects of approximately $3.5 million each fiscal year.
Financial Ability of Agencies to Provide Services
6-9: WBSD’s financial condition is sound with a significant positive net position, adequate reserves, and financial planning based on long-term financial planning and capital improvement programs that are annually reviewed, prioritized and updated.
Accountability for Community Service Needs, Including Governmental Structure and Operational Efficiencies
6-10: WBSD complies with all legal requirements aimed at ensuring accountability and transparency of public agencies. Additionally, WBSD has gone beyond the legal requirements and is a recipient of the District Transparency Certificate of Excellence from the Special District Leadership Foundation (SDLF) for the period January 2020 to March 2023.
Recommendations
1. Funding of Reserves – Continue to fund reserves consistent with adopted policies, including allocations to the recently created Treatment Plant Reserve which has not been fully funded.
2. Master Plan and CIP – Update the WBSD Master Plan and CIP beginning in 2022 in accord with current anticipated scheduling.
432 WBSD letter to LAFCo, May 17, 2022.