Susana Alcala Wood, City Attorney Jorge Oseguera, City Auditor Mindy Cuppy, City Clerk Howard Chan, City Manager John Colville, City Treasurer City Council Report
915 I Street, 1st Floor
Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-00667 April 12, 2022 Discussion Item 08
Title: Storm Drainage Property Related Fee Ballot Election Results Council Report (Two-Thirds Vote Required)
Location: Citywide
Recommendation: Adopt a Resolution certifying the Storm Drainage Property Related Fee ballot election; establishing a Storm Drainage Property Related Fee and the Storm Drainage Property Fee Fund; and authorizing the City Manager, or designee, to perform billing assessments.
Contact: William O. Busath, Director of Utilities (916) 808-1434, [email protected]; Chuong (Ryan) Pham, Business Services Manager (916) 808- 8995, [email protected]; Dean Fujimoto, Program Manager, (916) 808-6645, [email protected]; Tyler Stratton, Program Specialist, (916) 808-1284, [email protected], Department of Utilities
Presenter: William O. Busath, Director of Utilities (916) 808-1434, [email protected], Department of Utilities
Attachments:
1-Description/Analysis
2-Resolution
3-Exhibit A: Storm Drainage Service Rate Schedule
4-Exhibit B: SCI Consulting Group Final Ballot Tabulation Results Letter
File ID: 2022-00667 Discussion Item 08
April 12, 2022
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City of Sacramento
Description/Analysis
Issue Detail: There has not been a new Storm Drainage System Fee in the City of Sacramento since 1996.
Proposition 218, also called the “The Right to Vote on Taxes Act,” was approved in 1996 and requires a three-step process for approval of a Storm Drainage System Fee. The first step requires a “protest mailer” to be sent to property owners, the second step requires a public “rate hearing” be conducted, and the third step requires mailing special election ballots to property owners.
In December 2021, protest mailers were sent to all current Department of Utilities (DOU) drainage customers. In January 2022, about two percent of City property owners -- who are not currently DOU storm drainage customers but would be subject to the new fee -- were sent a protest mailer.
A rate hearing was conducted on January 26, 2022 with the Utilities Rate Advisory Commission (URAC) that provided an opportunity for the public to comment on the proposed property-related fee. The protest mailer results were presented to the URAC at the rate hearing and the URAC recommended that City Council authorize DOU to conduct the Storm Drainage property related fee ballot election.
On February 1, 2022, City Council received the rate hearing results and authorized DOU to conduct the Storm Drainage property related fee ballot election. On February 9, 2022, 130,071 ballots for 154,879 parcels were mailed to all property owners who would be receiving storm drainage services and subject to the proposed fee. Ballots were weighted by one vote per parcel. Property owners had until March 16, 2022 to mail completed ballots to the City Clerk’s Office. Ballots were tabulated and certified by SCI Consulting Group (see Exhibit B) from March 17 – 24, 2022 with the following results:
Vote Count Percent
Yes 22,178 52.3%
No 20,229 47.7%
TOTAL 42,407 100%
Staff recommends that Council adopt a Resolution certifying the Storm Drainage Property Related Fee ballot election; establishing a Storm Drainage Property Related Fee and the Storm Drainage Property Fee Fund; and authorizing the City Manager, or designee, to perform billing assessments.
File ID: 2022-00667 Discussion Item 08
April 12, 2022
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City of Sacramento
Policy Considerations: The City Council has the authority to prescribe storm drainage fees by a resolution approved by a two-thirds vote of the members of the legislative body thereof pursuant to Health & Safety Code section 5471.
Economic Impacts: DOU estimates that the proposed Storm Drainage property related fee will create 672 total jobs (386 direct jobs and 286 jobs through indirect and induced activity jobs supported) and create $103.6 million in total economic output ($65.3 of direct output and another $38.3 of output through indirect and induced activities) in total economic output over the next 10 years.
The indicated economic impacts are estimates calculated using a calculation tool developed by the Center for Strategic Economic Research (CSER). CSER utilized the IMPLAN input-output model (2009 coefficients) to quantify the economic impacts of a hypothetical $1 million of spending in various construction categories within the City of Sacramento in an average 1-year period. Actual impacts could differ significantly from the estimates and neither the City of Sacramento nor CSER shall be held responsible for consequences resulting from such differences.
Environmental Considerations:
California Environmental Quality Act (CEQA): The establishment and modification of utility service rates is exempt from the California Environmental Quality Act (CEQA) (Public Resources Code § 21080(b) (8)). While this action is not subject to CEQA, the projects constructed in the future capital programs will require and receive CEQA review.
Sustainability: The proposed Storm Drainage projects are consistent with the City’s Office of Climate Action and Sustainability’s initiatives for water by helping to achieve DOU’s climate resiliency in utility infrastructure and operations.
Commission/Committee Action: The Department of Utilities presented four Rate Workshops to the Utilities Rate Advisory Commission (URAC) from September through November of 2021.
The Department of Utilities presented three updates to the Water Committee from April through November of 2021. A public Rate Hearing was conducted with the URAC on January 26, 2022, and the URAC recommended that City Council authorize the ballot election. The City Council authorized the ballot election on February 1, 2022.
File ID: 2022-00667 Discussion Item 08
April 12, 2022
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City of Sacramento
Rationale for Recommendation: The City of Sacramento has an essential role in providing clean drinking water and protecting local water supplies by providing primary treatment of wastewater, managing creeks, streams, and stormwater runoff to prevent flooding and reducing trash pollution. Stormwater runoff can carry pollution, trash, harmful chemicals, and harmful bacteria into our local rivers, creeks, and streams, and on into the Delta.
Improvements to the system will help to minimize these pollutants. The proposed Storm Drainage property related fee will provide the funding to perform these needed repairs and improvements.
Financial Considerations: The proposed Storm Drainage property related fee complies with the Proposition 218 mandate which allows utilities to charge rates sufficient to recover the cost of providing utility services. The proposed Storm Drainage property related fee will generate approximately $20,250,000 annually for the Storm Drainage System. These revenues will need to be deposited into a separate fund. Staff is recommending that the City Council authorizes a new accounting fund to be known as the Storm Drainage Property Fee Fund.
All budgetary adjustments will be included in the Fiscal Year 2022/23 adopted budget.
Local Business Enterprise (LBE): Not applicable
Background: Sacramento’s local system of storm drains, levees, pumps, and pipes collect, and clean stormwater to protect our rivers and waterways from pollution. Levees, creeks, and canals help protect Sacramento communities from flooding by holding and conveying stormwater during large storms to prevent flooding in neighborhoods and streets.
Sacramento’s Storm Drainage System is up to 100 years old, and many levees, pipes, and pumps are rapidly deteriorating. Without repairs or improvements, there is increased risk of polluting our rivers and water sources, and of flooding in many areas of the City.
Sacramento’s flood risk is one of the highest in the nation because it sits at a low elevation on a flood plain and is largely surrounded by levees. In most cities, stormwater drains by gravity.
The City of Sacramento’s stormwater system relies on a complex system of pumps to drain stormwater into creeks and rivers. Many neighborhoods, including downtown Sacramento, rely on a “combined system” where sewage and stormwater are collected and conveyed in the same system of pipes (see map below). If old pipes or pumps fail in these areas, floodwater could include raw sewage, which can be harmful to public health and damage homes and rivers.
File ID: 2022-00667 Discussion Item 08
April 12, 2022
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City of Sacramento
To continue to protect clean, local water, the City of Sacramento has enacted a ballot measure (required by proposition 218 for storm drainage rate increases) to fund repairs, maintenance, and improvements to its aging stormwater system, which protects local rivers, and water sources from pollution and toxins, and protects homes and businesses from flooding. These funds will be used to:
• Repair aging water pipelines and other infrastructure; • Replace aging and deteriorating pumps to prevent flooding; • Protect local water quality and water supplies;
• Keep trash and harmful chemicals out of the American and Sacramento rivers and local creeks;
• Prevent sewage and human waste from flooding neighborhood streets; and • Provide safe, clean water for future droughts and emergencies.
The fee will be based on impervious surfaces (buildings and pavement), and paid by industrial, commercial, residential, and other property owners. The proposed monthly fee, by type of property, is in the table below. All funds raised will be used only for Sacramento’s stormwater system and subject to citizen oversight and public audits.
Residential property rates are based on Sacramento County Assessor’s data, including an average gross parcel size which is multiplied by an Impervious Surface Coefficient (ISC) which is then multiplied by the $0.01975 annual net square foot rate. This calculation is the basis for the monthly fees in Exhibit A.
File ID: 2022-00667 Discussion Item 08
April 12, 2022
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City of Sacramento
Non-residential property rates are based on Sacramento County Assessor’s data, including land use type and gross parcel size which is multiplied by an Impervious Surface Area Coefficient (see Exhibit A) which is then multiplied by the $0.01975 annual net square foot rate. These formulas are a well-established storm drainage rate development method. Both Residential and Non-Residential parcels will have a minimum fee of $1 per month.
Income-eligible customers may qualify for utility bill assistance. Property owners who have errors with their property type, acreage, or number of units listed in County Assessor data may correct this information with the County of Sacramento. Upon request the City will perform a billing assessment for parcels subject to either the current storm drainage fee based on room count, or for the fee described in Exhibit A based on the extent to which the parcel is determined to contribute stormwater to the Storm Drainage System. If the City determines that a parcel owner is being over-billed for storm drainage services rendered to the parcel, the City may reduce the storm drainage fees consistent with the principles contained in the Storm Drain Utility Property Related Fee Study.
1 RESOLUTION NO. ___
RESOLUTION ESTABLISHING THE CITY OF SACRAMENTO STORM DRAINAGE
PROPERTY-RELATED FEE SERVICE RATES AND THE STORM DRAINAGE
PROPERTY FEE FUND
BACKGROUND
A. Articles XIIIC and XIIID of the California Constitution (Proposition 218) esta blish various procedures for the approval of taxes, assessments, and property-related service fees by local government agencies.
B. For the imposition or increase of storm drainage service rates that are “property -related fees” within the meaning of Propos ition 218, Proposition 218 requires that a notice describing the proposed fee or fee increase and establishing a date, time and location of a public hearing on the proposed fee or fee increase (held not less than 45 days after the notice is mailed), be mai led to the record owner of each parcel subj ect to the proposed fee or fee increase. Under Section 13.02.040(C) and Section 3.44.100(B) of the Sacramento City Code, for fees or fee increases proposed by the City of Sacramento, the public hearing is held by the City’s Utilities Rate Advisory Commission.
C. At the public hearing, Proposition 218 requires that all protests filed against the proposed fee or fee increase be considered, and the agency may not approve the proposed fee or fee increase if written protests against the proposed fee or fee increase are presented by owners or tenants of a majority of the affected parcels (only one protest is allowed per parcel).
D. Proposition 218 requires a special ballot election for storm drainage property related fees. While water, wastewater, and solid was te fees are exempted from this requirement, storm drainage fees require the additional step of allowing property owners the opportunity to vote on proposed fees or increases to existing fees. The proposed fee or i ncrease may be approved if greater than 5 0% of the property owners , who submit ballots, vote “yes” as a result of the ballot election. The proposed fee or increase shall not be approved if 50% or more of property owners , who submit ballots, vote “no” as a result of the ballot election.
E. In Dece mber 2021, protest mailers were sent to al l current D epartment of Utilities drainage customers. In January 2022, about two percent of City property owners -- who are not currently Department of Utilities storm drainage customers but would be subject to the new fee -- were sent a protest mailer . The protest mailer : (i) described the proposed storm drainage property related fee ; (ii) provided the date, time and location of the public hearing when th e proposed fee would be heard by the City’s Utilities Rate
2 Advisory Commission; and (iii) provided notice that an owner or tenant had the right to file a written protest against the proposed rate increases at or before the time set for public hearing.
F. The City’s Utilities Rat e Advisory Commission held the public hearing on J anuary 26, 2022 and considered all protest s against the proposed storm drainage property related fee as well as all testimony and other information presented by City staff and member s of the public.
G. As of the conclusion of the public hearing, written p rotests against the proposed storm drainage property related fee were not received for a majority of the parcels that would be subject to the proposed fee.
H. Upon conclusion of the public hearing, the City ’s Util ities Rate Advisory Commission recommended that the City Council act to submit the proposed storm drainage property related fee to property owners for a vote.
I. The City Council considered the Utilities Rate Advisory Commission’s recommendations and all other information presented and in the public record and authorized the Department of Utilities to conduct the Storm Drainage property related fee ballot election on February 1, 2022.
J. On February 9, 2022, ballots were mailed to all property owners who would be receiving storm drainage services and subject to the proposed fee. Property owners had until March 16, 2022 at 4:30 pm to mail or drop off completed ballots to the City Clerk’s Office.
K. Ballots were tabulated and certified by SCI Consulting Group (see Exhibit B) from March 17 – 24, 2022 resulting in 52.3% with “yes” votes and 47.7% with “no” votes.
L. A new accounting fund needs to be created in accordance with Proposition 218 for the new storm drainage property related fee.
BASED ON THE FA CTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
SECTION 1: Based on the information presented to it and upon all information in the public record, and pursuant to Public Resources Code Section 21080(b)(8) , the City Council finds that the approval and imposition of the storm drainage property related fee approved and imposed in Section 2 of this resolution are exempt from the California Environmental Quality Act and finds that the increased rates are for the purpose of:
1. Providing funds to meet capital improvement expenses, includin g associated operations and maintenance expenses, and employee w age rates and fringe benefits.
3 2. Permitting the generation of necessary cash flow to finance maintenance of the City’s uti lity service sys tems and meeting financial reserve ne eds and requirements.
3. Funding the purchase or lease of necessary supplies and equipment for the maintenance of capital improvements.
SECTION 2: The City Council certifies the Storm Drainage Property Related Fee ballot election results as recommended by the City Clerk.
Yes 22,178 No 20,229
SECTION 3: The Storm Drainage property related fee service rate schedule shown on Exhibit A to take effect on July 1, 2022 is hereby approved and imposed.
SECTION 4: The City Manager, or designee, may perform a billing assessment for parcels subject to either the current storm drainage fee based on room count, or for the fee described in Exhibit A based on the extent to which the parcel is determined to contribute to the Storm Drainage System. If the City Manager or his designee determines that a parcel owner is being over-billed for storm drainage services rendered to the parcel, the City Manager or designee may reduce the storm drainage fees consistent with the principles contained in the Storm Drain Utility Property Related Fee Study.
SECTION 5: This resolution adopting the storm drainage rate schedule shown on Exhibit A is approved by two-thirds vote of the City Council pursuant to Health and Safety Code section 5471.
SECTION 6: The City Manager, or designee, is hereby authorized and directed to create a new accounting fund to be known as the Storm Drainage Property Fee Fund.
Table of Contents:
Exhibit A: Storm Drainage Service Rate Schedule
PASSED AND ADOPTED this __ day of ________, 202_.
APPROVED:
_____________________
4 Darrell Steinberg, Mayor
ATTESTED:
_____________________
Mindy Cuppy, City Clerk
EXHIBIT A
CITY OF SACRAMENTO
STORM DRAINAGE SERVICE RATE SCHEDULE
I. STORM DRAINAGE PROPERTY RELATED FEE – MONTHLY RESIDENTIAL
Residential fees are calculated by multiplying the average gross square feet by the impervious surface coefficient (ISC), multiplied by $0.0016458333 monthly.
Single-family parcels are placed into one of three tiers based upon parcel gross area and Multi-family parcels are placed into one of their tiers based upon density.
Single-family #1:
$3.13
• P arcel gross area less than 1/10 acre
• Average gross square feet: 2,878, ISC: 0.66
Single-family #2: $5.94
• P arcel gross area equal to and greater than 1/10 acre and less than 1/4 acre
• Average gross square feet: 6,681, ISC: 0.54
Single-family #3: $10.78
• P arcel gross area equal to and greater than 1/4 acre • Average gross square feet: 18,718, ISC: 0.35
Multi-family #1: $0.67 per unit
• 50+ units per acre (high density):
• Average gross square feet: 489, ISC: 0.84
Multi-family #2: $2.41 per unit
• 11-50 units per acre (medium density):
• Average gross square feet: 2,093, ISC: 0.70
Multi-family #3: $5.84 per unit
• 1-10 units per acre (low density):
• Average gross square feet: 6,845, ISC: 0.52
Minimum Rate Per Parcel $1.00
EXHIBIT A
II. STORM DRAINAGE PROPERTY RELATED FEE – MONTHLY NON-
RESIDENTIAL
Non-Residential fees are calculated by multiplying the parcel’s gross square feet by the impervious surface coefficient (ISC) listed below, multiplied by $0.0016458333 monthly.
Non-Residential Property Type ISC
Exempt 0.00
Agriculture 0.04
Golf, Park, Cemetery, Miscellaneous, & Vacant 0.10
Airport & Common Areas 0.30
Public & Utilities 0.44
Office, Recreational, Church & Welfare, & Personal Care & Health 0.80 Industrial, Retail, and Commercial 0.86
Minimum Rate Per Parcel $1.00