February 23, 2024
CITY OF SAN LEANDRO
Stormwater Fee Report
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HF&H CONSULTANTS, LLC
Managing Tomorrow’s Resources Today
590 Ygnacio Valley Road, Suite 105 John W. Farnkopf, PE Walnut Creek, California 94596 Laith B. Ezzet, CMC
Tel: (925) 977-6950 Richard J. Simonson
Fax: (925) 977-6955 Marva M. Sheehan, CPA
hfh-consultants.com Robert C. Hilton
February 23, 2024
Fran Robustelli
City Manager
City of San Leandro
835 E. 14th Street
San Leandro, CA 94577
Subject: Stormwater Fee – Draft Report
Fran Robustelli:
HF&H is pleased to submit this stormwater fee report for the City of San Leandro (City). The report summarizes the analysis that was conducted to develop updated fees, by customer category, to become effective July 1, 2024.
We greatly appreciate your assistance in developing the cost-of-service analysis.
Sincerely,
HF&H CONSULTANTS, LLC
Rick Simonson
Senior Vice President
City of San Leandro Stormwater Fee
Draft Report Table of Contents
HF&H Consultants, LLC Page i February 23, 2024
TABLE OF CONTENTS
1. INTRODUCTION ......................................................................................................2 Overview ..................................................................................................................... 2 City Facilities ................................................................................................................ 2 Stormwater Funding Background ................................................................................... 3 Legal Requirements of Stormwater Fee .......................................................................... 4
2. STORMWATER FUNDING NEEDS.............................................................................5 Annual Revenue Requirement........................................................................................ 6
3. RATE STRUCTURE ANALYSIS ..................................................................................7 Single-Family Residential Parcels.................................................................................... 7 Non-Single Family Residential Parcels ............................................................................. 7 Calculation of Estimated Impervious Surface Areas – by Land Use .................................... 8 Developed Vacant Parcels.............................................................................................. 9 Stormwater Fee Calculation ........................................................................................... 9 STORMWATER Fee Calculation – Alternative Funding Level .............................................10 Annual Adjustment ......................................................................................................10 Use of Stormwater Fee Funds .......................................................................................11
TABLE OF FIGURES
Table 1. Summary of Capital and Operations and Maintenance Costs..................................... 5 Table 2. Estimate of Annual Revenue Requirement .............................................................. 6 Table 3 – Summary of Single-Family Parcels......................................................................... 7 Table 4. Summary of SFEs per Acre for Each Non-Single Family Land Use.............................. 8 Table 5. Impervious Area Sampling Results ......................................................................... 8 Table 6. Proposed Updated Stormwater Fee (FY 2024-25) – Fund All Capital Projects ............10 Table 7. Proposed Updated Stormwater Fee (FY 2024-25) – Fund High and Very High Projects Only.................................................................................................................................10
City of San Leandro Stormwater Fee
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1. INTRODUCTION
OVERVIEW
The City of San Leandro (City) has engaged HF&H Consultants, LLC (HF&H) to study, make recommendations, and assist in the implementation of an updated stormwater fee to fund the operation of the municipal stormwater system, including environmental programs, maintenance and operations, capital improvements, and compliance with all state and federal regulations associated with the National Pollutant Discharge Elimination System1 (NPDES) permit.
In 2023, the City contracted with an engineering firm, Schaaf & Wheeler, to conduct a study to evaluate the condition of, and recommended improvements to, the City’s storm drain infrastructure. The Storm Drain Mater Plan (SDMP)2 presented options for the City to update their storm drain infrastructure to better serve the community and meet capacity requirements to prevent or minimize flooding, to achieve the goals and responsible environmental stewardship, to incorporate the costs of mandated compliance measures (i.e., installation and maintenance of trash capture devices), and guide smart investments in the City’s aging storm drain infrastructure.
The City has now embarked on the second phase: implementation of a funding mechanism to fund the recommended improvements as described in the SDMP. For this stormwater fee report, the first step in the process, incorporates information from the SDMP, establishes needs and associated revenues required, and presents two options for a fee structure that are fair and meet all legal requirements in accordance with Proposition 218. Subsequent steps in this implementation phase include a public hearing and a ballot proceeding over the coming months.
CITY FACILITIES
The City operates and maintains a storm drainage system, as it is empowered to do per Government Code Sections 38900 and 38901. This complex system is comprised of integrated storm drainage pipes, inlets, outfalls, culverts, pump stations, and perimeter levees to prevent flooding. Parts of the system date back nearly 150 years.
The City ‘s storm drain system intertwines with the Alameda County Flood Control District’s(ACFCD) storm drain system; the City may only update portions of the system under their ownership. Due to this, there are areas within the City where upsizing only the City piping will not alleviate flooding as those City pipes flow directly into ones owned by ACFCD. The ACFCD owns seven of the nine pump stations in the City, which further complicates the planning and implementation of Capital Improvement Programs (CIPs).
Flooding within San Leandro is caused by two basic interrelated factors: 1) major creeks and channels that overflow due to limited capacity with flood flow and 2) inadequate local drainage infrastructure. The operation and maintenance of major creeks and channels are, for the most part, outside of the City's 1 Created in 1972 by the Clean Water Act, the NPDES permit program is authorized by the Environmental Protection Agency to allow state governments to perform permitting, administrative, and enforcement aspects of the stormwater program 2 City of San Leandro Storm Drain Master Plan Study, Schaaf & Wheeler, January 2024 City of San Leandro Stormwater Fee
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control. Therefore, the SDMP, and the funding options discussed in this report, focuses on local storm drainage collection facilities owned and operated by the City.
The City encompasses 15.52 square miles and includes several watersheds within the City:
• The Oyster Point Watershed drains a small, primarily industrial region to the east of Oakland Airport and into the San Francisco Bay; • The San Leandro Marina Watershed drains urban neighborhoods and industrial areas near the marina through an engineered channel and two underground storm drains. It discharges to the San Francisco Bay; and
• The Estudillo Canal Watershed collects urban runoff from a wide area of urban San Leandro, ultimately discharging to the San Francisco Bay utilizing a network of canals and underground storm drains and a small creek along Fairmont.
The City operates and maintains a municipal separate storm sewer system (MS4) within the City’s boundaries. The MS4 is made up of man-made drainage systems including, but not limited to, curbs and gutters, ditches, culverts, pipelines, manholes, catch basins (inlets), dry wells and outfall structures.
The primary storm drainage service provided by the City is the collection, conveyance, and overall management of the stormwater runoff from improved parcels. By definition, all improved parcels that shed stormwater into the City’s MS4, either directly or indirectly utilize, or are served by, the City’s storm drainage system. The need and necessity of this service are derived from property improvements, which historically have increased the amount of stormwater runoff from the parcel by constructing impervious surfaces such as rooftops, pavement areas, and certain types of landscaping that restrict or retard the percolation of water into the soil lens beyond the conditions found in the natural, or unimproved, state.
To the extent that a property is in a natural condition or includes features that contain all increased runoff resulting from the property’s development, that property is exempted from any MS4 service. As such, open space land (in a natural condition) and agricultural lands that demonstrate stormwater absorption equal to or greater than natural conditions are typically exempt.
The 2023 SDMP contains a thorough set of maps and lists of various elements within the MS4. Those descriptions are the basis for this Report.
STORMWATER FUNDING BACKGROUND
In 1993 the City of San Leandro adopted a Storm Water Fee (Fee) to fund Clean Water Act pollution control mandates and manage the storm drain system. The current Fee generates approximately $1,070,000 per year. Over the past 30 years, the Fee has not been increased and its purchasing power has decreased by more than half. Over that same period, clean water regulations have increased with more mandates requiring additional investment. Additionally, repair and maintenance of the system is necessary to address flooding and capacity issues and plan for future climate adaptation.
The City’s Storm Water Fund currently operates at an annual deficit. The projected needs of the storm drainage system point toward the need for asking property owners to approve an increase in storm drainage fees in order to ensure a dedicated and sustainable funding stream. As many other municipalities in California have done, including Alameda, Berkeley, Cupertino, Palo Alto, San Mateo, and San Jose, the City of San Leandro Stormwater Fee
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HF&H Consultants, LLC Page 4 February 23, 2024
City is considering updating the Fee to provide a secure and predictable source of funding for the Stormwater system to meet Clean Water requirements and prevent flooding. This report details the system’s funding needs and the impact on rates based upon the SDMP.
LEGAL REQUIREMENTS OF STORMWATER FEE
This Report calculates the Stormwater Fee as a property-related fee. Property-related fees are subject to the requirements of Articles XIIIC and D of the State Constitution, which were approved by voters in 1996 through Proposition 218, as well as the Proposition 218 Omnibus Implementation Act (Government Code Sections 53750 – 53758).
Any property-related fee must comply with requirements of Article XIIID, Section 6. These include the following:
• Revenues derived from the fee shall not exceed the funds required to provide the property-related service; • Revenues derived from the fee shall not be used for any purpose other than that for which the fee was imposed;
• The amount of a fee upon any parcel or person as an incident of property ownership shall not exceed the proportional costs of the service attributable to the parcel; • No fee may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question. Fees based on potential or future use of service are not permitted. Standby charges, whether characterized as charges or assessments, shall be classified as assessments and shall not be imposed without compliance with the assessment section of the code; and • No fee may be imposed for general governmental services including, but not limited to, police, fire, ambulance or library services where the service is available to the public at large in substantially the same manner as it is to the property owners.
The procedural requirements of Proposition 218 require that new or increased property-related fees submit to a two-step process: 1) a 45-day public protest period culminating in a public hearing, and 2) a ballot proceeding whereby it must be approved by a 50% simple majority of property owners (or a twothirds supermajority of registered voters) before new or increased fees could be authorized.
City of San Leandro Stormwater Fee
Draft Report 2. Stormwater Funding Needs
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2. STORMWATER FUNDING NEEDS
The 2023 SDMP identified a Capital Improvement Plan (CIP) totaling $79,590,000 worth of capital improvements and repairs and a stormwater operating budget of $1,967,000 in on-going operations and maintenance costs, which includes a $107,000 annual loan repayment to the General Fund3 for the current fund shortfall (from years in which the stormwater expenses exceeded the annual revenue collected by the current Fee). Table 1 summarizes the funding needs and provides a breakdown of capital projects by priority.
Table 1. Summary of Capital and Operations and Maintenance Costs 3 Annual repayment to the General Fund reflects the cumulative shortfall of $2.5 million paid back over a term of 30 years, with an annual interest rate of 1.75% (which reflects the historical average annual return on investment of the City’s reserves)
Priority Description Estimated Cost
Capital Improvement Projects
Very High Mitigate the most frequent, recurring flooding issues and the most sever system deficienies with
the greatest impact to properties. Includes
installation of 177 small and 6 large trash capture
devices to meet MRP requiprements by June 2025 $8,240,000 High Mitigate areas of frequent, but less damaing
flooding areas where extensive deficiencies are
identified in the SDMP model. $24,010,000
Medium Mitigate areas where moderate and/or isolated
capacity deficiency is identified by the SDMP model
or known to occur. $24,590,000
Low Mitiate isolated capacity deficiencies identified the the SMDP model that have the least potenteial
impact on properties, or areas where the benefit of
City projects is limited by the capacity of ACFCD
facilities. Includes a $10,000,000 cost for a new
pump station on Neptune Ave. $22,750,000
Subtotal - Capital Projects $79,590,000
Annual Operating and Maintenance Costs
Trash Capture Devices Mainteance $200,000
Compliance $540,000
Street Cleaning $780,000
Pipe Cleaning $100,000
Green Infrastructure $100,000
General Fund Repayment $107,000
Other Operations & Maintenance $140,000
Subtotal - Operations & Maintenance $1,967,000
City of San Leandro Stormwater Fee
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The CIP costs shown in Table 1 above are expressed in 2024 dollars. Costs are shown as one-time project expenses and include all phases such as environmental, permitting, design, and construction. The summary reflects a list of specific recommended projects in the Schaaf & Wheeler 2023 SDMP.
ANNUAL REVENUE REQUIREMENT
Since stormwater fees are subject to voter approval, it is recommended that a fee be structured in the beginning to be steady over the long term as well as sustainable. Unlike other utilities (e.g., water and sewer) where the fees can be reviewed and re-set at five-year (or less) intervals, stormwater fees are usually set at a level that can be increased annually in accordance with a predetermined formula or index for many years to come. As a result, the revenue requirements must be expressed in annual terms that will reflect future years’ needs (with the formulaic adjustments).
While the O&M costs are shown in Table 1 as annual costs, the CIP costs are shown as lump-sum, onetime costs. Therefore, the CIP costs must be annualized, either through annual debt service payments if a project or projects will be debt-funded (e.g., revenue bond, bank loans) or cash-funded with fee revenue.
Therefore, the revenue needs shown below in Table 2 convert the CIP costs to annual amounts based on an assumed 15-year revenue bond or 30-year, pay-as-you-go (PAYGo) expenditure plan. Table 2 calculates the Net Annual Costs to be covered by the amended Stormwater Fee under two scenarios: 1) funding all capital projects identified in the SDMP and 2) funding only Very High and High priority projects. Section 3 of this report calculates the proposed amended Stormwater Fee for both scenarios.
Table 2. Estimate of Annual Revenue Requirement
1 Estimated contribution from CalTrans ($2,749,000) and State grant ($1,000,000) for the installation of trash capture devices
2 Reflects bond-financing Very High Priority Projects (15-year term, 4.5% interest rate) 3 Reflects PAYGo funding amortized over 30 years Fund All
Projects
Fund High and
Very High
Projects Only
Operations & Maintenance
Trash Capture Devices Mainteance $200,000 $0 $200,000 $200,000 $200,000 Compliance $540,000 $0 $540,000 $540,000 $540,000
Street Cleaning $780,000 $0 $780,000 $780,000 $780,000
Pipe Cleaning $100,000 $0 $100,000 $100,000 $100,000
Green Infrastructure $100,000 $0 $100,000 $100,000 $100,000 General Fund Repayment $107,000 $0 $107,000 $107,000 $107,000 Other Operations & Maintenance $140,000 $0 $140,000 $140,000 $140,000 O&M Subtotal $1,967,000 $0 $1,967,000 $1,967,000 $1,967,000 Capital Improvement Projects
Very High Priority Projects $8,240,000 ($3,749,000) 1 $4,491,000 $424,447 2 $424,447 High Priority Projects $24,010,000 $24,010,000 $800,333 3 $800,333 Medium Priority Projects $24,590,000 $24,590,000 $819,667 3 Low Priority Projects $22,750,000 $22,750,000 $758,333 3 Capital Subtotal $79,590,000 ($3,749,000) $75,841,000 $2,802,780 $1,224,780 Total Annual Revenue Requirement $4,769,780 $3,191,780
Cost Description
Estimated
Current Cost
Less: Costs
Funded by Other
Sources Net Cost
Net Annual Cost
City of San Leandro Stormwater Fee
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3. RATE STRUCTURE ANALYSIS
Proposition 218 states that the amount of a fee upon any parcel shall not exceed the proportional costs of the service attributable to the parcel. The use of the City’s stormwater system that is attributed to each parcel must be proportionate to the estimated amount of stormwater runoff contributed by the parcel, which is, in turn, proportionate to the amount of impervious surface area on a parcel (such as building roofs and pavements).
SINGLE-FAMILY RESIDENTIAL PARCELS
The most widely used method of establishing storm drainage rates is to use the average Single-Family Residential parcel (SFR) as the basic unit of measure, which is called the Single Family Equivalent (SFE).
The metric for this fee structure is impervious surface area, a benchmark amount of impervious surface area must be established for the average single-family residential property. The City has a wide range of sizes of SFR parcels, which have varying percentages of impervious area. Generally, smaller, denser parcels tend to have a higher proportion of impervious area than larger, less dense parcels, which tend to have a lower percentage of impervious area, as larger residential properties tend to have a larger proportion of pervious landscaping, and therefore a smaller proportion of impervious area.
The City has a large range of sizes of SFR parcels; therefore, the range of SFR was broken into three size categories as shown in Table 3 below with the medium category containing the largest number of parcels.
A random sample of 484 parcels in that size category was selected, and the Impervious Surface Area (ISA) (e.g., concrete, asphalt, roofs, pavers) of each sample parcel was measured using aerial photographs. The average ISA is 3,069 square feet, which will be used as the benchmark for all other size categories and other non-residential land uses. Therefore, for subsequent calculations for all non-medium sizes SingleFamily parcels, 1 SFE equals 3,044 square feet of Impervious Surface Areas).
Table 3 – Summary of Single-Family Parcels
1 As calculated in Table 5
2 Single-Family Equivalent as compared to the Median Impervious Surface Area of Medium Size SFR parcels
NON-SINGLE FAMILY RESIDENTIAL PARCELS
Unlike residential parcels, non-single family parcels can vary widely in size (e.g., anywhere from 0.08 acres to 100+ acres), as wells as impervious characteristics (e.g., parcels with commercial offices tend to have a high percentage of impervious surfaces from office buildings and parking lots, while parks tend to have a lower percentage of impervious surfaces from significant landscaped areas, while multi-family complexes fall somewhere in between). For this reason, the parcels have been grouped into land use categories according to their Impervious Surface Area characteristics. To account for various sizes of non-residential Single-Family
Residential (SFR)
Parcel Sizes
Parcel Size Range
(square footage)
# of
Parcels
% of SFR
Parcels
Average
Impervious
Surface Area1
SFE2
per
Parcel
Small < 3,200 1,193 6% 1,602 0.52
Medium 3,200 to 7,200 16,111 79% 3,067 1.00
Large > 7,200 3,094 15% 4,617 1.51
20,398 100% 9,287
City of San Leandro Stormwater Fee
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properties, the SFE for each land use category is calculated on a per-acre basis, so size of the parcel can be a variable. The SFE-per-acre is computed for each non-residential category using the formula below, taking into account the average Impervious Surface Area for each non-single family category as sampled and summarized in Table 5.
𝑆𝑆𝑆𝑆𝑆𝑆 𝑃𝑃𝑃𝑃𝑃𝑃 𝐴𝐴𝐴𝐴 = (43,560 square feet per acres) 𝑥𝑥 𝐴𝐴𝐴𝐴 𝐴𝐴𝐴𝐴 % 𝑜𝑜𝑜𝑜 𝐼𝐼𝐼𝐼𝐼𝐼 𝐼𝐼 𝐼𝐼𝐼𝐼 𝐴𝐴 𝐴𝐴 3,067 square feet of Impervious Areas per SFE (from Table 3) Table 4 shows a summary of resulting parcel SFEs for each non-Single Family land use category.
Table 4. Summary of SFEs per Acre for Each Non-Single Family Land Use CALCULATION OF ESTIMATED IMPERVIOUS SURFACE AREAS – BY
LAND USE
For most land use categories, a sample of parcels was analyzed using the Alameda County’s Geographic Information System (GIS) to determine the average percentage Impervious Surface Area. Table 5 below shows the results of that analysis.
Table 5. Impervious Area Sampling Results
Land Use
Category # of Parcels
# of Parcels
Sampled
Total Acres
Sampled
Total Acres
Impervious
Area
Single-Family Residential
Small < 3,200 sq. ft. 1,193 36 1.9 1.3 1,602 sq. ft.
Medium 3,200 to 7,200 sq. ft. 16,111 484 58.7 33.7 3,067 sq. ft.
Large > 7,200 sq. ft. 3,094 93 20.7 9.8 4,617 sq. ft.
Non-Single-Family Residential
Apartments/Condos 2,036 61 49.2 35.1 71.3%
Commercial/Municipal 1,929 58 22.1 19.4 87.6%
Schools 19 19 151.3 83.9 55.4%
Parks 35 35 90.8 15.1 16.6%
Golf Courses 6 6 239.5 4.2 1.8%
Vacant - Developed Parcels 299 Not Sampled
Undeveloped Parcels/Open Space 447 Not Sampled
Impervious Area
City of San Leandro Stormwater Fee
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Each individual parcel’s SFE is then calculated by multiplying the parcel size (in acres) times the SFE per acre for that land use category, as shown in the following formula:
Parcel Size (acres) x SFE per Acre = SFE
DEVELOPED VACANT4 PARCELS
Developed vacant parcels are devoid of obvious structures or improvements but are distinguished from undeveloped vacant land by one of several characteristics. Typically, a developed vacant parcel has been graded to be ready for building construction (possibly as part of the original subdivision or adjacent street grading). In some cases, the parcel previously contained a structure or improvement that has been removed, but its fundamental alteration from a natural state remains. Although developed vacant parcels may have significant vegetative cover, the underlying soil conditions resulting from grading work or previous improvements usually cause some rainfall to runoff into the storm drainage system. The average percentage of Impervious Area for developed vacant parcels is reasonably assumed to be 1.8%, which is also used as a minimum value of imperviousness for any land use type (excluding open space and agricultural land, which assumes to have no impervious surface area). Vacant parcels that have significant impervious paving remaining from prior improvements may be classified as Commercial/Municipal or some other classification best representing the average Impervious Surface Area of the parcel.
STORMWATER FEE CALCULATION
The primary metric in this analysis is the SFE as illustrated above. To arrive at the fee amount for the various land use categories, the total City-wide SFEs must be divided into the total revenue requirement to arrive at the rate per SFE. Using the analysis above, that calculation is represented by the following formula:
𝑆𝑆𝑆𝑆𝑆𝑆 𝑅𝑅 𝑅𝑅 = 𝐴𝐴𝐴𝐴𝐴𝐴 𝐴𝐴𝐴𝐴 𝑅𝑅 𝑅𝑅 𝑅𝑅 𝑅𝑅
Total SFEs
Based on the numbers from our analysis, the rate per SFE is calculated as follows:
𝑆𝑆𝑆𝑆𝑆𝑆 𝑅𝑅 𝑅𝑅 = $4,769,780
63,931
= $74.61
The SFE rate amount is then multiplied by the SFEs per parcel or acre for the various land use categories to arrive at the updated Stormwater Fees shown in Table 6 (fund all capital projects) and Table 7 (fund high and very high priority projects only).
4 “Vacant” in this Report refers to land that is devoid of improvements. It does not refer to land with vacant buildings or improvements, which would continue to shed water as if they were occupied.
City of San Leandro Stormwater Fee
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Table 6. Proposed Updated Stormwater Fee (FY 2024-25) – Fund All Capital Projects STORMWATER FEE CALCULATION – ALTERNATIVE FUNDING LEVEL
Table 2 summarizes the annual revenue requirement to be funded by the updated Stormwater Fee and presents to scenarios: 1) fund all capital projects (annual revenue requirement = $4,769,780) and 2) fund only high and very high priority projects (annual revenue requirement = $3,191,780). Table 7 summarizes the proposed Stormwater Fees for Scenario 2 – Fund High and High Priority Projects only.
Table 7. Proposed Updated Stormwater Fee (FY 2024-25) – Fund High and Very High Projects Only
ANNUAL ADJUSTMENT
The updated Fee is subject to an annual adjustment tied to the percentage change in the Consumer Price Index-U (CPI) for the San Franciso-area as of December of each succeeding year, with a maximum annual adjustment not to exceed 3.0%. Any change in the CPI in excess of 3.0% shall carryover as “Unused CPI” and may be used to increase the then-current rate in years in which the CPI is less than 3.0%.
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USE OF STORMWATER FEE FUNDS
The City shall deposit into a separate account(s) all Stormwater Fee revenues collected and shall appropriate and expend such funds only for the purposes outlined by this Report. The specific assumptions utilized in this Report, the specific programs and projects listed, and the division of revenues and expenses between the two primary categories (capital improvements and O&M) are used as a reasonable model of future revenue needs and are not intended to be binding on future use of funds.
City of San Leandro Stormwater Fee
Draft Report Appendix A
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Appendix A – List of Planned Capital Projects by Level of Priority