HomeMy WebLinkAboutItem 5e. Adopt a Resolution to amend authorized Private Sewer Lateral Replacement Rebates Item 5e
Department: Utilities
Cost Center: 6104
For Agenda of: 9/3/2024
Placement: Consent
Estimated Time: N/A
FROM: Aaron Floyd, Utilities Director
Prepared By: Chris Lehman, Utilities Deputy Director - Wastewater
SUBJECT: ADOPT A RESOLUTION TO AMEND AUTHORIZED PRIVATE SEWER
LATERAL REPLACEMENT REBATE PROGRAM
RECOMMENDATION
Adopt a Draft Resolution entitled, “A Resolution of the City Council of the City of San Luis
Obispo, California, authorizing amendment of the Private Sewer Lateral Replacement
Rebate Program.”
REPORT-IN-BRIEF
On August 20, 2019, the City Council approved a Resolution to establish a private sewer
lateral replacement rebate program. The intent of the rebate program was to incentivize
private infrastructure replacement to reduce the impact on public infrastructure. Since
then, inflationary impacts have resulted in increased sewer lateral replacement costs. By
increasing the rebate incentive, staff anticipates maintaining or increasing replacements
of private sewer laterals, which reduces treatment and conveyance costs and
environmental and public health impacts associated with sanitary sewer overflows
(SSOs) on the publicly owned wastewater collection and treatment facilities.
POLICY CONTEXT
In May 2018, the City Council approved an update to the Water and Wastewater Element
of the General Plan, which included identifying capacity-constrained areas of the city’s
publicly owned wastewater collection system (Water and Wastewater Element Figure 3:
Wastewater Collection System Capacity Constrained Areas).
The State Water Resources Control Board adopted statewide General Waste Discharge
Requirements (GWDR) for publicly owned wastewater collection systems in 2006, which
was most recently amended on June 5, 2023. The GWDR requires the development and
implementation of a system-specific local sewer system management plan (SSMP) that
documents a comprehensive program for sewer system operation, maintenance, repair,
and reporting of all Sanitary Sewer Overflows (SSOs) in the statewide spill reporting
database. The city is required to comply with these statewide requirements. The City
Council approved San Luis Obispo’s 2019 SSMP on May 7, 2019.
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Addressing wastewater collection system capacity limitations allows for the continuation
of housing development and is supportive of the Housing and Homelessness Major City
Goal.
DISCUSSION
Background
San Luis Obispo has separate stormwater and sanitary sewer systems. Only wastewater
is intended to flow into the sanitary sewer system, which ultimately flows through the
wastewater collection system and into the Water Resource Recovery Facility (WRRF).
With aging sewer infrastructure, cracks due to wear in the materials, root growth, or
improperly plumbed stormwater can enter the wastewater system and cause sewer lines
to exceed their capacity. This excess water from groundwater and stormwater entering
the wastewater collection system is termed Inflow and Infiltration (I&I). High rates of I&I
entering into sewer pipes can exceed the capacity of the city’s wastewater collection
system, leading to system backups and/or wastewater overflows. Overflows occur at
maintenance holes and usually flow to nearby storm drains or creeks. Overflows can also
occur in private homes, resulting in property damage and potential health risks. Overflows
are of considerable concern to the city and its regional regulatory partners. Additionally,
I&I from private infrastructure impacts the city's ability to convey its wastewater safely to
the publicly-owned wastewater treatment plant or Water Resource Recovery Facility, and
the treatment of this excess wastewater flow increases the energy required for pumping
and treatment. I&I also consumes capacity in the wastewater collection system, resulting
in increased capital requirements to increase pipeline size.
Private sewer laterals are the portion of the sewer lines that extend from the connection
at a residence up to and including the point of connection with the publicly owned sewer
main (Figure 1). By city Ordinance, private laterals are the responsibility of the property
owner.1 The city estimates that there are 13,390 private sewer laterals citywide,
approximately 7,000 of which are in capacity-constrained areas. The average length of a
single-family residential private sewer lateral is approximately 65 feet. Based on that
average, the private system of laterals is estimated at an overall 164 miles of pipe. Unlike
public sewer lines, these private sewer laterals are not routinely inspected, maintained,
or repaired/replaced at intervals to ensure they are in good condition.
1 Municipal Code Section 13.08.395 (Private sewer laterals/systems, Ownership, Maintenance, and
Repair)
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Figure 1: Private sewer lateral (yellow) connecting to city sewer main (blue)
Since the onset of the Voluntary Sewer Lateral Replacement (VSLR) rebate program in
1997, only single-family residential sewer laterals have been eligible for rebates, as staff
have aimed to focus limited resources on the oldest infrastructure in town that is known
to have the highest contributions to I&I. On August 20, 2019, the City Council approved
a resolution to establish a Private Sewer Lateral Replacement Rebate program, which
increased rebates available through the VSLR rebate program. Council declared a
primary public purpose in the expenditure of public funds to benefit private interests as
failing private sewer laterals contribute to excess wastewater flows into the publicly
owned wastewater collection system and WRRF, potentially causing or contributing to
overloading of the city’s system.
Since the fall of 2019, approximately 300 rebates have been issued to homeowners for
the replacement of their private sewer lateral. To maintain the effectiveness of the
program, staff are proposing an amended (increased and standardized) private sewer
lateral rebate amount for the replacement of private single-family residential sewer
laterals (Attachment A). The goals of the rebate remain the same - to reduce I&I from
private sewer laterals and reduce the potential for wastewater overflows.
While private sewer lateral replacement project costs vary widely due to San Luis
Obispo's unique and diverse landscape, the construction cost index (CCI) has increased
by 24.22% since September 2019, when the rebate was first authorized. Due to this
increase in CCI, staff are recommending an adjustment to the rebate incentive offered to
homeowners by the city. The amended rebate increases and standardizes the amount
from $3,000 for lateral replacement in capacity-constrained areas and $2,000 for all other
replacements to $4,000 for all replacements, which may not exceed the total cost of the
project. The standardized rebate acknowledges the universal impacts of I&I on the WRRF
and simplifies the administrative process. In addition to the proposed $4,000 rebate,
successful applicants will be reimbursed for the sewer wye connection fee2. As the
impacts of increased construction costs precede this report, the amended rebate program
amount is proposed to be retroactive for work completed from September 3, 2023, to
September 3, 2024. Staff have determined this is a reasonable accommodation that can
be funded through the approved FY 2024-25 budget.
2 The physical connection of the private sewer lateral to the city sewer main is known as the “wye”
connection. The wye connection fee covers the materials and staff labor required for the installation.
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Expanded Rebate Eligibility
Single-family residential intensification projects with required sewer lateral offset
requirements, such as a home remodel or the addition of an Accessory Dwelling Unit
(ADU), are also being recommended to be eligible for rebates. Rebates for single-family
residential sewer lateral replacements conditioned through a Notice to Correct may not
be available but will be conditionally reviewed at the discretion of the Utilities Director.
These projects are currently excluded under the existing Ordinance.
City's Progress in Reducing Sanitary Sewer Overflows
The city has made progress over the years in repairing and replacing the aging
wastewater pipeline infrastructure and reducing overflows. The city has 145 miles of
wastewater pipelines and estimates that there are 164 miles of private laterals, making
over 50 percent of the system privately owned and maintained. The city has collected
condition data of the private wastewater collection system through closed -circuit
television (CCTV) inspections. Approximately 50 percent of the private system has been
inspected through third-party contractors since 2013, with over 800 lateral inspections
completed since September 2019 as a condition of the city’s inspection upon sale
ordinance requirements.3 Based on these condition assessments (Figure 2), significant
repairs will still need to occur to allow for increased intensification and increased housing
development forecasted in the city’s General Plan Land Use and Housing Elements.
Public access to private sewer lateral conditions is available on the city’s website at
https://www.slocity.org/laterals (Figure 3).
3 Municipal Code Section 13.08.395 Private sewer laterals/systems, Inspection of Existing Private Sewer
Laterals
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Figure 2: Private Sewer Lateral Conditions as of August 15, 2024
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Figure 3: Private sewer lateral condition map (slocity.org/laterals), data as of August 12, 2024
Future Private Sewer Lateral Program Considerations
Staff is in the process of completing an updated flow study and hydraulic model (last
completed in 2015) of the entire publicly owned wastewater collection system . This will
update staff’s understanding of current capacity limitations, and staff anticipates
delivering the updated report to the City Council in the spring of 2025. This updated report
will provide clarity on the progress of the city’s Wastewater Flow Offset Program and
current system limitations, which will inform future policy and program decisions as well
as inform decisions on capital projects.
Previous Council or Advisory Body Action
On August 20, 2019, the City Council adopted Resolution No. 11037, Establishing a
Private Sewer Lateral Replacement Program and Eliminating an Existing city Fee for
Sewer Wye Installation (Attachment B). On June 4, 2024, the City Council approved the
2024-25 budget supplement, which provided an increase of $270,000 to incentivize the
reduction of I&I.
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Public Engagement
Staff have discussed the current Wastewater Flow Offset Program (including private
sewer lateral replacement requirements) at the Developers Roundtable with various
realtor groups, home inspectors, residential property managers, developers, and
environmental group representatives. As a result of this outreach and corresponding
feedback, staff were motivated to proceed with the recommendation to increase rebate
amounts. Outreach will continue as staff aim to increase the amount of private sewer
lateral replacements and improve the efficiency and impacts of the program. Staff have
streamlined the rebate application process and created a digital application form that can
be completed online at the city’s website: https://www.slocity.org/lateralrebate.
The city maintains a copy of the 2019 SSMP at the City's Utilities Department (879 Morro,
San Luis Obispo), and the document is also available on the City’s web site. Outreach is
also performed through various city programs, including the Environmental Compliance
(Pretreatment) Program and Capital Improvement Program.
CONCURRENCE
The City’s Community Development and Finance Departments concur with the
recommendations made in this report by the Utilities Department. The City Attorney’s
office concurs with the form of the recommended Resolution.
ENVIRONMENTAL REVIEW
The proposed amended rebates are exempt from the provisions of the Cali fornia
Environmental Quality Act (CEQA), pursuant to the statute (Public Resources Code
Section 21000, et seq.) and the State CEQA Guidelines (14 Cal. Code Regs. 15000 et
seq.). The proposed amended rebate program is exempt from CEQA pursuant to CEQA
Guidelines Sections 15307 (Actions by Regulatory Agencies for Protection of Natural
Resources) and 15308 (Actions by Regulatory Agencies for the Protection of the
Environment) because the intent of the program is to incentivize sewer lateral
replacements and reduce I&I and the potential for SSOs. Actions resulting from the
proposed amended rebate program would result in the replacement of existing private
sewer laterals serving existing development, which are exempt from CEQA pursuant to
CEQA Guidelines Section 15303 (New Construction or Conversion of Small Structures)
because the replaced sewer laterals would serve existing development in existing
urbanized areas, and the replacement of poorly functioning sewer laterals would not have
a significant adverse impact on the environment. Continued implementation of the
program would have a beneficial impact on the environment by reducing the potential for
I&I and overflows due to reduced flows from groundwater and stormwater.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2024-25
Funding Identified: Yes
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Fiscal Analysis:
Funding
Sources
Average
Annual
Rebates1
Retroactive Rebate
Payments2 Total Budget Available
Contingency
Funds
Remaining
Sewer
Fund 97 rebates 32 rebates $250,000
$4,000 $1,000 or $2,000 $220,0003
Subtotal $388,000 $45,000
Total $433,000 $470,000 $37,0004
1. Since the program’s inception on August 20, 2019.
2. Retroactive payments for rebates issued from 9/3/2023 to 9/3/2024 .
3. Additional funding was approved during the FY2024-25 budget supplement.
4. Staff anticipates providing additional rebates for single-family residential intensification projects,
such as some remodels or ADUs, that require offsets. These projects are currently not eligible
for private sewer lateral replacement rebates.
Funding for the amended rebate program is available in the 2023 -25 Financial Plan,
Capital Improvement Program, which was amended to include increased funding as part
of the 2024-25 budget supplement. Rebates would only be provided when funds are
allocated for that purpose within a given budget year. Rebates are proposed to be
available on a first-come, first-served basis by the date of application until the funds are
expended. The amended rebate program amounts are proposed to be retroactive for work
completed from September 3, 2023, to September 3, 2024. If funding is depleted during
the fiscal year of the application, an applicant’s rebate would be placed on a backlog
waitlist for payment in the new fiscal year or after July 1.
ALTERNATIVES
1. Council could decide to dissolve the private sewer lateral rebate program and
direct staff to apply funding to only public infrastructure. Full replacement costs
would be the burden of the property owner. This alternative is not recommended a s it
would likely lead to a reduction in private sewer lateral replacements.
2. Council could decide to maintain the current private sewer lateral rebate
amounts. This alternative is not recommended due to the increased replacement
costs associated with material and labor inflationary trends. These increased costs
disincentivize private property owners from replacing sewer laterals.
3. Council may direct Staff to authorize amended (increased) rebate amounts for
applicants moving forward but not to authorize retroactive payments for the
increased rebate amount. This recommendation is not recommended as the
retroactive rebates will provide reasonable equity to all recently qualified past
applicants.
4. Council may direct staff to explore expanding qualifying private lateral
replacement rebates to include multifamily residential properties. Staff have not
evaluated the potential cost associated with funding this modification to the program.
This alternative is not recommended due to limited funding but may be further
assessed in preparation for the FY2025-27 Financial Plan.
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ATTACHMENT
A - Draft Resolution authorizing amendment of Authorized Private Sewer Lateral Rebates
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R ______
RESOLUTION NO. _____ (2024 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AUTHORIZING AMENDMENT OF THE
PRIVATE SEWER LATERAL REPLACEMENT REBATE PROGRAM
WHEREAS, the City must provide capacity assurance consistent with its adopted
Sewer System Management Plan and Statewide General Waste Discharge
Requirements; and
WHEREAS, the City completed a Sanitary Sewer Flow Monitoring and Inflow/
Infiltration Study in March 2012 that included sanitary sewer flow monitoring, rainfall
monitoring, and inflow and infiltration analysis; and
WHEREAS, the City adopted the Wastewater Collection System Infrastructure
Renewal Strategy on January 19, 2016, which identified areas with capacity constraints
and surcharging in the wastewater collection system during peak wet weather events;
and
WHEREAS, in May of 2018, the City updated its General Plan, Water and
Wastewater Management Element and included areas in the wastewater collection
system with capacity constraints during peak wet weather events; and
WHEREAS, the City has experienced sanitary sewer overflows, which have been
identified as a threat to public health and water quality because of the pathogen s,
pollutants, and nutrients they contain, which have been a focus of State Water Quality
Regulators over the past several years; and
WHEREAS, the City owns, operates, and maintains a sanitary sewer system with
over 145 miles of pipeline and provides wastewater collection services to properties within
the City limits as well as Cal Poly and San Luis Obispo County Airport; and
WHEREAS, a system of approximately 13,390 private sewer laterals, estimated to
equal an additional 164 miles of pipeline, is owned and maintained by property owners;
and
WHEREAS, private sewer laterals contribute significant inflow and infiltration ,
contributing to capacity constraints, surcharging, and overflows in the wastewater
collection system during peak wet weather events; and
WHEREAS, the City would like to encourage the timely replacement of private
sewer laterals; and
WHEREAS, the City’s Private Sewer Lateral Replacement Rebate Program was
created to accelerate the replacement of aging private infrastructure that impacts public
infrastructure; and
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Resolution No. _____ (2024 Series) Page 2
R ______
WHEREAS, the amendment of the Private Sewer Lateral Replacement Rebate
Program will provide funding assistance to property owners for their private sewer lateral
replacement; and
WHEREAS, funding for the Private Sewer Lateral Replacement Rebate Program
is identified in the City's Capital Improvement Program and provided by the City's Sewer
Fund.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. The City Council hereby amends the Private Sewer Lateral
Replacement Rebate Program using funding from the Sewer Fund and authorizes the
Utilities Director to implement the program as follows:
a) The sewer lateral replacement must be permitted through the City of San Luis
Obispo Community Development Department.
b) The Private Sewer Lateral Replacement Rebate Program only applies to those
sewer laterals, which are replaced in their entirety from the structure up to and
including connection with the City main; spot repairs and partial repairs are not
included in this program.
c) Verification of installation, inspection, and approval of completed work by the
City is required.
d) For property owners of single-family residences, the Private Sewer Lateral
Replacement Rebate will be a maximum of $4,000, which may not exceed the
cost of the project. All rebates are subject to available funding.
e) The property owner must submit a dated, detailed sales receipt for proof of
purchase with the Private Sewer Lateral Replacement Rebate Application. The
purchase of the private sewer lateral replacement must be clearly itemized on
an invoice. A copy of the property owner’s W9 must be sub mitted with the
application.
f) The Private Sewer Lateral Replacement Rebate may take four weeks or more
from the date the rebate application is filed.
g) Private Sewer Lateral Replacement Rebates will only be provided to the
property owner.
h) Only one Private Sewer Lateral Replacement Rebate will be provided over the
lifetime of the property.
i) The Private Sewer Lateral Replacement Rebate Program is only in effect when
funds are allocated for that purpose within a given budget year. Sewer Lateral
Replacement Rebates will be available on a first-come, first-served basis from
the date of application until the funds are expended. If funding runs out during
the fiscal year, an applicant may be required to wait for a future year of rebate
funding.
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Resolution No. _____ (2024 Series) Page 3
R ______
j) One-time retroactive rebate funds will be dispensed for all Private Sewer
Lateral Replacement Rebates issued from September 3, 2023, to September
3, 2024, to increase the total incentive amount paid to $4,000.
k) Private Sewer Lateral Replacement Rebates may not be available to property
owners to replace their private sewer lateral as part of a Notice to Correct
condition. This allowance will be applied at the discretion of the Utilities Director
based on previous enforcement compliance history.
l) As an incentive to replace private sewer laterals and reduce inflow and
infiltration, the collected city fee for sewer wye installations will be refunded for
all qualifying rebate applications.
SECTION 2. The City Council hereby declares a primary public purpose in the
expenditure of public funds to benefit private interests as failing private sewer laterals
contribute excess water to the public wastewater collection system and Water Resource
Recovery Facility and potentially cause or contribute to the overloading of the City's
(public) system. The inflow and infiltration from laterals can lead to sanitary sewer
overflows, resulting in damage to surrounding properties, public health risks, and
environmental degradation.
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Resolution No. _____ (2024 Series) Page 4
R ______
SECTION 3. Resolution Number 11037 (2019 Series) is hereby amended and
superseded to the extent inconsistent herewith.
Upon motion of Council Member ___________, seconded by Council Member
___________, and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this ______ day of _______________ 2024.
___________________________
Mayor Erica A. Stewart
ATTEST:
______________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
______________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on ______________________.
___________________________
Teresa Purrington
City Clerk
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