HomeMy WebLinkAbout03/26/2002, B-1 - CREEK AND FLOOD PROTECTION FUND council W°fi 3" z oz
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C I T Y O F SAN L U IS OBISPO
FROM: Michael D. McCluskey, Public WorDirector
Prepared By: David Elliott,Administrative Analyst
SUBJECT: CREEK AND FLOOD PROTECTION FUND
CAO RECOMMENDATIONS:
1. Pending formal adoption of fees in May 2002,conceptually approve:
a. An advanced level of creek and flood protection services.
b. A user fee structure to cover the costs of an advanced service level for creek and flood
protection.
c. A strategy for gradually phasing in creek and flood protection user fees while phasing out
general fund transfers to the Creek and Flood Protection Fund.
2. Provide direction for:
a. Further refinements to the fee structure.
b. Additional consultation with stakeholders.
REPORT IN BRIEF
Over the last seven years,two major challenges have arisen with the City's creek and flood
protection systems. First,heavy rainstorms in 1995 and 1997 showed that the community was still
vulnerable to flood damage, despite implementation of many flood protection improvements
recommended in the 1983 Flood Management Policy. And second,the City learned that it would
be subject to National Pollution Discharge Elimination System (NPDES) regulations that require
significant ongoing activities to reduce the level of pollutants discharged from storm drainage
systems into natural waterways.
The City now spends $372,300 per year to clean storm drain inlets, clear creek channels, sweep
streets, replace substandard catch basins, replace inadequate storm sewers, and remove silt from
creeks. But these efforts are not nearly enough to resolve the creek and flood protection
challenges now facing the community. Since 1995 the City has been actively planning.for several
new initiatives to correct flooding problems and comply with NPDES regulations. These initiatives
include eliminating harmful discharges to the creek system, educating the public about creek
protection, increasing the replacement of deficient storm drains, and constructing projects that will
improve flow capacity in the creeks while protecting or enhancing natural habitat. The ultimate
cost of implementing these new initiatives will be an estimated$917,800 per year.
To finance these initiatives, over the past year the Council conceptually approved formation of a
Creek and Flood Protection Fund and directed staff to develop a user fee structure and recommend
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fee levels. Following this direction, a team of City employees developed a fee structure based on
the percentage of impermeable area for parcels within four broad categories of land use: single-
family residential,multi-family residential,educational, and other non-residential. The team also
setup a schedule for gradually phasing in new initiatives and phasing out General Fund support for
the new Creek and Flood Protection Fund. This analysis led to the following recommended fees:
Flat Fee per Month
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Single-Family Residential $1.00 $1.75 $2.50 $3.25 $4.00 $4.50
Multi-Family Residential $0.23 $0.41 $0.59 $0.76 $0.94 $1.05
Fee per Month per 1,000 Square Feet of Parcel Area
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Educational $0.03041 $0.05270 $0.07601 $0.09831 $0.12162 $0.13683
Other Non-Residential $0.15097 $0.26415 $0.37744 $0.49061 $0.60379 $0.67928
These fees will allow all proposed new initiatives to be phased-in over a five-year period. At the
end of that phase-in period, Creek and Flood Protection services will fall between an advanced
and exceptional level, as defined by the U.S. Environmental Protection Agency (EPA). Given
the environmental sensitivity of the San Luis Obispo Creek watershed and the role that this
watershed plays in defining the quality of life for San Luis Obispo, an advanced or exceptional
service level is appropriate and desirable for the community.
DISCUSSION
Background
In 1969 and 1973 the City was overwhelmed by massive storms that caused extensive damage to
property and creek systems. The public demanded new initiatives and the Council responded
with creation of the 1983 Flood Management Policy (the "Pink Book_"), which listed numerous
projects to help avert future damage from flooding.
Over the last seven years, the San Luis Obispo community received two wakeup calls about its
creek and flood protection systems. The first call occurred during the heavy rainstorms of 1995
and 1997, when severe flooding and erosion showed that the community was still vulnerable to
storm damage despite aggressive implementation of the Pink Book recommendations.
Preliminary inspection of a small sample of storm drainage facilities after the 1995 storms
revealed widespread and systematic failure. Rock guards, catch basins, and storm sewers —
particularly in areas away from the downtown were too small or were clogged with debris or
had deteriorated to the point of near total obstruction. A typical example was a section of
corrugated metal pipe where the entire bottom section of pipe had corroded away, causing the
pipe to collapse and restrict storm water flow to practically nothing.
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Also, the community was reminded that extensive improvements to storm drainage facilities
were of limited value in some areas because they simply dumped more water into severely
restricted creek channels. Deficiencies in the condition of storm drainage facilities and in the
capacity of waterways caused not only extensive flooding and erosion, but also property damage,
traffic disruption, and a general upheaval of life and business within the City.
The second wakeup call came in 1999 when the EPA issued notification that starting in March
2003 a new level of cities and counties (including the City of San Luis Obispo) would be subject
to NPDES regulations. These regulations require ongoing activities to reduce the level of
pollutants discharged from storm drainage systems into natural waterways. Many undesirable
materials (dirt, motor oil, detergents, and residues from pesticides, herbicides, and fertilizers) are
being picked up by storm water and introduced into waterways through storm drainage systems.
These materials cause problems ranging from wildlife habitat destruction to public health
hazards. They also impede ongoing efforts to restore and enhance wildlife habitat.
Erosion and runoff is the number one cause of creek and ocean pollution. It is serious and
deserves nationwide attention. Although the San Luis Obispo community has made some strides
in the past to prevent this kind of pollution (through activities like inspection programs and
community creek clean-up days), the NPDES requirements substantially raised the bar for this
effort. These regulations require various ongoing activities intended to reduce the level of
pollutants discharged into the storm drain system and eventually into natural waterways. These
NPDES activities include:
1. Educating the public about creek protection.
2. Encouraging public participation in creek protection activities.
3. Eliminating illicit discharges to the storm drainage system.
4. Controlling construction site runoff to the storm drainage system.
5. Continually controlling site runoff from newly developed property after construction.
6. Improving municipal operations to reduce pollution discharges.
7. Monitoring compliance with regulations and documenting progress on these efforts.
What is the City Doing Now?
Before focusing on new initiatives, the City should look at what is already being done:.
Substantial ongoing program activities and projects are in place and focus on cleaning storm
drain inlets, clearing creek channels, regularly sweeping streets, replacing substandard catch
basins,replacing inadequate storm sewers, and removing silt from creeks.
1. Cleaning Storm Drain Inlets. Every October before the first fall rainstorms, a Public Works
maintenance crew cleans out all catch basins in the downtown commercial core as well as a few
storm drain inlets in outlying areas where accumulated debris has caused repeated flooding
problems in the past.
Annual Cost: $21,700 including indirect costs.
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2. Clearing Creek Channels. Every year from April to October, Public Works maintenance
workers, with assistance from California Conservation Corps crews, get down into creek areas
and perform various tasks to maintain storm water flow capacity. These tasks include cutting
back exotic vegetation, clearing large obstructions like fallen trees, and removing debris or
refuse. In addition, these workers spray herbicide to eradicate giant reeds and other exotic
plants. This spraying helps maintain flow capacity to some extent by limiting overall vegetative
growth, and it also protects native plants and wildlife habitat from being overrun by exotics.
This work is closely coordinated with and monitored by the City's Natural Resources Protection
staff.
Annual Cost: $75,100 including indirect costs.
.3. Sweeping Streets. Street sweeping is usually viewed as an aesthetic benefit,but it also helps
prevent creek pollution. Many materials detrimental to the San Luis Obispo Creek watershed are
deposited onto City streets through various routine daily activities. For example, merchants
sweep the sidewalks in front of their stores and push silt into the street gutters. Vehicles parked
in the street leak motor oil that collects on the street surface. People wash their cars in their
driveways and the rinsed-off detergent runs into the street. Gardeners spray their yards with
pesticides, herbicides, and fertilizers, and the residues from these chemicals are washed into the
street through irrigation runoff and storm water. These materials get mixed in with debris that
can be swept up by a street sweeper before rain washes it all into a storm drain and eventually
into a creek, where it can harm wildlife habitats and create health hazards. Public Works crews
sweep streets at these frequencies:
Streets in the downtown commercial core: seven days per week
Arterial and major collector streets: two days per week
Residential streets: once every four weeks
Annual Cost: $117,500 including indirect costs.
5. Replacing Substandard Catch Basins. Poorly designed and undersized catch basins easily
become clogged with debris and stop functioning. Storm water then backs up and floods the
surrounding streets and properties. The City replaces 12 to 15 of these substandard catch basins
each year with better designed and more correctly sized structures..
Annual Cost: $50,000.
6. Replacing Inadequate Storm Sewers. Areas served by damaged or undersized storm sewers
are subject to chronic flooding during even moderate rainfall. Each year the City typically
replaces one deficient storm sewer or installs a new storm sewer in an area where none exists.
Annual Cost.: $92,500 (average of 2001-02 and 2002-03 appropriations).
7. Removing Silt from Creeks. Silt carried by storm water repeatedly settles in certain areas of
creeks. As these deposits continue to build up, the capacity of the creek decreases; and flooding
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of the surrounding area becomes more likely. This siltation must be periodically removed to
prevent flooding.
Annual Cost: $15,500 (average of 2001-02 and 2002-03 appropriations).
What More Should the City Be Doing?
The challenges of chronic flooding and waterway pollution are not insurmountable. They can be
resolved through a determined and systematic program of increased maintenance, additional
capital improvement, stepped up enforcement, and public education.
In immediate response to the storms of 1995 and 1997, the City replaced some obviously and
severely deficient storm drainage facilities and repaired extensive erosion damage to creek
banks. And then, with Council direction and approval, the. City also began identifying what
additional activities and projects would be needed over the long term to best manage creek and
flood protection systems. This work included five tasks:
1. Outlining the activities and costs needed to comply with NPDES regulations (completed).
2. Precisely determining the location, description, and condition of all storm drainage facilities
within the City(95 percent completed).
3. Mapping the information gathered about the storm drainage facilities into the City's
geographic information system (95 percent completed).
4. Prioritizing storm drainage repair and replacement projects (in progress).
5. Defining projects that could increase flow capacity in waterways while protecting or
enhancing the creek environment (completed).
From this work Public Works has defined six new creek and flood protection initiatives, which
are described in the following paragraphs.
1. Eliminating Illicit Discharges, Controlling'Site Runoff, and Performing Administrative Tasks
(Required by NPDES). An illicit storm drain discharge is any discharge to the storm drainage
system that is not composed entirely of storm water. (This definition assumes that introducing
any foreign matter is potentially detrimental to the creek system.) Such discharges may enter the
system through direct connections (inadvertent or deliberate) or indirect connections (like spills
of harmful materials that eventually migrate into storm sewers). This initiative will include
conducting field surveys to identify illicit discharges and then working with the parties involved
to eliminate those discharges.
Soil disturbance associated with construction activity increases the likelihood of erosion and the
possibility for sediment to be washed into storm drains and eventually into the creek system
where it can degrade water quality. This initiative will implement regulatory activities to control
runoff from construction sites where areas one acre and larger are graded. These activities will
include reviewing site plans, inspecting construction sites, and enforcing runoff control
requirements after construction is completed. Existing City development regulations require an
erosion control plan for sites where areasfive acres and larger are graded. Existing regulations
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do not provide for post-construction runoff control.
Where permanent on-site runoff control systems are built as part of a development project, this
initiative will provide for periodic inspections to ensure that these systems are well maintained
and that they continue working effectively.
In addition to these activities,this initiative will include various administrative tasks such as:
a. Preparing ordinances, operations manuals, inspection procedures, and other documents
needed to implement expanded program activities.
b. Preparing the NPDES permit application, goals, and annual compliance reports.
c. Training City maintenance crews about how to reduce pollution discharges and control
erosion in creeks.
d. Coordinating the creek protection activities to be conducted in Public Works, Utilities,
Fire, Community Development, and Administration Departments.
Annual Cost: $111,700 to pay for a project coordinator at the Engineering Associate level and
associated indirect costs.
2. Encouraging Public Participation in Creek Protection. Activities (Required by NPDES).
While the City can more aggressively identify and abate illicit storm drain discharges, that effort
can be productively leveraged through voluntary public cooperation and participation. This
initiative will invite such participation by:
a. Targeting specific audiences (e.g., industries, homeowners, schools) and conducting on-
site workshops about how to reduce discharges of pollution into storm drains and water-
ways.
b. Providing direct assistance to individual homeowners about caring for adjacent creeks
and about properly using fertilizers, pesticides, paints, solvents, and other chemicals.
c. Organizing volunteer participation in activities such as storm drain inlet stenciling and
creek cleaning.
The Natural Resources Manager and the City Biologist can provide the staffing for this initiative.
Annual Cost: $6,800 to pay for presentation materials and associated indirect costs.
3. Educating the.Public about-Creek Protection (Required by NPDES). This initiative is similar
to the previous one, except that it will be aimed toward a larger, more general audience. It will
include the following activities:
a. Printing and distributing brochures, posters, and fact sheets about creek protection.
b. Placing newspaper, billboard, radio, and television advertisements about creek protection.
The Natural Resources Manager and the City Biologist can provide the staffing for this initiative.
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Annual Cost: $34,200 to pay for printing and advertising and associated indirect costs.
4. Inspecting and Cleaning Catch Basins and Storm Sewers.(Required by NPDES). Since
Summer 2001 Public Works has been carrying out a project to inspect and inventory storm
drainage facilities within the City. This project has revealed many catch basins and storm drain
pipes so clogged with dirt and debris that storm water flow is severely hindered or completely
blocked. The primary consequence is flooding that damages property, disrupts traffic, and upsets
the community's normal routines. A secondary consequence is that storm water bypasses the
storm drain system and finds another way to get to the creek system.
Preventing this secondary consequence will become more critical in the future, as the City begins
to install filtering structures in storm drains in order to capture pollutants before they enter
creeks. If catch basins and storm drains are clogged, runoff cannot be confined and directed
through the filtering structures. The easiest way to keep catch basins and storm drains clear is
through regularly scheduled cleaning with a vacuum flusher truck like the one used by the
wastewater collection maintenance crew. Unfortunately, the wastewater collection flusher truck
is currently scheduled for almost continuous use and cannot be shared for regular storm drain
cleaning activities. Adding a second vacuum flusher truck to the fleet and hiring a half-time
operator will allow systematic annual inspection and cleaning of all catch basins (not just those
in the downtown commercial core) and all storm sewers in the City. Benefits will include less
flooding and more effective operation of filtering structures to keep pollutants out of the creeks.
Annual Cost: $44,300 to pay for one-half Heavy Equipment Operator and associated indirect
costs.
One-time Cost: $150,000 to buy a vacuum flusher truck.
5. Increasing the Replacement and Improvement of Inadequate Storm Sewers. The inspection
and inventory project has also identified widespread deterioration of storm sewers, particularly
those constructed over 40 years ago from corrugated metal pipe. The following four specific
projects have already been identified, and more will be proposed as the inventory is completed:
a. Constructing a storm sewer in Bridge .Street between Beebee and Higuera at a cost of
$264,000.
b. Replacing a storm sewer in El Cerrito Street at a cost of$89,000.
c. Replacing a storm sewer in Johnson Avenue at Bishop at a cost of$25,000.
d. Replacing a storm sewer in Murray Street between Santa Rosa and Chorro at a cost of
$190,000.
On average the City has tried to budget for one storm sewer replacement or improvement project
each year, but major projects continue to be deferred because money is not available. At this rate
existing storm sewers will completely fail faster than they can be replaced. Raising the annual
appropriation for this purpose from $92,500 to $350,000 will help correct severe flooding
problems more quickly.
Additional Annual Cost: $257,500.
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6.. Constructing Creek Flow Capacity Improvement Projects. An extensive study of the San
Luis Obispo Creek watershed has identified the following projects that will improve flow
capacity in the creeks while protecting or enhancing natural habitat:.
a. Replacing bridges over Stenner Creek at a cost of$811,000.
b. Constructing a detention basin on San Luis Obispo Creek upstream from Cuesta Park at a
cost of$12,000,000.
c. Widening San Luis Obispo Creek between Elks Lane and Prado Road to accommodate a
25-year storm at a cost of$5,550,000.
d. Widening San Luis Obispo Creek at Los Osos Valley Road to accommodate a 25-year
storm at a cost of$890,000.
e. Excavating the Mid-Higuera Floodplain on San Luis Obispo Creek to accommodate a 25-
year storm at a cost of$3,800,000.
f. Widening San Luis Obispo Creek between Elks Lane and Prado Road to accommodate a
100-year storm at a cost of$8,500,000.
g. Widening San Luis Obispo Creek at Los Osos Valley Road to accommodate a 100-year
storm at a cost of$1,300,000.
These are expensive, long term projects that will probably be have to be built with debt
financing. The annual debt service cost recommended below will finance about $3 to $4 million
worth of construction.
Annual Cost: $350,000 in debt service.
What If the City Does Nothing More?
Flood protection efforts tend to run in cycles. Heavy storms hit a community and cause severe
damage and disruption. The community then responds by spending a significant amount of time
and money in the short term to repair damage and by developing long-term plans for resolving
persistent underlying problems. Unfortunately, because flood protection systems work
flawlessly when it does not rain hard, complacency creeps in, and long term plans never get
completed or implemented. Then heavy storms hit, and the cycle starts over.
If this cycle is not broken in San Luis Obispo, uncontrolled storm water will continue to damage
property and threaten-lives. Flooring and furnishings in homes and businesses will be damaged.
Valuable landscaping in yards and parks will be destroyed. Flooded streets will cause traffic
accidents and delays. Economic productivity will suffer as the community stops to prepare for
incoming storms, respond to emergencies, and repair damage.
In addition,the ecology of the San Luis Obispo Creek watershed will continue_ to deteriorate.
Harmful bacteria and chemicals will pollute the watershed. Creek banks will erode,washing
sediment into the creek beds and degrading water quality. Wildlife habitat will deteriorate. And
efforts to restore watershed area to its natural state will be hampered.
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How Can the City Finance All these Proposed New Initiatives?
The key to breaking out of this recurring cycle is finding a way to finance implementation of the
plans now in place. But doing that raises several questions. What level of service should be
offered? When should new initiatives be started? Should these efforts be financed through taxes
or fees? If fees are the method chosen, how much should they be? Fortunately, the Council has
laid the groundwork here by taking the following policy actions over the past year:
1. Reviewed a report recommending that user fees and an enterprise fund would be the best
means of financing new creek and flood protection initiatives, including activities required
byNPDES. (April 200 1)
2. Conceptually approved formation of a new enterprise fund by July 2002 and authorized staff
to develop a user fee structure and recommend fee levels. (Apri12001)
3. Approved formation of a.Creek and Flood Protection enterprise fund as a key component of
the Flood Projection Major City Goal in the 2001-02 Financial Plan. (See page B-37 of the
Financial Plan.) (June 200 1)
4. Appropriated $75,000 in the 2001-02 Financial Plan for selecting a method of setting Creek
and Flood Protection Fund fees and preparing the City's utility billing system to collect those
fees. (See page D-74 of the Financial Plan and pages 56-57 of Appendix A to the Financial
Plan.) (June 2001)
This direction has led to the recommended creation of a new enterprise fund: the Creek and
Flood Protection Fund. The name was carefully chosen. The creek system is integral to the
City and its image, and protecting that resource is a key value in the community. Also, given the
City's history of severe flooding and property damage, a high profile for flood protection was
also necessary.
How Should Creek and Flood Protections Fees be Calculated?
In developing any new fee to support new public initiatives, many factors have to be considered.
What follows is a review of the steps taken to arrive at the recommendations included in this
report.
Preliminary Apportionment of Cost. To work out the details of forming a new enterprise fund
and developing a fee structure, Public Works convened a team of employees from Public Works,
Finance, and Administration. This fee development team established the following criteria for
the fee structure and its accompanying billing system:
I. The fees should be equitable and relatively modest.
2. The fees should be easy to understand.
3. The fee structure should comply with the requirements of Proposition 218.
4. The billing system should be easy to administer.
5. Fees should be collected through the existing utility billing system.
Experience in other cities has shown that a fee generally based on a developed parcel's imper-
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meable area is the most fair and equitable means of spreading cost among ratepayers. This
approach makes sense because what creates the need for a creek and flood protection system is
development of buildings, driveways, parking lots, and other features that cause storm water to
run off parcels rather than be absorbed through the soil. Therefore, properties with larger
developed impermeable areas should theoretically bear a proportionately larger share of creek
and flood protection costs. Ideally, the fee for each parcel would reflect exactly the ratio of
impermeable area on the parcel to the total impermeable area within the City. But calculating
the impermeable area for each parcel and setting up a billing system based on such calculations
would be far too complex and cumbersome to be practical. In setting user fees, the commonly
accepted standard is that they should"reasonably"—not "perfectly"—reflect costs and benefits.
To balance equitability and practicality, the fee development team came up with a fee structure
based on the percentage of impermeability for all parcels within four broad categories of land
use:
I. Single-family residential
2. Multi-family residential (which includes mobile home parks)
3. Educational
4. Other non-residential (which includes office, retail, commercial, industrial, and government,
and institutional).
In the first stage of this process, GIS technicians in Public Works analyzed satellite images and
created an electronic map showing permeable and impermeable surface areas over the entire city..
On top of this map the technicians overlaid a map of current land uses to determine the share of
impermeable area attributable to each account category. At the same time, open space areas and
vacant parcels were backed out of the calculations because these undeveloped properties do not
contribute to an increase in storm water runoff. Also, paved streets were excluded because they
actually function as part of the storm drain system by collecting storm water and directing it to
catch basins. The resulting calculations yielded the following apportionment of impermeable
area:
Share of
Account Impermeable
Category Area
Single-Family Residential 35.9%
Multi-Family Residential 9.4%
Educational 4._1%
Other Non-Residential 50.6%
Total 100.0%
This preliminary apportionment showed that all the single-family residential parcels together
should bear 35.9 percent of creek and flood protection costs, all multi-family parcels together
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should bear 9.4 percent, etc.
(Incidentally, this analysis of satellite imagery was so technically complex that Public Works
originally allocated $50,000 of the $75,000 appropriation mentioned above to have a consultant
perform the task. When the GIS technicians stepped up and performed this work, they spent only
$11,000 for satellite images and software, saving the City about $39,000 in out-of-pocket contract
expense.)
Adjusted Apportionment of Cost. Extrapolating fees from the preliminary apportionment of cost
resulted in extraordinarily high fees for San Luis Coastal Unified School District. This situation
occurred because most of the area in the educational category belongs to the school district, and
there are only a handful of accounts over which to spread the cost. To mitigate the impact of these
fees for the school district, the fee structure was adjusted in order to transfer 75 percent of the
educational category's apportionment to the residential accounts.. Although the actual percentage is
somewhat arbitrary,the partial transfer makes sense for four reasons:
1. Because residences create the need for schools and are the primary beneficiaries of school
services, residential parcels should share the costs of managing the runoff created by.school
parcels.
2. Most of the school parcels are used formally and informally for recreation not related to
school activities. Because residents are the primary users of school property for this purpose,
they should share the costs of managing the runoff created by school parcels.
3. There are so many residential accounts that the transfer results in relatively small increases to
residential fees.
4. Because the schools serve students outside the city limits, part of the educational cost
apportionment should remain with the school district and not be transferred to city resi-
dences. Having 25 percent of the apportionment remain with the school district reasonably
acknowledges this situation.
This transfer resulted in the following adjusted apportionment.of cost:
Account Share of
Category Cost
Single-Family Residential 38.3%
Multi-Family Residential 10.1%
Educational 1.0%
Other Non-Residential 50.6%
Total 100.0%
Residential areas are generally similar enough in size that flat fees for single-family and multi-
family residential accounts would be fair and would simplify billing. On the other hand, parcel
size vanes .so widely among educational and other non-residential accounts that fees for those
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accounts should be based on actual parcel size to be equitable.
Factors Affecting Fee Levels
Assuming that all proposed. new initiatives will be implemented, establishing appropriate fee
levels.depends two factors:
1. The rate that new program activities and projects should be phased in order to cushion the
effects of new fees
2. The rate that General Fund support should be phased out to make the new enterprise fund
self-sustaining.
Phasin¢ In New Creek and Flood Protection Initiatives. Current concern about the State
economy and growing uncertainty about the local economy make this an awkward time to
propose new fees, even for important public safety improvements and enhancements to quality of
life. For this reason, the fee development team recommends phasing in new creek and flood
protection initiatives, as well as the fees to pay for them, over a reasonable period of time. With
that in mind, the team recommends the following phase-in strategy:
Start Description of
Date New Initiative
January 2003 Begin eliminating illicit discharges, controlling site runoff, and performing
administrative tasks (required by NPDES).
January 2003 Begin educating the public about creek protection (required by NPDES).
July 2003 Increase outlays for:replacement and improvement of inadequate storm sewers
to a level of$350,000 year._
January 2003 Begin encouraging public participation in creek protection activities (required
-by NPDES .
July 2004 Enhance public education and participation efforts (required by NPDES).
October 2004 Begin inspecting and cleaning catch basins outside the downtown and all storm
sewers (required byNPDES)..
July 2005 Set aside.$230,000 for constructing creek improvementprojects.
July 2006 Begin setting aside $350,000 each year for constructing creek flow capacity
improvement projects.
With this phase-in strategy, all activities and ongoing projects needed for an advanced level of
service would be up and running within five years.
Phasing Out General Fund Support. There is an inverse relationship between the level of fee
revenue collected and the level of General Fund transfers needed to the Creek and Flood
Protection Fund. The fee development team recommends that fee levels increase gradually so
that annual General Fund contributions will gradually diminish and disappear by 2006-07, when
all proposed activities and ongoing projects would be implemented. By 2007-08 the Creek and
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Page 13
Flood Protection Fund would be self-sustaining and would be able to retain a reserve amounting
to at least 20 percent of operating costs, as required by City budget policy.
What Fees Are Being Recommended?
Based on the recommended fee structure and the recommended phasing strategies, the fee
development team recommends the Creek and Flood Protection Fund fees shown in the
following tables:
Fees for Residential Accounts
Flat Fee per Month
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Single-Family Residential $1.00 $1.75 $2.50 $3.25 $4.00 $4.50
Multi-Family Residential* $0.23 $0.41 $0.59 $0.76 $0.94 $1.05
*per unit; includes mobile home parks
Fees for Non-Residential Accounts
Fee per Month per 1,000 Square Feet of Parcel Area
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Educational $0.03041 $0.05270 $0.07601 $0.09831 $0.12162 $0.13683
Other Non-Residential $0.15097 $0.26415 $0.37744 $0.49061 $0.60379 $0.67928
Effects of Bi-Monthly Billing. The City's utility billing system is now set up to issue bills every
two months. Although the possibility of switching to monthly billing is scheduled for Council
consideration in May 2002, implementation is unlikely until 2003-04 at the earliest, even if the
Council chooses to make this change. Consequently, for at least the first couple of years,
ratepayers would see bi-monthly bills with two months worth of fees on each bill. For example,
in the first year, single-family residential accounts would pay $2.00 every two months, rather
than$1.00 each month.
Financial Projections. The recommended fees along with the recommended phase-in strategy
would result in the following financial projections for the Creek and Flood Protection Fund:
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Expenditures $669,400 $734,200 $1,008,600 $1,265,000 $1,274;800 $1,290,100
Less Fee Revenue -285,800 -505,000 -721,600 -938,000 -1,154,600 -1,298,800
Less Zone 9 Revenue -100,000 -100,000 -100,000 -100,000 -100,000 -100,000
General Fund Subsidy $283,600 $129,200 $187,000 $227,000 $20,200 0
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Council Agenda Report-Creek and Flood Protection Fund
Page 14
Although the Zone 9 revenue available to the City has remained at $100,000 for several years,
there is some uncertainty about the long-term continuation of this revenue source at its current
levels.
What Are Examples of Fees Proposed for Various Non-Residential Accounts?
Fees for non-residential accounts will vary according to parcel size. The following tables show
what the recommended fees would amount to for various non-residential ratepayers:
Fees for.San Luis Coastal.Unified School District
Fee per Month
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Bishop's Peak Elementary $14.47 $25.08 $36.17 $46.78 • $57.87 $65.11
C.L. Smith Elementary $15.40 $26.68 $38.49 $49.78 $61.58 $69.28
Hawthorne Elementary $6.02 $10.43 $15.04 $19.45 $24.06 $27.07
Pacheco Elementary $11.51 $19.94 $28.77 $37.20 $46.03 $51.78
Sinsheimer Elementary $55.30 $95.85 $138.25 $178.80 $221.19 $248.84
Teach Elementary $12.36 $21.42 $30.89 $39.96 $49.43 $55.61
Laguna Middle School $32.13 $55.69 $80.32 $103.89 $128.52 $144.58
SLO High School* $86.75 $150.37 $216.88 $280.50 $347.01 $390.39
Pacific Beach High School $8.54 $14.79 $21.34 $27.60 $34.14 $38.41
All San Luis Coastal USD $242.46 $420.26 $606.15 $783.95 $969.83 $1,091.06
*includes administrative offices and the old SLO Junior High School
Examples of Fees for Other Non-Residential Accounts
Fee per Month
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Average Non-Residential Fee $7.64 $13.36 $19.09 $24.82 $30.54 $34.36
Restaurant(average size) $1.77 $3.10 54.43 $5.76 $7.09 $7.97
Restaurant(small size) $0.47 $0.82 $1.17 $1.52 $1.87 $2.11
Fast Food Restaurant $2.77 $4.84 $6.92 $9.00 $11.07 $12.46
Shoe Store $1.05 $1.84 $2.63 $3.42 $4.21 $4.73
Gift Shop $0.32 $0.57 $0.81 $1.05 $1.29 $1.45
Home Furnishings Stdre $0.35 $0.61 $0.87 $1.13 $1.39 $1.57
Bank Branch $14.65 $25.63 $36.61 $47.59 $58.57 $65.90
Gas Station(large size) $3.38 $5.91 $8.44 $10.97 $13.50 $15.19
Council Agenda Report-Creek and Flood Protection Fund
Page 15
Examples of Fees for Other Non-Residential Accounts (continued)
Gas Station(average size) $1.98 $3.47 $4.96 $6.45 $7.93 $8.93
Church(average size) $12.21 $21.36 $30.52 $39.67 $48.82 $54.93
Church(large size) $23.57 $41.24 $58.92 $76.59 $94.26 $106.05
Newspaper $41.10 $71.92 $102.76 $133.57 $164.38 $184.93
Auto Dealer(average size) $19.66 $34.39 $49.14 $63.88 $78.61 $88.44
Auto Dealer(large size) $26.68 $46.68 $66.69 $86.69 $106.69 $120.03
Chain Grocery Store $24.72 $43.25 $61.80 $80.33 $98.86 $111.22
Manufacturer(large size) $47.95 $83.89 $119.87 $155.81 $191.75 $215.72
Manufacturer(small size) $1.67 $2.92 $4.17 $5.42 $6.67 $7.50
Construction Contractor $8.11 $14.18 $20.26 $26.34 $32.42 $36.47
Mini Storage Facility $4.82 $8.44 $12.06 $15.68 $19.29 $21.70
Big Box Store $97.67 $170.88 $244:17 $317.38 $390.60 $439.43
Fees for City Accounts
To better put fees for City accounts into a budget perspective, they are shown in the following
table as total fees to be paid each year-
Fees per Year
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Water Fund $218 $382 $546 $709 $873 $982
Sewer Fund $1,140 $3,044 $4,349 $5,653 $6,957 $7,827
Parking Fund $886 $1,551 $2,216 $2,880 $3,545 $3,988
Golf Fund $2,446 $4,280 $6,116 $7,950 $9,784 $11,007
General Fund $18,131 $31,724 $45,330 $58,921 $72,514 $81,580
General Fund(buildings only) $6,336 $11,087 $15,842 $20,592 $25,342 $28,510
General Fund(parks only) $11,795 $20,637 $29,488 $38,330 $47,172 $53,070
Council Agenda Report—Creek and Flood Protection Fund
Page 16
Other cities that have formed creek and flood protection utilities and charged user fees to finance
the activities of such utilities have also provided a way for ratepayers to appeal fee calculations
and assessments. The fee development team is examining the appeal mechanisms in these cities
and will recommend an appropriate means for appeal when the Creek and Flood Protection fees
are formally presented to the Council for adoption in May 2002.
What Level of Service Will the Recommended Fees Allow?
The EPA has calculated broad cost estimates for managing watersheds — including both creek
protection and flood control — at various service levels. Findingsare shown in the following
table:
Cost
Service Examples of Service Activities per Acre
Level cumulative er Year
Incidental Running storm water in wastewater sewers $20
Running storm water in ditches
Minimum Preventing floods $50
Running storm water in dedicated storm water pipes
Moderate Preventing erosion damage in waterways $100
Building storm water detention facilities
Advanced Keeping pollution out of waterways $150
Restoring and preserving natural waterway habitat
Exceptional Enhancing the natural diversity and beauty of waterways $200
Mimicking natural hydrology in new storm drain facilities
The area within the City of San Luis Obispo is about 7,290 acres. Therefore; according to EPA
estimates, the annual cost of achieving various service levels in San Luis Obispo would be:
Expected Annual
Service Level Cost
Incidental $145,800
Minimum $364,500
Moderate $729,000
Advanced $1,093,500
Exceptional $1,458,000
Existing City creek and flood protection costs (for storm drain cleaning, creek clearing, street
Council Agenda Report—Creek and Flood Protection Fund
Page 17
sweeping, and various capital projects) budgeted for 2002-03 amount to $372,300 —just barely
above a minimum service level, as defined by the EPA. Given the environmental sensitivity of the
San Luis Obispo Creek watershed and the. role that.this watershed plays in defining the quality of
life for San Luis Obispo, at least an advanced or exceptional service level is appropriate for the
community. This conclusion was confirmed during public outreach meetings in Winter 2001,
where community members expressed a strong desire to reduce creek pollution, exercise good
stewardship over the creek watershed, and thereby maintain a high quality of life.
As shown below, after fee levels and new initiatives are fully implemented in 2007-08, annual
Creek and Flood Protection Fund expenditures will amount to $1,290,100, or $177 per acre—well
above an advanced service level.
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Expenditures $669,400 $734,200 $1,008,600 $1;265,000 $1;274,800 $1,290,100
How Do The Proposed Fees Compare to Similar Fees in Other Cities?
Use of enterprise funds and user fees to finance creek and flood protection is a fairly new
strategy that is rapidly gaining momentum as a response to NPDES requirements. AMEC Earth
and Environmental, Inc. recently conducted a survey that found 206 such enterprise funds had
been established nationally. Among the cities and counties surveyed,the average monthly fee
for single-family residential accounts (the benchmark for this type of fee) was $3.80.. At an
assumed inflation rate of three percent per year, this average monthly fee would rise to $4.54 in
2007-08—almost precisely the $4.50 proposed for San Luis Obispo in that year.
Several progressive California cities and service districts with sensitive watershed environments
have established fee-supported enterprises to protect those resources. The following table shows
the single-family residential fees in some of those agencies:
SFR Fee
Pet
Agency Month
City of Monterey $4.76
City of Palo Alto $4.25
City of Salinas $1.56
City of Santa Cruz $9.09
Vallejo Flood Control District $2.66
Average $4.46
City of San Luis Obispo (2002-03) $1.00
City of San Luis Obispo (2007-08) $4:50
/-l7
Council Agenda Report—Creek and Flood Protection Fund
Page 18
Do the Proposed Fees Comply with Proposition 218?
Here is an excerpt from a report titled NPDES Phase II Stormwater Financial Feasibility Study
prepared for the City and presented on April 12,2001 by Black &Veatch Corporation:
If the City chooses to charge users a stormwater fee to recover the costs of the stormwater
program, Proposition 218 issues need to be considered. Proposition 218 applies to fees
and charges imposed by an agency upon a parcel or upon a person, incident on property
ownership, including a user fee or charge fora property related service. Proposition 218
requires stringent public hearing requirements and requires that the fee or charge may not
be imposed if written protests are presented by a majority of the owners of the parcels.
If the stormwater fee is set up on total impervious area or gross area with intensity of de-
velopment and runoff factors in the manner recommended, it will not be incident on
property ownership because the fee would be related to stormwater service provided and
undeveloped parcels would not be charged. This.should mitigate the concerns regarding
Proposition 218.
The proposed fees will not be incident on property ownership because they will be based on
impermeable area, will be related to service provided to mitigate runoff, and will not be charged
on undeveloped parcels. Therefore, Proposition 218 requirements will not apply.
What Are the City's Next Steps?
There will about two months between the study session when the Council reviews this report and
May 21, 2002, when the Council is scheduled to consider fees for all enterprise funds as part of
the 2002-03 Financial Plan Supplement review. After receiving Council direction regarding the
proposed fee structure, service level, and phase-in strategy, the fee development team will
continue in-depth information presentations aimed toward all categories of ratepayer: residential,
educational, and other non-residential. These presentations will emphasize that serious creek and
flood protection challenges can be met and resolved by implementing a program of well-
conceived activities and projects. And furthermore, program costs can be covered by modest
fees shared among a wide cross-section of community ratepayers. The results will be greater
safety for life and property as well as cleaner and healthier creeks and oceans.
PUBLIC OUTREACH AND CONCURRENCES
The need for a Creek and Flood Protection Fund financed through user fees was presented and
discussed during heavily advertised public meetings on the NPDES and Waterway Management
initiatives. These meetings were well received by the attendees, who generally agreed with the
proposed approach.
The Downtown Association and the Chamber of Commerce have seen some of the preliminary
data presented in this report. More extensive information will follow over the next two months.
Council Agenda Report-Creek and Flood Protection Fund
Page 19
On March 5, 2002 the City Administrative Officer spoke at the Chamber of Commerce "Big
Committee" meeting and introduced the topic of Creek and Flood Protection Fund fees. At that
meeting he passed out a flyer announcing the March 26 study session and the opportunity for
discussion with staff members prior to the study session.
On March 8, 2002 the City Administrative Officer met with Superintendent Steve Ladd and
Assistant Superintendent Russell Miller from the San Luis Coastal Unified School District and
briefed them on the proposed fees. They appreciated the gradual phase-in period for the fees and
the additional effort to mitigate the impact of the fees on the District. They also expressed their
concern that fee levels, once adopted, would be significantly increased later. They were assured
that one of the City's objectives is to avoid major changes to the phase-in strategy after adoption
of the fees.
On March 15, 2002 the City Administrative Officer and the Assistant City Administrative
Officer met with County Administrative Officer David Edge and briefed him on the proposed
fees.
The Public Works.Director has set up meetings with the Downtown Association, the Chamber of
Commerce, the Manufacturers Association, and ECOSLO to brief them about the proposed fees
before the study session. At the study session he will report on the results of those meetings.
FISCAL IMPACT
Effect on the General Fund
Although there are no direct fiscal impacts involved with conceptually approving the recommen-
dations of this report, eventual adoption of fees and formation of the Creek and Flood Protection
Fund will have a definite effect on the General Fund. This effect is summarized in the following
table:
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
GF Subsidy $283,600 $129,200 $187,000 227,000 $20,200 $0
+GF Fees +18,100 +31;700 +45,300 +58,900 +72,500 +81,600
-]ndirect Costs Paid to GF -90,300 -108,300 -133;000 -136,400 -140,000 -143,700
Net GF Support $211,400 $52,600 $99,300 $149,500 -$47,300 -$62;100
GF Support in 2001-02 $234,000 $234,000 $234,000 $234,000 $234,000 $234,000
Variance from 2001-02* -$22,600 -$181,400 -$134,700 -$84,500 -$281,300 -$296,100
*Reduction in General Fund Support from 2001-02
The fee development team also looked at the effects on the General Fund if the fees started at
$0.75 per month or $1.25 per month for single-family residential accounts and were correspond-
// 9
I
Council Agenda Report—Creek and Flood Protection Fund
Page 20
ingly lower or higher for other account categories. The following tables summarize the effects:
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
SF Residential Fee $0:75 $1:50 $2.25 $3.00 $3.75 $4.50
Variance from 2001-02 +$44,400 -$113,800 -$67,000 -$16,900 -$213,600 -$296,100
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
SF Residential Fee $1.25 $2.00 $2.75 $3:50 $4.00 $4.50
Variance from 2001-02 -$94,000 -$253,800 -$206,800 $156,700 -$281,300 -$296,100
If the single-family residential fee starts at $0.75 per month, the General Fund will actually pay
$44,400 more in 2002-03 than it would under the existing budget. On the other hand, if the
single-family residential fee starts at $1.25 per month, the General Fund will pay $94,000 less in
2002-03 than what is now budgeted and $71,400 less than if the single-family residential fee
starts at the recommended$1.00 level.
By the time the Creek and Flood Protection Fund is set up, the General Fund will have absorbed
the following out-of-pocket start up costs:
Questa Engineering Study-Storm Water Management Program Requirements(actual cost) $33,900
Black&Veatch Study-NPDES Phase 2 Feasibility Study(actual cost) 35,500
Satellite Imagery and Software(actual cost) 11,000
Utility Billing System Modifications(estimated cost) 10,000
Public Outreach Materials and Services(estimated cost) 9,000
Total $99,400
The fee development team is recommending that these costs not be recovered from the new
Creek and Flood Protection Fund fees.
Effect on the Creek and Flood Protection Fund
Attached is a working capital analysis for the Creek and Flood Protection Fund from 2002-03 to
2008-09:- It shows the overall effect of phasing in new initiatives and phasing out General Fund
support over seven years.
Creek and Flood Protection Fund fees will be presented to the Council on May 21, 2002 along
with revenue and rate reviews for other enterprise funds (Water, Sewer, Parking, Transit, and
Golf) as part 2002-03 Financial Plan Supplement review. The report for that meeting will cover
extensively the full fiscal impact of planned revenues and expenditures for creek and flood
protection. Feedback now from the study session will help the fee development team prepare
better recommendations for the rate review in May. Assuming rates are adopted in May, the first
i-aD
Council Agenda Report—Creek and Flood Protection Fund
Page 21
billing would follow in July 2002.
ATTACHMENT:
Attachment 1 -Working Capital Analysis,Creek and Flood Protection Fund,2002-03 to 2008-09
I:\Council Agenda Reports\Creek and Flood Protection Fund v-5.doc
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