City Council Meeting: July 12, 2006
Agenda Item:
______
To: Mayor and City Council
From: Craig
Perkins, Director - Environmental and Public Works Management
Subject: Approval
of Watershed Management Plan and Direction to Prepare Materials for Council Review
and Approval of a Clean Beaches and Ocean Funding Measure for the November 2006
Ballot
Recommended
Action
It is recommended that Council approve the Santa
Monica Watershed Management Plan, direct staff to issue a notice for a public hearing
on proposed stormwater funding increases for either July 25, 2006 or August 8,
2006, and direct staff to prepare the materials required for official Council
action on either July 25, 2006 or August 8, 2006 to place a Clean Beaches and
Ocean funding measure on the November 2006 ballot.
Executive
Summary
Santa
Monica has a long and abiding commitment to the protection of our
beaches and ocean resources. A number of
programs, projects and ordinance changes have been implemented over the past
two decades to better control and reduce the negative impacts from contaminated
urban runoff that is caused both by storm events as well as by the uninformed
or irresponsible actions of citizens and visitors. These combined efforts over the years have
resulted in reduced levels of runoff pollution onto our beaches and into Santa Monica Bay.
Due to the implementation by State and
Federal agencies of more stringent regulatory standards for broad categories of
water pollutants, a considerable amount of additional effort will be required
of Santa Monica
over the next several years. The
recently completed Watershed Management Plan sets forth the types of projects
and programs that are proposed to be implemented over the next ten years as
part of a heightened effort to protect Santa
Monica beaches and the Bay. To pay for the additional capital projects
and new program initiatives that are required by the Plan as well as City
compliance with Total Maximum Daily Loadings TMDLs, an additional stormwater
funding measure should be placed before the voters at the November 2006
election.
A poll was conducted in late February to
determine the potential level of support within the community for a stormwater
funding measure on the November ballot.
The results of the polling show that such a measure has a very good
chance of receiving over two-thirds support if the arguments in favor of the
measure are effectively disseminated. In
order for Council to review and consider a proposed stormwater funding measure
for the November 2006 ballot, staff will need to prepare all required documents
and return to Council for review and final action by August 8, 2006. A noticed public hearing must also be
conducted and completed prior to this final action.
Discussion
Stormwater Management Issues
The City’s stormwater management program consists
of operation and maintenance of the City-owned stormwater system; compliance
with Federal, State and local regulations including inspections, monitoring and
enforcement; implementation of the Santa Monica Bay Restoration Plan; capital
improvement projects to reduce and treat polluted runoff; and an extensive
public education and outreach effort. Santa Monica operates and
maintains 20 miles of stormdrains, 824 catch basins and other major infrastructure
assets such as the Santa Monica Urban Runoff Recycling Facility (SMURRF). The Los Angeles County Public Works
Department is responsible for the operation and maintenance of the remaining
stormwater conveyance infrastructure within Santa Monica such as the Pico-Kenter
drain. Santa Monica, though, is responsible for the
quality of the runoff and for all water quality permitting and compliance
related to stormdrain discharges into the ocean or other water channels such as
Ballona Creek. The City-owned stormdrains
and catch basins are of varying ages and conditions, some of them being over 60
years old. Certain sections of the
City’s system have also been determined to have potentially insufficient
hydraulic capacity in the event of a major (25 year) storm.
The City of Santa Monica
has long been committed to local and regional actions to improve the condition
of Santa Monica Bay
and protect the health and safety of the millions of residents and visitors who
enjoy the renowned Santa Monica
beaches and ocean front each year. This
commitment has been demonstrated over the past two decades by a number of
programs, policies and projects aimed at reducing the volume and toxicity of
urban runoff, the largest source of pollution into Santa Monica Bay. Urban runoff management and pollution
prevention activities have become significantly more urgent and will become
even more so over the next several years as regulations promulgated by the Los
Angeles Regional Water Quality Control Board (Regional Board) that implement
Total Maximum Daily Loadings (TMDLs) take effect. These new standards are in addition to the
National Pollution Discharge Elimination System (NPDES) permit requirements for
all municipalities within Los
Angeles County
which have been in place since 1995. Santa Monica
and every other municipality in Los
Angeles County
must develop and implement action plans to each do their fair share to comply
with these new requirements and keep the beaches and ocean clean.
The TMDL milestones for which Santa
Monica is responsible are those related to Santa Monica Bay
and Ballona Creek. The TMDL standards
apply to both dry weather and wet weather periods and cover a number of
contaminants of concern such as bacteria, trash, toxics, metals, pesticides and
herbicides, and oil and grease. While
most of the standards for Santa
Monica Bay
are still under development by the Regional Board, the bacteria reduction
requirements have been established and are very stringent. As of July 15, 2006, bacteria levels cannot
exceed State-imposed bacterial thresholds in Santa Monica Bay
during dry weather periods, defined as April 1 to October 31 of each year. Beginning in 2009, there must be a 10%
reduction in wet weather bacteria increasing to a 25% reduction by 2013, a 50%
reduction by 2018 and a 100% reduction by 2021.
Concurrently, a reduction in the total number of days during the year
when the bacteria limits can be exceeded is also an element of the new
regulations. A set of additional
contaminant reduction standards that have been promulgated by the Regional
Board will be applied to the runoff from the southeastern portion of Santa Monica that flows
into Ballona Creek, including trash, metals, toxics and bacteria.
Watershed Management Plan
Over the past two years, City staff, a consultant
team and various stormwater experts have worked on the development of a
Watershed Management Plan (Plan). The Plan provides a set of recommended
projects and activities, prioritized by specific public benefit criteria, which
will allow the City to improve the quality of its urban runoff, such that the
waters of Santa Monica
Bay and its tributaries
will meet the goals of the nation’s Clean Water Act. Consistent with current City practice, the
Plan emphasizes reducing urban runoff quantity (volume) as the most
cost-effective strategy to reduce the water pollution entering the Bay. Therefore, the identified capital projects in
the Plan generally mitigate wet weather runoff.
Specific recommendations for improvements to Santa Monica’s storm water system have also
been developed for each of the 13 sub-watersheds throughout the City. The Plan breaks out these recommendations
into three primary categories: 1) stormdrain conveyance system upgrades; 2)
multipurpose capital improvement projects; and 3) on-site stormwater management
systems. The highest priority projects
in the Plan are those that will best achieve the greatest number of Plan goals:
·
Reduce urban runoff pollution
·
Reduce urban flooding
·
Increase water reuse and conservation
·
Increase recreational opportunities and open
space
·
Increase wildlife and marine habitat
The Plan’s ambitious set of multi-benefit
projects that are recommended by the Plan to be built over the next 20 years
carries an estimated construction and land acquisition cost of over $200
million. The ongoing annual operation
and maintenance costs for these projects once they are completed are estimated
at approximately $10 million. In addition, a separate analysis covering current
hydraulic deficiencies in the stormwater conveyance system identified as much
as $30 million in recommended system upgrades over the next 20 years. It is noted, however, that most if not all of
these deficiencies could be addressed through the strategic application of the
above-mentioned urban runoff reduction and pollution control projects within
the geographic areas where the potential deficiencies have been noted.
Stormwater Funding Issues
The Watershed Management Plan presents a thorough
analysis of the current funding mechanism for the City’s Stormwater Enterprise
Fund, but also evaluates alternative funding sources and approaches that may be
available to the City. The report
describes the large increases in ongoing stormwater revenues that would be
required to fully implement the Plan.
Since the completion of the Plan in April of this year, staff has
therefore been engaged in a careful examination of the essential fiscal needs
of the stormwater fund over the next ten year period to ensure that revenue
increases are limited to the amount that is absolutely necessary to
cost-effectively achieve all the City’s compliance targets.
Santa
Monica created a stand-alone Stormwater Enterprise Fund and adopted a
stormwater parcel fee in 1995. The fee
is collected through the annual property tax bills issued by the Los Angeles
County Tax Assessor. For tax exempt
parcels (City owned property, public schools, Santa Monica College,
etc.), a separate bill is generated by the City and sent to each of the
affected property owners. The current
fee varies according to parcel type and size.
For example, the fee totals $3.02 per month for all single family
parcels, averages $1.05 per month for each condominium, averages $6.92 per
month for each apartment building, and averages $13.82 per month for each
commercial parcel. The fee levels that
were established in 1995 have never been increased. These stormwater fees generate approximately
$1.25 million of revenue per year and are the primary source of funds to cover
capital and operational costs in the stormwater fund. The current stormwater fee structure is a
fair and equitable revenue option for the Stormwater Enterprise Fund since the
fee amounts are based on the average quantity of runoff that is calculated to
be generated (there is a distinct runoff factor for each particular land use
type) and the size of a parcel, and are therefore directly correlated to a
parcel’s proportionate runoff flows that the City is responsible for conveying
and mitigating.
It is important to note that changes to
the City’s stormwater fee come under the purview of State Proposition 218 that
was passed in 1997. Under the current
interpretation of Proposition 218 by the courts, Santa Monica’s stormwater fee is defined as a
property-related fee. Such a fee can be
increased either through a two-thirds approval of the local electorate or
through majority approval from property owners obtained by a Proposition 218
balloting process as defined by Article XIIID, §6, of the California
Constitution. Under the property owner
balloting process, a mailed ballot would be sent to each eligible Santa Monica property owner, whether they reside in Santa Monica or not. All returned ballots would be counted and the
measure could be approved by a yes vote from a majority of the ballots
received.
Another option that has been evaluated by
staff is the implementation of a Clean
Beaches and Ocean Parcel
Tax. This special tax would need to be approved by a two-thirds vote of the
local electorate and could be based on similar methodology to determine the per
parcel amount that is used for the existing stormwater fee. The advantages of a
stormwater parcel tax over a stormwater parcel fee are several: greater
flexibility is granted to the jurisdiction in determining the eligibility of
stormwater projects that can be funded; a parcel tax is less susceptible to
challenge by individual property owners than a parcel fee; reduced tax amounts
or tax exemptions can be allowed in the measure for specific property owners
such as public schools and colleges; and, finally, the Proposition 218 process
that must be followed to place a special tax on the ballot when compared to a
property related fee is simpler. In fact, given the lead time required to
satisfy the various Proposition 218 public hearing and property owner protest
requirements for a property related fee, there is not sufficient time remaining
to place a stormwater property related fee increase on the ballot for November
2006.
Given the various considerations tied to
each funding option discussed above, staff recommends a special tax to be known
as the “Clean Beaches
and Ocean Parcel Tax” as the most appropriate funding mechanism to generate the
additional revenue necessary to implement Santa
Monica’s Watershed Management Plan.
Funding Recommendations
Based on staff’s analysis, it is
estimated that a revenue increase of $3.0 million per year, in the form of a
Clean Beaches and Ocean Parcel Tax, would be required to implement the minimum
level of capital projects and operational enhancements needed to implement an
integrated Watershed Management Plan and comply, for at least the next ten
years, with all applicable regulatory standards. It is also projected that these new revenues
will need to be increased annually based on the Consumer Price Index for the
Stormwater Fund to remain financially viable over time. With these enhancements, it is projected that
no further revenue adjustments will be needed over the next ten years. The additional revenue will allow the City to
cover all anticipated stormwater operations and maintenance costs as well as
pay for up to $40 million in capital projects over the next ten years. It is anticipated that Santa Monica will be able to use its local
funding to leverage access to outside capital funds from the State and other
sources that are expected to be available.
It is hoped that these outside capital grant funds could total as much
as $15 million over the next ten years thereby allowing the City to actually
complete over $50 million in eligible capital projects over the period.
The proposed Clean Beaches
and Ocean Parcel Tax would result in additional Stormwater Fund revenues of
approximately $3.0 million per year.
Although the proposed revenue increase is lower than what is recommended
in the Watershed Management Plan, staff is confident that with a focus on
implementation of the most cost-effective and strategic approaches the
projected funds will be sufficient to successfully proceed with the Plan. Since the new parcel tax would be collected
by the County as a part of their annual property tax assessment and then
transferred to Santa Monica, if the parcel tax were approved by the voters in
November 2006, the new revenues would not start to be received by the City until
early 2008 due to the lag in property tax billings by the County. New stormwater projects or programs therefore
could not be budgeted prior to FY 2007-2008.
The proposed Clean Beaches and Ocean
Parcel Tax would be approximately $7.00 per month for single family parcels;
$2.50 per month for condominiums; $16.00 per month for an average apartment
building; and $32.00 per month for an average commercial parcel. Under the proposed ballot measure, the parcel
tax would thereafter be adjusted annually based on changes in the Consumer
Price Index. It is recommended that Council exempt from the proposed parcel tax
any property owned by the Santa Monica
Malibu Unified
School District or Santa Monica College.
Results
of Community Polling
A
survey of 400 potential voters was conducted between February 23 and 26 of this
year to determine the level of public support for revenue increases to finance
expanded stormwater program efforts. It
is important to note that in the polling, potential voters were asked their views
on a proposed stormwater property related fee as opposed to a special
stormwater parcel tax. For purposes of interpreting the responses, it is
believed that voter attitudes are essentially the same for either approach. The
polling results (attached) show that over two-thirds of Santa
Monica voters either support or lean toward supporting a Clean Beaches
and Ocean revenue measure to pay for the expanded pollution prevention and
cleanup activities that are necessary.
The potential voters were less supportive of a combined ongoing funding
measure in conjunction with a capital facilities bond measure. The polling also identifies that voters are
very concerned about protecting public health and the environment through
efforts to keep the Bay and beaches free of trash, bacteria and other
contaminants as well as upgrading aging stormdrain pipes and catch basins.
The
surveyed residents were asked their opinion on two different funding
approaches: the first approach was a proposed Clean Beaches and Ocean Fee of
$79 annually, and the second approach was a combined $60 million capital bond
and a $28 annual fee. Each of these
questions was asked both at the start of the interview as well as after
additional explanation and justification for the revenue increase had been
shared. It is important to note that for polling purposes it was necessary to
use a single average annual fee amount of $79 and $28, respectively, in the
survey questions. In fact, these figures overstate the additional annual amount
that would be paid by most voters since the actual amount would be less for a
condominium owner or for each unit of an apartment building. Accordingly, the
polling consultants believe the survey results are somewhat less positive than
they would be if it had been possible to give each interviewee the exact
additional cost impact related to their specific circumstance.
When
the question was first asked, 60% of the responses to the fee only question
were yes/leaning yes, and 21% of the responses were no/leaning no. In terms of the combined fee and bond
question, 49% of the respondents were initially yes/leaning yes, and 27% of the
responses were no/leaning no. Once a
fuller explanation of the purpose and importance of the Watershed Management
Plan and the necessary projects had been shared, the yes/leaning yes responses
to the fee only question rose to 67% and the no/leaning no responses dropped to
17%. For the combined bond and fee
question, the yes/leaning yes responses rose to 64%, and the no/leaning no
responses dropped to 22%. Based on these
polling results, it is recommended that a stand alone ongoing funding increase
as opposed to a combined bond and funding increase measure be pursued. It is also the conclusion of the polling
consultants that such a ballot measure has a high likelihood of receiving the
support of at least two-thirds of the voters if it is accompanied by a fair
presentation of public information allowed by law that focuses on the water
quality and beach/ocean protection themes that the voters care about most.
As can be seen from the attached polling results,
additional valuable information was generated about the potential ballot
language that would be most effective in generating voter support and the
specific beach and ocean protection issues that resonate most strongly with
potential voters. In addition, the
polling identifies the groups and individuals from both within and outside Santa Monica who would be
most believable in speaking out on the issues of beach and ocean
protection. The survey results have also
been tabulated according to demographic data, property ownership status,
education levels and various other factors.
Alternatives
An alternative funding approach that
could be utilized for generation of financial resources to deal with stormwater
issues is a stand alone capital facilities bond. This is the approach that was taken by the
City of Los Angeles in the form of Proposition
O, a $500 million capital bond issue that was approved by more than two-thirds
of the Los Angeles
voters in fall 2004. Proposition O is a
general obligation bond that will be repaid over 20 years through increased
property tax assessments based on the assessed valuation of parcels within the
City of Los Angeles. A capital bond
measure, if approved by two-thirds of the voters, would certainly provide the
least expensive borrowing alternative and a reliable source of funding for the
capital projects that need to be constructed over the next ten years to reduce
beach and ocean pollution. However, none
of the bond proceeds would be legally available to pay for any operation,
maintenance and/or repair costs associated with new or existing capital
projects. Similarly, none of the bond
proceeds would be legally available to pay for water quality sampling and
testing, inspections, code enforcement, catch basin cleaning, SMURRF
operations, screen and filter replacements, spill response and cleanup, public
information and education, or any other ongoing responsibilities of the
Stormwater Enterprise Fund. An increase in the stormwater fees or a new
stormwater parcel tax, in addition to a capital bond, would be necessary to pay
for these critical ongoing tasks.
Another
important difference between a capital general obligation bond and a stormwater
fee or special tax is that bond repayment costs would be paid by each property
owner based on their particular assessed valuation. Properties of the same type
and size that have a significantly different assessed valuation would therefore
pay a significantly greater or lesser share of the bond costs. A stormwater
parcel fee or special tax, in comparison, would be much more equitable between
parcels of the same type and size. As was discussed above, the polling that has
been completed by the City shows that voters appear to be less likely to
support a combined capital bond and fee/tax than a stand alone fee/tax. In addition, a portion of the ongoing revenue
stream generated through increased stormwater fees/taxes would be available to
cover the debt service on stormwater revenue bonds that could be authorized by
City Council to pay for capital projects as necessary over time.
Contract
Approval to Support Joint Agency Efforts
For the past two years, Santa Monica
has been working with the cities of Los Angeles
and El Segundo, Los Angeles
County and Caltrans on
implementation of the Santa Monica Bay Beaches Wet Weather Bacteria TMDL. The Regional Board is requiring additional
analytical work to supplement the Implementation Plan that was submitted last
year by the group to implement this TMDL.
Camp, Dresser & McGee (CDM) is the firm that completed the original
Implementation Plan and is best qualified to prepare the supplemental
report. Staff will therefore be entering
into a sole source contract with CDM in an amount not to exceed $50,000 to
complete the required data collection and analysis. Although Santa Monica
will implement the contract with CDM in order to expedite the necessary work
that must be submitted to the Regional Board, the other partner agencies will
directly reimburse Santa Monica
for all but $9,453 of the $50,000 contract cost.
There are no budget impacts associated with the
recommendations in the staff report related to the Watershed Management Plan
and the proposed Clean
Beaches and Ocean Parcel
Tax.
Prepared
by: Craig Perkins
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Forwarded to Council:
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Craig
Perkins
Director
- Environmental and Public Works Management Department
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P. Lamont Ewell
City Manager
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