COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Public Works

DATE:

May 22, 2006

BOARD MEETING DATE:

June 6, 2006

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

Neil R. Cullen, Director of Public Works

SUBJECT:

Proposed Increase in Sewer Service Charges for the Ten (10) County Governed Sewer/Sanitation Districts

Recommendation:

Acting as the governing board of the ten (10) County Sewer/Sanitation Districts (Districts), adopt:

1.

an ordinance setting the sewer service charge rates for 2006-07 through 2010-2011, which are recommended to increase significantly in order to finance State and Federal mandates and to finance improvements in the collection systems of the agencies that transport and treat sewage from the ten (10) Districts; and

2.

a resolution:

(a)

setting a time and place for a public hearing to consider the sewer service charges for FY 2006-2007 for the ten (10) Districts governed by your Board; and

(b)

directing the Director of Public Works to send a notice of the proposed rates and charges to each property owner in each district as required by the State Constitution.

Vision Alignment:

Commitment: Ensure basic health and safety for all.

Goal 7: Maintain and enhance the public safety for all residents and visitors.

Background

Previous Board Action

1.

Adopted an ordinance setting the current sewer service charge rates for nine (9) sewer/sanitation districts governed by your Board.

2.

Recently approved the formation of the Edgewood Sewer Maintenance District to serve two new subdivisions adjacent to Edgewood Road in the San Carlos area.

3.

Authorized capital improvement projects in the Districts financed by sewer service charges levied in the district where the project was located.

History

State and Federal Regulations Regarding Sanitary Sewer Overflows from Sewer Collection Systems

The ten (10) Districts governed by your Board serve approximately 12,200 properties and finance the operation and maintenance of approximately 150 miles of sewer mains as well as the cost of treating the sewage collected by the Districts. The operation of the Districts’ sewer collection systems is regulated by the California Regional Water Quality Control Board (RWQCB) and the Environmental Protection Agency (EPA) pursuant to the Federal Clean Water Act.

Sanitary Sewer Overflows (SSO) from sewer collection systems contains domestic, commercial, or industrial sewage. SSO’s can pollute surface or ground waters, threaten public health, adversely affect aquatic life, and impair the recreational use and aesthetic enjoyment of surface waters. Sewer main blockages that result in SSO’s can also create sewage back ups into houses causing property damage and creating a public health hazard to those who come in contact with the untreated sewage. We are currently required to report SSO’s that are greater than 100 gallons to the RWQCB.

The San Francisco Bay RWQCB recently implemented a SSO control program that requires all sanitary sewer collection system agencies in the Bay Area to prepare Sewer System Management Plans (SSMP) pursuant to Section 13267 of the California Water Code. The SSMP has several elements that must be completed by August 2008. The SSMP describes the activities each sewer/sanitation district will employ to manage their wastewater collection systems effectively.

The State Water Resources Control Board (SWRCB) has adopted statewide waste discharge requirements and they are currently developing a reporting program to provide a consistent approach in reducing SSO’s. The SWRCB reporting program will supersede the RWQCB reporting requirements once it is developed, except in instances where the RWQCB reporting requirements are more stringent.

The EPA has also developed draft permit requirements under the Clean Water Act (CWA) to regulate SSO’s from collection systems. This program, when implemented, will essentially prohibit SSO’s and levy penalties or sanctions for those agencies that allow SSO’s to occur.

Discussion

What the Districts Must Do to Comply

The SWRCB in cooperation with the Bay Area Clean Water Agencies (BACWA), developed guidelines for effective management of wastewater collection systems through the use of a SSMP. The guidelines specify that effective management of a wastewater collection system includes:

•

Maintaining or improving the condition of the collection system infrastructure in order to provide reliable service into the future.

•

Cost-effectively minimizing infiltration/inflow and providing adequate sewer capacity to accommodate wet weather flows in the sewer systems.

•

Minimizing the number and impact of SSO’s that occur.

Financing District Operations and Mandated Programs

The Districts are funded predominantly by sewer service charges that are set by ordinance and collected together with the property tax. The Districts also receive a property tax apportionment which has been redirected by the State to balance their budget in recent years. The sewer service charge varies among Districts depending upon the size of the District, condition and age of the sewer infrastructure, access issues associated with maintenance, cost of sewage treatment, and an individual District’s financial responsibility associated with the transmission and treatment of District collected sewage by other agencies.

We have evaluated the sewer service charge for each district and developed the proposed rates to finance:

1.

Continued routine and emergency maintenance (operation and maintenance).

2.

Increased costs for sewage treatment and disposal.

3.

Development of SSMP’s.

4.

The cost to comply with additional regulatory requirements (on going television inspection of the system, spot repairs identified through the television inspections, and acquisition or replacement of equipment used to maintain and repair the collection systems).

5.

The cost to continue to implement capital improvement projects to increase the size of sewer mains where capacity is insufficient, and to rehabilitate or replace structurally damaged sewer mains.

6.

Contingencies for unanticipated charges, expenses, or repairs.

7.

Payments pursuant to existing agency agreements for costs associated with downstream system or facility improvements and upgrades.

The methodology used to determine the rates is described in Attachment A.

Process to be Followed in Implementing an Increase in the Current Rate and Fee Structure

The County Ordinance Code provides that sewer service charges for the Districts be collected on the tax roll. Your Board must take the following three actions by August 1, 2006, to place the sewer service charges on the tax roll for FY 2006-2007:

1.

Amend the Ordinance Code to increase the rates used to calculate the sewer service charge fees for each property within each district.

2.

Hold a public hearing and receive testimony.

3.

Adopt a Resolution adopting the FY 2006-2007 Sewer Service Charges Report.

In addition, Article XIIIC and XIIID of the State Constitution requires an individual notice of the hearing to consider any new or increased property related fees including sewer fees, and a mechanism for rejecting the fees via a “majority protest” at the public hearing. We are recommending that your Board direct us to notify each owner of each property of the new annual charges by mail and to explain that protests to the charges must be in writing.

An ordinance and a resolution have been approved as to form by County Counsel.

Fiscal Impact

The following are the current rates and proposed increases in sewer service charge rates for the next five (5) years in each of the ten (10) Districts that we believe are needed to cover the costs as explained above:

Sewer Service Charge ($/Year Per Residential Unit)

Proposed Rates

District

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

Burlingame Hills SMD

$ 657

$ 1,524

$ 1,585

$ 1,648

$ 1,714

$ 1,783

Crystal Springs CSD

$ 496

$ 1,517

$ 2,170

$ 1,820

$ 2,750

$ 1,995

Devonshire CSD

$ 404

$ 983

$ 1,011

$ 1,021

$ 1,033

$ 1,075

Edgewood SMD

-

$ 792

$ 809

$ 799

$ 790

$ 822

Emerald Lake SMD – Zone 1

$ 482

$ 850

$ 884

$ 919

$ 956

$ 994

Emerald Lake SMD – Zone 2

$ 353

$ 683

$ 709

$ 732

$ 756

$ 787

Fair Oaks SMD

$ 267

$ 365

$ 379

$ 395

$ 410

$ 427

Harbor Industrial SMD

$ 268

$ 376

$ 386

$ 388

$ 390

$ 405

Kensington Square SMD

$ 352

$ 906

$ 942

$ 979

$ 1,019

$ 1,059

Oak Knoll SMD

$ 412

$ 695

$ 723

$ 752

$ 782

$ 813

Scenic Heights CSD

$ 376

$ 701

$ 718

$ 715

$ 714

$ 742

Sewer master plans were developed for the Districts in 1999, which evaluated the sewer collection system and prioritized capital improvement projects for each District based on capacity, excessive maintenance requirements, and structural deficiencies. We have completed seven (7) capital improvement projects and will complete four (4) additional projects this fiscal year. The remaining capital improvement cost (construction only) required to complete the Sewer Master Plan List is approximately $7,600,000 in today’s dollars. These projects have been financed with a “pay as you go” method.

We are currently evaluating if long term loans are available to the Districts to help finance the District’s costs associated with projects to improve the transport and treatment of District collected sewage by other agencies.

We estimate that it will cost approximately $12,000 ($1 per rate payer in the Districts) to prepare, print and mail individual notices to each rate payer. This cost will be paid from the revenues of the respective Districts.

There is no impact on the General Fund.