COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Public Works

DATE:

June 4, 2007

BOARD MEETING DATE:

June 5, 2007

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

James C. Porter, 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):

1.

introduce an ordinance setting the sewer service charge rates for 2007-08 through 2011-2012 for nine (9) districts and for 2007-08 for the Crystal Springs County Sanitation District; and

2.

adopt a resolution:

a)

setting a time and place for a public hearing to consider the sewer service charges for FY 2007-2008 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.

Approved the process utilized by the Department for setting sewer service charge rates for each of the ten (10) districts.

2.

Adopted an ordinance setting the current sewer service charge rates for nine (9) sewer/sanitation districts governed by your Board to pay for operation and treatment costs for the districts and not increasing the sewer service charge rate for the 2006-07 fiscal year for the Crystal Springs County Sanitation District due to a majority protest levied by the property owners.

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), the State Water Resources Control Board (SWRCB), and the Environmental Protection Agency (EPA) pursuant to the Federal Clean Water Act.

Sanitary Sewer Overflows (SSO) from sewer collection systems contain 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 all SSO’s that are not completely returned to the sewer system to the SWRQCB and report SSO’s annually to the RWQCB.

Both the RWQCB and the SWRCB have implemented requirements that all sanitary sewer collection system agencies prepare Sewer System Management Plans (SSMP) pursuant to Sections 13263 and 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 SWRCB adopted Statewide General Waste Discharge Requirements (WDR) for Wastewater Collection Agencies on May 2, 2006. The WDR established monitoring and reporting requirements as well as SSMP requirements and timelines. All federal and state agencies, municipalities, counties, districts, and other public entities that own or operate sanitary sewer systems greater than one mile in length are required to comply with the WDR.

2006-07 Sewer Service Charges

The sewer rates adopted for the 2006-07 fiscal year were increased in five (5) of the Districts in order to cover the costs of sewage treatment, downstream capital improvements, and operation and maintenance. The rates for the Fair Oaks, Harbor Industrial, Kensington Square, and Oak Knoll Sewer Maintenance Districts were not increased since the rates your Board had previously set for the 2005-06 fiscal year were sufficient to cover the District’s expenses. The rates for the Crystal Springs County Sanitation District were also not increased due to a Proposition 218 majority protest.

The rate increases approved for some of the districts last year were only sufficient to cover operations and maintenance costs and not proactive or required programs such as: implementation of a SSMP, district capital improvement projects, or contingencies.

Discussion

Public Input Process

The Department has sent an informational letter to all property owners in each district informing them of the operations, maintenance, and management requirements of the districts. The letter also provided information about the rate setting timeline. The Department sent a second letter to all property owners notifying them of proposed rates and providing them with information about community meetings to discuss proposed rates and obtain their input regarding the proposed rates. The proposed rates result from property owner input at the community meetings and rate calculations performed by the Department.

What the Districts Must Do to Comply

The RWQCB 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.

The SWRCB has also developed SSMP requirements that are similar to the requirements of the RWQCB with the additional of a requirement for a communication plan. The communication plan shall allow for communication with the public regarding the development of the SSMP and create a plan to communicate with systems that are either tributary or satellite to a collection system.

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 previously been redirected by the State to balance their budget. The sewer service charge rate 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, with the exception of the Crystal Springs County Sanitation District, to finance:

1.

Continued routine and emergency maintenance (operation and maintenance).

2.

Increased costs for sewage treatment and disposal.

3.

The cost to comply with regulatory requirements (required reporting, development of SSMP, 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).

4.

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.

5.

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

We are proposing to set a one year rate (2007-08) for the Crystal Springs County Sanitation District. During the 2007-08 fiscal year District staff will work with a committee comprised of property owners in the District to develop rates that will be acceptable to the property owners in the District while adequately meeting the financial obligations of the District. This District faces the financial challenges of paying their proportionate share of past and future downstream capital improvement projects. This will also provide an opportunity for the downstream agencies to further solidify the proposed timing for their projects.

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 July 24, 2007, to place the sewer service charges on the tax roll for FY 2007-2008:

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 2007-2008 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 sewer service charge rates for the next five (5) years in nine (9) Districts that we believe are needed to cover the costs as explained above. We are proposing increased sewer service charge rates for Crystal Springs County Sanitation District only for the 2007-08 fiscal year.

Sewer Service Charge ($/Year Per Equivalent Residential Unit)

Proposed Rates

District

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

Burlingame Hills SMD

$812

$950

$1,200

$1,400

$1,500

$1,600

Crystal Springs CSD

$496

$900

Rates to be evaluated during 2007-08 FY

Devonshire CSD

$474

$600

$700

$800

$900

$1,000

Edgewood SMD

$655

$750

$800

$850

$900

$950

Emerald Lake SMD – Zone 1

$629

$750

$900

$1,050

$1,100

$1,130

Emerald Lake SMD – Zone 2

$428

$550

$670

$750

$770

$810

Fair Oaks SMD

$267

$400

$400

$400

$420

$470

Harbor Industrial SMD

$268

$280

$290

$300

$310

$320

Kensington Square SMD

$373

$500

$750

$850

$900

$975

Oak Knoll SMD

$412

$500

$600

$700

$800

$900

Scenic Heights CSD

$387

$500

$650

$800

$950

$1,050

Sewer master plans were developed for the Districts in 1999 and 2000, 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 eleven (11) capital improvement projects. The remaining capital improvement cost (construction only) required to complete the Sewer Master Plan List is approximately $11,230,000 in today’s dollars. These projects have been financed with a “pay as you go” method.

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.

Attachments:

Attachment “A” – Sewer Rate Increase Methodology

Attachment “B” – Comparison of Sewer Service Charges in Other Jurisdictions