COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Public Works

DATE:

July 16, 2007

BOARD MEETING DATE:

July 24, 2007

SPECIAL NOTICE/HEARING:

Complied with Publication Requirements

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

James C. Porter, Director of Public Works

SUBJECT:

Adoption of Proposed Sewer Service Rates and 2007-08 Sewer Service Charges Report 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.

Hold a public hearing to consider all comments, objections, and written protests to the sewer service charges that are based on the proposed sewer service rates previously introduced.

2.

After considering all written and oral comments, close the public hearing and determine if there is a majority protest in writing to the proposed sewer service rates in any of the Districts governed by your Board.

3.

If there is a majority protest in writing in any of the Districts:

a.

Terminate consideration of imposing the proposed sewer service rates in said District(s);

b.

Adopt a resolution approving sewer service charges for said District(s) based on the sewer service rate previously in affect (2006-07);

c.

Direct staff to recalculate the Sewer Service Charges Report (Report) based on the 2006-07sewer service rates for said District(s);

d.

Direct staff to file a copy of the Sewer Service Charges Report with the Controller.

e.

Direct staff to prioritize expenditures in said District(s) as follows:

1)

meet the contractual commitments of said District(s) for the transport/treatment and for downstream capital improvement projects associated with the transport and treatment of sewage collected by said District(s);

2)

provide “on-call” responses to clear mainline blockages that may occur after sewer staff’s normal business hours in said District(s);

3)

provide responses to clear mainline blockages that may occur during sewer staff’s regular business hours; and

4)

complete the preparation of the Sanitary Sewer Management Plan (SSMP) as required by the State.

5)

perform in-district capital improvements if revenues allow.

4.

Adopt a resolution adopting the 2007-08 Sewer Service Charges Report based on the currently proposed sewer service rates for the Districts where there is not a written majority protest.

5.

Direct staff to meet and discuss future sewer service rates and District services with a committee of property owners who represent the Homeowner Association groups in the Crystal Springs County Sanitation District during the 2007-2008 fiscal year.

Vision Alignment:

Commitment: Ensure basic health and safety for all.

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

Adoption of the proposed sewer service rates contributes to this commitment and goal by providing funding for the Districts to continue the operation and maintenance of the sewer systems. Ongoing operation and maintenance of the sewer systems is necessary to ensure public health and safety and comply with new environmental regulations.

Background

Previous Board Action

1.

Adopted Resolution No. 068781 on June 5, 2007 that set 9:15 A.M. on July 24, 2007, in your Chambers as the time and place for a public hearing to consider the Sewer Service Charges Report for 2007-08 for the Sewer/Sanitation Districts governed by your Board.

2.

Directed the Director of Public Works to send notices of the proposed rates and charges to each property owner in each District as required by the State Constitution.

History

The Districts governed by your Board currently provide sanitary sewage collection, transport, treatment and disposal services as well as ancillary field and office services to approximately 12,000 residences, businesses, schools, and institutions in ten (10) areas of San Mateo County. Virtually all of the revenue to provide these services in each District is generated by a user fee, the sewer service charge.

The State Regional Water Quality Control Board (RWQCB) notified staff in July 2005 of the requirement to prepare a Sewer System Management Plan (SSMP) pursuant to Section 13267 of the California Water Code, and a timetable to provide specific elements of the SSMP. They also notified us that failure to respond, a late response or incomplete response could subject the agency to civil liabilities imposed by the State of up to $1,000 per day. The State Water Resources Control Board recently implemented Waste Discharge Requirements for all sewer collection systems, which specifies sewer overflow reporting requirements and requirements for development of a SSMP.

In developing the elements of the sewer service rates, staff reviewed five (5) years of historic cost data and collection system master plans for each District to develop costs for continuing with the maintenance of the collection system. We also included contractual commitments of the Districts for downstream transport and treatment of the sewage collected by the Districts, and costs for developing a SSMP that meets the provisions of the RWQCB.

The cost elements that are included in the proposed sewer service rates, with the exception of the Crystal Springs county Sanitation District, are:

1.

Continued routine and emergency maintenance (operation and maintenance).

2.

Increased costs for sewage treatment and disposal.

3.

Compliance 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 system).

4.

District capital improvement projects to increase the size of sewer mains where capacity is insufficient, and to rehabilitate or replace structurally damaged sewer mains, and

5.

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

The 2007-08 Sewer Service Charges Report contains the individual charge for each parcel of real property receiving sewer service from the ten (10) Districts. The following table indicates the prior and the current sewer service rates which were used to calculate the 2007-08 Sewer Service Charges Report:

District

Prior Rate 2006-07

Current Rate 2007-08

Increase

Burlingame Hills SMD

$ 812

$ 950

$ 138

Crystal Springs CSD

$ 496

$ 900

$ 404

Devonshire CSD

$ 474

$ 600

$ 126

Edgewood SMD

$ 655

$ 750

$ 95

Emerald Lake Heights SMD – Zone 1

$ 629

$ 750

$ 121

Emerald Lake Heights SMD – Zone 2

$ 428

$ 550

$ 122

Fair Oaks SMD

$ 267

$ 400

$ 133

Harbor Industrial SMD

$ 268

$ 280

$ 12

Kensington Square SMD

$ 373

$ 500

$ 127

Oak Knoll SMD

$ 412

$ 500

$ 88

Scenic Heights CSD

$ 387

$ 500

$ 113

Public Input Process:

The Department sent three mailings to all property owners in each of the ten Districts. The first mailing contained information about the sewer systems, district specific information, the need for sewer service rate increases, and the timeline for setting new rates. The second mailing provided information relative to the proposed rates and provided information about community meetings to discuss proposed rates and obtain input regarding the proposed rates. The Department conducted evening meetings with property owners from each of the ten districts to describe in greater detail how the proposed rates were calculated. The input received at those meetings was used to determine the proposed rates. After the Board meeting on June 5, 2007, the Department sent a third mailing which provided property owners with the proposed rates and information about the time and place of the Public Hearing.

The Department has received several e-mails and letters from property owners within the Districts with questions and comments regarding the sewer service rates. Staff has responded to their questions and posted the Questions and Responses on the Department’s website. Staff has also held additional meetings with representatives of the Homeowner Association (HOA) groups from the Devonshire County Sanitation District on May 7, 2007, the Burlingame Hills Sewer Maintenance District on June 1, 2007, and the Crystal Springs County Sanitation District on May 29 and June 18, 2007. The meeting on June 18 was attended by the President of the Baywood Park HOA. The San Mateo Highlands HOA could not attend the meeting. We will schedule additional meetings over the next several months with representatives from HOA groups in the Crystal Springs County Sanitation District to discuss and develop rates for the future.

Discussion

Our June 5, 2007 staff report (copy attached) explained the need for the additional charges and the proposed process to be followed pursuant to the County Ordinance Code. Notices were sent to the property owners of the approximately 12,000 parcels in the ten County Sewer/Sanitation Districts informing them of the proposed charges for each specific property, the reason for the charges, and the time, place, and date when your Board would consider the proposed charges. The purpose of the public hearing is to allow your Board to hear and consider any and all objections or written protests to the amount of the individual charges.

The following table indicates the number of written protests to the proposed increase in sewer service rates that were received at the time this report was prepared (June 28, 2007):

District

No. of Properties in District

Written Protests Received

Percent (%)

Burlingame Hills SMD

433

3

0.69%

Crystal Springs CSD

1,461

4

0.27%

Devonshire CSD

301

5

1.66%

Edgewood SMD

14

0

0.00%

Emerald Lake Heights SMD – Zone 1

212

0

0.00%

Emerald Lake Heights SMD – Zone 2

1,775

1

0.06%

Fair Oaks SMD

7,210

8

0.11%

Harbor Industrial SMD

68

0

0.00%

Kensington Square SMD

74

0

0.00%

Oak Knoll SMD

132

0

0.00%

Scenic Heights CSD

53

2

3.77%

We will report to your Board on any written protests that are received up to and including the date and time of the public hearing.

Alternates to Consider:

After the close of the hearing, your Board has the following options to consider for each District, based on whether or not there is a majority protest in each District:

Districts Where There is a Written Majority Protest:

We recommend that you take the actions as recommended in the Recommendation Section of this report including:

1.

Adopting a resolution approving sewer service charges in the District(s) where there is majority protest using the sewer service rates previously in affect for the 2006-07 fiscal year, and directing staff to recalculate the charges and file the report with the Controller; and

2.

Directing staff to prioritize expenditures in said District(s).

Districts Where There is No Written Majority Protest:

Your Board can:

1.

Approve the Sewer Service Charges Report as presented for the Districts where there is no majority protest; or

2.

Reduce the sewer service rates as you may determine appropriate.

Your Board, as stated above, can reduce sewer service rates at the close of the public hearing. However, a source of funding, such as a loan, would need to be found if a District incurred an expense that could not be financed based on adopted rates. Additional impacts to the District could include reduced maintenance; deferred capital improvements; or the Districts not meeting State mandates that can result in possible fines against the Districts.

We believe the recommended Sewer Service Charges are appropriate as they have been calculated in conformance with the proposed sewer service rates, provide the funding necessary to maintain the collection systems of the Districts, allow the Districts to meet their contractual commitments as well as meeting the most recent State mandates in developing and financing a SSMP for each District. The Sewer Service Charges for the Crystal Springs County Sanitation District are not sufficient to financially support all of the District’s existing and anticipated financial obligations. We have been advised by the San Mateo Highlands HOA that they do not support an additional loan to pay the current debts to downstream agencies.

Crystal Springs County Sanitation District

The Department will be conducting meetings with a committee comprised of HOA representatives in the Crystal Springs County Sanitation District to develop rate structures for the future that will adequately support the financial requirements of the District or determine whether other options for providing sewer service are available to the District. The 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 refine the proposed timing and estimated cost for their projects.

A resolution has been approved as to form by County Counsel, and we will provide an alternate form of resolution if there is a majority protest in a District(s), or if your Board determines to reduce sewer service rates in a District(s) where there is no majority protest.

Fiscal Impact

The adoption of the 2007-08 Sewer Service Charges Report and its filing with the Controller will result in the user charges contained therein being placed on the tax roll. The charges will appear on the 2007-08 tax bill of each affected property and be collected in the same manner as the property tax.

There is no direct impact to the General Fund. However, sewer service charges are levied on properties that are either leased or owned by the County that are in the Districts and which are provided sewer service.

Attachment:

June 5, 2007 Board Report