COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Public Works

DATE:

July 1, 2008

BOARD MEETING DATE:

July 22, 2008

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 FY 2008-09 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.

Adopt an ordinance setting the FY 2008-09 sewer service rate for the Crystal Springs County Sanitation District (CSCSD) at the same level as the FY 2007-08 rate, increasing the FY 2008-09 rate for the Burlingame Hills Sewer Maintenance District (BHSMD), and setting the rates for the FY 2008-09 for the remaining eight districts as previously set by Ordinance No. 04382; and

2.

Hold a public hearing and receive testimony on (1) increasing the sewer service rate for the BHSMD and (2) imposing the Sewer Service Charges for all ten districts calculated on the basis of the adopted sewer service rates.

3.

After considering all written and oral objections to the sewer service rate for the BHSMD and charges for all ten (10) Districts, close the public hearing and determine if there is a majority protest to the proposed sewer service rate in the BHSMD.

4.

If there is a majority protest in writing in the BHSMD, terminate consideration of imposing a sewer service rate increase for the BHSMD and adopt a resolution setting the FY 2008-09 sewer service rate and charges for the BHSMD based on the sewer service rate in affect for FY 2007-08, and direct staff to recalculate the Sewer Service Charges for the BHSMD.

5.

Adopt a Resolution authorizing the imposition of sewer service charges for the 2008-09 fiscal year, and authorizing the filing of the 2008-09 sewer service charges report for the county sewer maintenance and sanitation districts with the Controller.

VISION ALIGNMENT:

Commitment: Ensure basic health and safety for all.

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

The sewer service charges provide funding for the Districts to operate and maintain the sewer systems, which serve portions of the unincorporated area and some neighboring city areas.

BACKGROUND

PREVIOUS BOARD ACTION

1.

Adopted Ordinance No. 04382 on August 7, 2007, establishing the sewer service rates for the FY 2007-08 for the BHSMD and the CSCSD and set rates for the other eight (8) districts for FY 2007-08 and subsequent four fiscal years. The sewer service rate for the CSCSD was increased and set for only one year (FY 2007-08) and the sewer service rate was set for one year (FY 2007-08) for the BHSMD and was not increased due to a majority protest.

2.

Adopted Resolution No. 069483 on June 3, 2008, (1) setting 9:30 A.M. on July 22, 2008, in your Chambers as the time and place for a public hearing to consider the sewer service rate for the BHSMD and for the Sewer Service Charges Report for FY 2008-09 for the ten (10) Sewer/Sanitation Districts governed by your Board, and (2) directing the Director of Public Works to send notices of the proposed rate to each property owner in BHSMD.

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.

DISCUSSION

Our June 3, 2008 staff report (copy attached) explained the need for the sewer rate increase for the BHSMD, maintaining the sewer service rate for the CSCSD for the FY 2008-09, and adopting the Sewer Service Charges Report based on the adopted sewer service rates. The report also described the proposed process to be followed pursuant to the County Ordinance Code.

Notices were sent to the property owners of the approximately 1,900 parcels in BHSMD and CSCSD informing them of the proposed rates and 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 Department also sent letters to the various homeowner associations in the remaining eight (8) districts informing them of the sewer service rates previously adopted and the hearing to consider the sewer service charges report for FY 2008-09 based on the adopted rates. The purpose of the public hearing is to allow your Board to hear and consider any objections and written protests to the sewer service rate for the BHSMD and the Sewer Service Charges Report based on the adopted rates for all ten districts.

The FY 2008-09 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 FY 2008-09 Sewer Service Charges Report:

District

Prior Rate 2007-08

Current Rate 2008-09

Increase

Burlingame Hills SMD

$812

$950

$138

Crystal Springs CSD

$900

$900

$ 0

The Following Rates Previously Set by Ordinance No. 04382, August 7, 2007

District

Prior Rate 2007-08

Current Rate 2008-09

Increase

Devonshire CSD

$600

$700

$100

Edgewood SMD

$750

$800

$ 50

Emerald Lake Heights SMD – Zone 1

$750

$900

$150

Emerald Lake Heights SMD – Zone 2

$550

$670

$120

Fair Oaks SMD

$400

$400

$ 0

Harbor Industrial SMD

$280

$290

$ 10

Kensington Square SMD

$500

$750

$250

Oak Knoll SMD

$500

$600

$100

Scenic Heights CSD

$500

$650

$150

Public Input Process:

At your direction, the Department has been meeting with a group of representatives from the BHSMD and the CSCSD during the FY 2007-08 to determine sewer service rates for the FY 2008-09. The proposed sewer service rates for these districts were determined through the meetings and based on the recognition that both districts face potentially significant issues that will have financial impacts to the districts. It is recommended that the sewer service rates for both districts be set for one year while district specific financial requirements continue to be discussed and other issues become known.

The Department sent two mailings to all property owners in BHSMD and CSCSD. The first mailing provided information about the evening public meetings which were held for each district to discuss the proposed rates, convey information about the meetings the Department has had with representatives from the districts, and to obtain input regarding the proposed rates. After the Board meeting on June 3, 2008, the Department sent a second mailing to each property owner in both districts with the proposed rates and information about the time and place of the Public Hearing. The second mailing for the BHSMD complied with Article XIIIC and XIIID of the State Constitution by individually noticing each property owner of record of the proposed increase in the property related fee and a mechanism for rejecting the fees via a “majority protest” at the public hearing.

The Department has not received any written protests to the proposed FY 2008-09 rate for the BHSMD. 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 the BHSMD, based on whether or not there is a majority protest:

If There is a Written Majority Protest in the BHSMD:

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

Adopting a resolution approving sewer service charges in the BHSMD for FY 2008-09 using the sewer service rate previously in affect for the FY 2007-08, and directing staff to recalculate the charges for the BHSMD and file the revised report with the Controller.

If There is No Written Majority Protest in the BHSMD:

Your Board can:

1.

Approve the Sewer Service Charges Report as presented including the charges for the BHSMD based on the proposed sewer service rate; or

2.

Reduce the sewer service rate as you may determine appropriate for the BHSMD.

Your Board, as stated above, can reduce the sewer service rate for the BHSMD at the close of the public hearing. However, a source of funding, such as a loan, would need to be found if the BHSMD incurred an expense that could not be financed based on the adopted rate. Additional impacts to the BHSMD could include reduced maintenance; deferred capital improvements; or the BHSMD 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 and previously adopted sewer service rates, provide the funding necessary to maintain the collection systems of the Districts, allow the Districts to meet their contractual commitments and meet the most recent State mandates. The sewer service rate for the CSCSD is not sufficient to financially support all of the District’s existing and anticipated financial obligations. We will continue to meet with the CSCSD homeowner representatives to develop future sewer service rates that are sufficient to meet all of the CSCSD’s financial obligations.

Future Meetings with the BHSMD and CSCSD Homeowner Association Representatives

The Department will continue conducting meetings with the committees comprised of homeowner association representatives in the BHSMD and CSCSD to develop rate structures for the future that will adequately support the financial requirements of the districts or determine whether other options for providing sewer service are available to the districts. Both districts face the financial challenges of paying their proportionate share of past and future downstream capital improvement projects and the uncertainties associated with issues affecting both districts.

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 the BHSMD.

FISCAL IMPACT

The adoption of the FY 2008-09 Sewer Service Charges Report and its electronic filing with the Controller will result in the user charges contained therein being placed on the tax roll. The charges will appear on the FY 2008-09 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 3, 2008 Board Report