The Water Services Division - Stormwater Section has contracted with Water Resources Economics for a Stormwater utility rate analysis. The purpose of the rate adjustment considerations are to fund the budget gap created by new responsibilities, capital projects and workloads within the Section driven by the 2019 Museum Fire, 2022 Pipeline Fire and subsequent flooding, deteriorating watershed conditions on the south slope of Mount Elden, increased infrastructure maintenance needs, and addressing deferred infrastructure capital needs. The purpose of this agenda item is to provide Council a review of the Stormwater Utility Rate Adjustment Study results and staff's recommendations for rate changes in advance of the November 15, 2022 Council Meeting for a Public Hearing and 1st Read of an Ordinance for the rate adjustments at that time. 
 

Summary,

1. Review the background on stormwater fund, a bit of history and future obligations.
2. Discuss the financial challenges associated with this fund
3. Discuss the importance of reserves, GO Bond initiatives, and level of service
4. Review the schedule / game plan
5. Receive input from Council

The Stormwater Enterprise Fund is funded through a Stormwater Utility rate assessment that is provided on the Municipal Services Bill (“water bill”). The rate is set based on Equivalent Rate Units (ERUs) of 1,500 square feet of impervious area that are themselves based on a calculation of impervious surface within an individual parcel. The rate is intended to fund all of the Stormwater Section’s responsibilities including FEMA regulatory compliance, stormwater maintenance, stormwater development review, stormwater inspections, capital improvements, and master planning. The last rate adjustment was completed in 2018 and effective on July 1,2019 to help support operations and major capital improvements which included $32 million in debt finance.
 
The Water Services Division - Stormwater Section has taken on additional responsibilities, workloads and capital improvement needs since the 2019 rate implementation. These changes include flood response and capital improvements related to the 2019 Museum Fire and 2022 Pipeline Fire, flood response from incising steep slopes on the south slope of Mount Elden, general emergency and disaster responses, a better accounting of aging infrastructure and deferred maintenance and improvements related to aging infrastructure, increased runoff from forest thinning as well as forecasted near-term climate variability, and an increase in impervious area through better mapping and hydrologic modeling. The additional responsibilities are beyond the budget capacity as outlined in the 2019 rate.
 
To adjust to the current operational environment the Water Services - Stormwater Section solicited a rate adjustment study. Water Resources Economics is the consultant who conducted the study in cooperation with Management Services and Water Services Divisions. The intention is to provide City Council with two proposed rate structures dependent on the election results on Proposition 441 GO Bond. 

Staff's intention is to bring an Ordinance to Council on November 15, 2022 for a Public Hearing and 1st Read.  The 2nd Read and Adoption is planned for November 29, 2022 with implementation of the new rate in January 2023.