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SR-104-088 (7)~_ ~ City of 5anta Monica City Council Report City Council Meeting: July 25, 2006 Agenda Item: -1'~ To: Mayor and City Council From: Craig Perkins, Director - Environmental and Public Works Management Subject: Public Hearing for Proposed Clean Beaches and Ocean Parcel Tax and Adopt a Resolution to Place on the November 7, 2006 Ballot Recommended Action It is recommended that the City Council: 1. conduct a Public Hearing to discuss Proposed Clean Beaches and Ocean Parcel Tax Measure; and 2. adopt a resolution to place the Clean Beaches and Ocean Parcel Tax on the November 7, 2006 ballot. Executive Summary On July 12, 2006, the City Council directed staff to call a public hearing for July 25, 2006, and prepare ballot language to place a special parcel tax ordinance before Santa Monica voters in the upcoming November 2006 election. The ordinance is attached as Exhibit A to the Resolution. The Council reserved to the July 25 meeting the decision whether to approve the Resolution calling for adoption of a Clean Beaches and Ocean Parcel Tax or to proceed with placing the measure on the November 7, 2006, General Election ballot. 1 The Clean Beaches and Ocean Parcel Tax ordinance will raise revenue to be used solely for the purpose of implementing and financing a portion of the City's Watershed Management Plan. The goals of the Plan are to reduce urban runoff pollution; reduce urban flooding; increase water reuse and conservation; increase recreational opportunities and open space; and increase wildlife and marine habitat. The proposed special tax will fund financing the operation, administration, maintenance, improvement, environmental restoration, upgrade and replacement of the existing and future storm drainage system, on-site stormwater management systems, storm drain conveyance system upgrades, and multipurpose capital improvement projects, improving the quality of stormwater, as well as paying for, or securing the payment of, any indebtedness incurred for these purposes. The urban runoff management and pollution prevention activities of the Plan will assist the City in complying with National Pollution Discharge Elimination System (NPDES) permit requirements, meeting the goals of the Clean Water Act, as well as new regulations promulgated by the Los Angeles Regional Water Quality Control Board relating to Total Maximum Daily Loadings (TMDLs). Discussion ~ Parcel Tax Rate The Clean Beaches and Ocean Parcel Tax ordinance establishes an initial annual parcel tax of $84.00 per single residential detached family unit ($7.00 per month). Rates for multi-family and commercial properties will vary depending upon parcel size and a"runoff factor" that represents the amount of average storm drainage from a 2 parcel for a particular land use. The runoff factors and the formula to compute the parcel tax for multi-family, commercial and other property types is identified in section 7.64.040 of the attached Ordinance. The rates are subject to increase each year based on the annual percent increase for the twelve month period February through February of the prior fiscal year, if any, in the Wage Earners and Clerical Workers All Items Consumer Price Index (CPI-W) for the Los Angeles-Riverside-Orange County statistical area, or any successor index. Under the California Constitution, a special tax is treated differently from a property- related fee, the latter of which cannot exceed the reasonable cost of providing a service or regulatory activity for which the fee is charged. The Clean Beaches and Ocean Parcel Tax is a special tax in that public agencies, including the Santa Monica Community College, Santa Monica-Malibu Unified School District and the City of Santa Monica, are exempt from special taxes as a matter of law. In addition, other qualifying non-profit institutions generally exempt from taxation (e.g. churches, schools, hospitals) may seek to exempt themselves from a special tax. Notwithstanding these exemptions, the parcel tax rate will raise annual revenues of approximately $2,350,000. Compliance with State Law. Consistent with state law, proceeds of the Clean Beaches and Ocean Parcel Tax will be deposited into a special fund and applied only to the specific purposes identified in the Ordinance. Each year, the City's Chief Financial Officer will be required to file a report with the City Council containing both of the following: (a) the amount of funds collected 3 and expended; and (b) the status of any project authorized to be funded as identified in the Ordinance. In addition, the City Council will establish and appoint members to a citizen's oversight committee to audit the use of funds. Subcommittee Proposed section 9 of the Resolution authorizes the Mayor or a designated subcommittee to prepare a written argument in favor of the Measure not to exceed 300 words, on behalf of the City Council. If the Council wishes to retain section 9 in the Resolution, it should decide whether to appoint a subcommittee. At the subcommittee's discretion, the argument may also be signed by bona fide organizations or by individual voters. Rent Control Pass Through and Low Income Exemption The legal responsibility for payment of the special tax, if passed, would fall to property owners, including owners of rent-controlled multi-family buildings, unless the Santa Monica Rent Control Board votes to authorize a direct pass-through of the special tax to renters. ln the interest of equity, it is therefore recommended that Council direct staff to request the Rent Control Board to authorize a direct pass-through of the tax prior to the November election. It is also recommended that Council direct staff to prepare a process and eligibility criteria for the exemption of low income property owners and renters from the tax. The recommended low income exemption process will be presented to Council for formal approval prior to November 2006. 4 Communication with Santa Monica Communitv Colleqe and Santa Monica-Malibu Unified School Districts. The Council requested staff to inquire as to the status of the school district's intent to hold a special election in November 2006 on a bond measure and report on the impact of such an election if pursued. In addition, the Council requested staff to inquire of these Districts as to the cooperation they could provide and the resources that could be made available to implement Wastewater Management Plan activities. Staff will report on discussions with the Districts at the hearing. Budqet/Financial Impact The budget impact resulting from the recommended action would be an increase in City election costs of from $5,000 to $7,000. If the ballot measure is approved by the voters, there will be an increase in special tax revenue for implementation of the Wastewater Management Plan of approximately $2,350,000 annually. Prepared by: Craig Perkins Approved: Forwarded to Council: Craig Perk' s Director - Environmental and Public Works Management Department Attachment: Resolution P. ont Ewell C Manager 5 ee o te eso utlon o.