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SR-092507-8CCity Council Meeting: September 25, 2007 Agenda Item: ~ ~ G To: Mayor and City Council From: .Craig Perkins, Director- Environmental and Public Works Management Carol Swindell, Director- Finance Subject: Council Actions to Implement Stormwater Management Projects Funded by the Measure V Clean Beaches and Ocean Parcel Tax. Recommended Action Staff recommends that the City Council: 1. review and conceptually approve the proposed phase I plan for use of Measure V funds; 2. approve Measure V low income waiver provisions and adopt implementing resolution; 3. approve proposed membership, scope and responsibilities for Measure V Citizens Oversight Committee; and 4. direct staff to proceed with preparation of analysis and recommended actions to borrow capital funds for proposed Measure V capital projects through issuance of revenue bonds supported by Measure V revenues. 1 Executive Summary The Clean Beaches and Ocean Parcel Tax (Measure V) was passed by over two-thirds of Santa Monica voters in November 2006. Measure V raises revenue to be used solely for the purpose of implementing the City's Watershed Management Plan. This report presents a proposed plan for the first phase of Measure V funded projects that are recommended to be financed through the issuance of revenue bonds that will be repaid from annual Measure V tax revenues. Low income waiver guidelines and an implementing waiver resolution are presented in the report for discussion and Council action. Recommendations are also presented related to the membership, scope and responsibilities of the Citizens Oversight Committee that was authorized by Measure V to audit the use of funds. Following conceptual Council approval of the first phase Measure V implementation plan, staff will prepare as part of the mid-year budget review a financial analysis and budget recommendations, including debt issuance to finance capital projects and operating budget increases that are necessary to implement the adopted Watershed Management Plan. In addition, following Council approval of the low income waiver provision, staff will work with the Rent Control Board and its staff to finalize their approval of apass-through of the tax to tenants. Background The goals of the Watershed Management Plan are to reduce urban runoff pollution; 2 reduce urban flooding; increase water reuse and conservation; increase recreational opportunities and open space; and increase wildlife and marine habitat. Measure V generated revenues can be used for necessary capital as well as operations and maintenance costs related to storm drainage systems and multipurpose capital improvement projects that improve the quality of stormwater, as well as paying for 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 and new regulations promulgated by the Los Angeles Regional Water Quality Control Board relating to Total Maximum Daily Loadings (TMDLs). Compliance with these regulatory standards over the next several years will require a significantly enhanced effort by the City, and the consequences to cities that do not comply with the .urban runoff requirements could be severe. The Clean Beaches and Ocean Parcel Tax 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 parcel for a particular land use. The rates are subject to increase each year based on CPI changes. It is estimated that the parcel tax will generate approximately $2.3 million in revenue during FY 2007-08. 3 Proceeds of the Clean Beaches and Ocean Parcel Tax can be applied only to the specific purposes identified in the enabling Ordinance. Each year, the City's Chief Financial Officer will be required to file a report with the City Council containing: (a) the amount of funds collected and expended; and (b) the status of any project authorized to be funded as identified in the Ordinance. Discussion Proposed Measure V Projects The following projects are proposed as the priority stormwater projects to be funded by Measure V during the first phase of Watershed Management Plan implementation. The projects have been selected based on both an initial evaluation of their potential water quality benefits, consideration of existing grant and multi-jurisdiction partnership opportunities and an assessment of their readiness to be implemented within a reasonable time period. The preliminary costs that are listed represent the estimated total project costs. It is anticipated that some of these costs will be offset by outside grant funding sources that will be pursued by City staff on an ongoing basis. The estimated total cost of these proposed projects is $25.0 million. Other stormwater mitigation projects applicable to implementation of the Watershed Management Plan are already under construction or in the design process by the City and will augment the proposed priority list below. In addition, staff will continue to look for opportunities for other appropriate stormwater projects that can either be financed by private developments or funded in partnership with other public agencies such as the 4 Santa Monica Malibu Unified School District or Santa Mdnica College as a part of their respective capital construction programs. 16th Street and Airport Watersheds Retention System Construction of a subsurface stormwater treatment, storage and reuse project at Marine Park and Penmar Golf Course. This joint project between the City of Santa Monica and the City of Los Angeles would capture runoff from approximately 600 acres within the City of Santa Monica and a similar amount from within the City of Los Angeles. Approximate cost: $7.5 million. Airport Watershed BMPs Construction of curb extensions, infiltration chambers, porous concrete strips and other urban runoff best management practices within the Airport watershed that would be coordinated with the construction of the 16th Street and Airport Watersheds Retention System project. Approximate cost: $3.0 million. Pico-KenterStorm Drain Upgrades Construction of improvements at the Pico-Kenter stormdrain ouffall to improve the reliability of diversions to the Santa Monica Urban Runoff Recycling Facility (SMURRF) and ensure that 100% of dry weather runoff is diverted either to SMURRF or to the sewer system to prevent any urban runoff from entering the ocean during dry weather periods. Approximate cost: $2.0 million. 5 Pier Storm Drain System Upgrades and Pollution Prevention Reduction Increase the size of the existing Pier Storm drain diversion to the sewer for flows that exceed the capacity of SMURRF, and replace the deficient storm drain under the Pier to reduce runoff flows onto the beach. The project also includes implementation of structural measures to better mitigate ocean pollution from birds and other activities on or near the Pier. Approximate cost: $2.0 million. SMURRF Water Storage Reservoir Increase the reliability and effectiveness of the Santa Monica Urban Runoff Recycling Facility by constructing a supplemental finished water reservoir to store recycled water used for landscape irrigation or toilet flushing by SMURRF customers. The project will increase the total volume of recycled water use and provide needed redundancy for periods when SMURRF is shut down for repairs or maintenance. Approximate cost: $3.0 million Bicknell Green Street Project Construct curb drains, parkway swales and retention areas, and permeable retrofit features for one block of a residential street as a demonstration project. Approximate cost: $1.0 million. Ocean Park Boulevard Green Street Project As part of a larger urban design improvement project for the portion of Ocean Park Boulevard between Lincoln Boulevard and Neilson Way, create new open space areas 6 within the existing Ocean Park Boulevard right of way, install subsurface runoff retention structures/devices, construct permeable paved areas to replace impervious concrete and asphalt and divert runoff into newly created and landscaped areas. Approximate cost: $1.0 million. Beach Lot Greening Projects Implement additional beach parking lot greening projects to create permeable recreation space that will still be usable for beach parking during the heaviest beach parking demand days. Pursuit of additional project opportunities will be tied to the successful implementation of the current project to remove asphalt paving from the South Beach Parking Lot. Approximate cost: $1.0 million. Multi-Benefit Urban Runoff Pollution Control Projects Install various types of Best Management Practice technologies at City parks, school sites and other existing and new open spaces within the city to harvest, reuse and infiltrate storm runoff; and construct areas of porous concrete, asphalt and other appropriate materials in alleys, gutters and streets to infiltrate dry and wet weather runoff. Approximate cost: $4.5 million. Analysis of Capital Financing Needs The revenues that are received by the City from the Clean Beaches and Ocean Parcel Tax can be used for all eligible Stormwater program expenses related to the implementation of the City's Watershed Master Plan. Current cash flow projections for 7 the next ten year period (FY 2007-08 to 2017-18) show that the total revenues anticipated to be collected during the period will be approximately $31.0 million. During the same ten year period, it is estimated that approximately $50.0 million will need to be spent on new capital projects, approximately $5.0 million will be needed for general operations and maintenance costs (including new staffing), and approximately $g.5 million will be needed for operation and maintenance costs related to the new capital projects. The ten year cash flow projection therefore identifies a possible total funding shortfall of about $33.5 million. Staff currently expects to seek up to $25.0 million of the $50 million in needed capital funds through regional, state and federal grant sources. Even with the successful receipt of grant funds, however, there will still be insufficient cash flow available from Measure V proceeds to meet all the local share of CIP project funding over the next ten years. In order to plug this cash-flow gap, it is proposed that funds be obtained through the issuance of stormwater revenue bonds that will be repaid with ongoing Measure V tax revenues. The bond financing options will be explored by staff and a final bond funding recommendation will be presented to City Council within the next few months. Low Income Exemptions The enabling ordinance for the Clean Beaches and Ocean Tax authorizes the City Council to establish by resolution special exemption procedures and eligibility criteria based on income, age or disability. Staff recommends that Council adopt the attached resolution that will exempt all property owners and renters from the tax who meet the 8 following income eligibility limits for FY 2007-08. These are the same thresholds that are currently used for the City's Senior Citizens Utility User's Tax Exemption Program. a. $25,002 annual gross income for single person households. b. $28,650 annual gross income for two or more person households. Thereafter, the income eligibility limits will be increased annually by the December to December change in the Los Angeles-Riverside-Orange County Consumer Price Index for Wage Earners and Clerical Workers (CPI-W). The total exemption amount for an eligible single family property owner would be $84.00 per year, and the exemption amount for an apartment renter would be approximately $24 per year. Although it is not possible to precisely estimate the fiscal impact of the proposed exemption, it is roughly calculated that the Clean Beaches and Ocean revenue loss from the exemption would be less than $100,000 annually if all eligible property owners and renters availed themselves of the exemption option. Following Council approval of an exemption resolution, staff will establish an exemption application and verification process managed by the appropriate City department and will ensure that all potentially eligible residents receive exemption information and application materials. Citizens Oversight Committee Measure V created a Citizens Oversight Committee for "audit responsibility" over use of Measure V revenues. The Measure indicated that the membership, scope and 9 responsibilities of the Committee shall be determined by Council. After evaluation of various committee options, staff recommends that Council establish a Citizens Oversight Committee for Measure V that is comprised of five persons selected by their respective board or task force colleagues as follows: One member of the Task Force on the Environment • One member of the Recreation and Parks Commission • One member of the Sustainable City Task Force • One member of the Planning Commission City's representative to the Metropolitan Water District Board It is recommended that the Citizens Oversight Committee initially meet once every three months, which can be adjusted based on the issues that need to be reviewed or discussed. The responsibilities of the Committee are proposed to be solely advisory to the City Council and would fall .into three categories: review of proposed capital and operating .expenditures from Measure V funds for the next calendar quarter; review of actual Measure V expenditures for the proceeding calendar quarter; and review of proposed Measure V capital projects to confirm consistency. with the generally or specifically established water quality improvement goals of the program. The project review activities of the Committee would include providing assistance to staff in ensuring that the proposed projects will meet the goals of the Watershed Management Plan. The staff liaison to the Committee shall be designated by the Director of EPWM. Budget/Financial Impact The budget impact from approval of the low income waiver resolution will be a Clean Beaches and Ocean Tax revenue loss of approximately $100,000 in FY 2007-08 which 10 will increase in subsequent years based on increases in the Tax tied to the Consumer Price Index. There are no other budget impacts from the recommended actions in this report. Prepared by: Craig Perkins, Director of Environmental and Public Works Management Approved: Craig Perkins Director- E vironmental and Public Works Management Department ~, `G2~ lam// Carol Swindell Director- Finance Department Attachment: Resolution Forwarded to Council: 11 Reference Resolution No. 10248 (CCS)