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SR-080527-8B~® ~;tYOf City Council Report Santa Monica'° City Council Meeting: May 27, 2008 Agenda Item: ~"~ To: Mayor and City Council From: Joan Akins, Acting Director -Environmental and Public Works Management Subject: Resolution Establishing the Duties and Responsibilities of the Citizens Oversight Committee Created by the Measure V Clean Beaches and Ocean Parcel Tax Recommended Action Staff recommends that the City Council adopt a resolution defining the membership, scope and responsibilities for the Measure V Citizens Oversight Committee, and direct staff to proceed with a process to identify eligible applicants for the Oversight Committee to be considered and appointed by City Council. Executive Summary The Clean Beaches and Ocean Parcel Tax (Measure V) was passed by 67% 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: Measure V created a Citizens Oversight Committee for "audit responsibility" over use of Measure V revenues. Measure V specifies that the membership, scope and responsibilities of the Committee shall be determined by the City Council. At #heir meeting on September 25, 2007 Council directed staff to return at a later date with a resolution for adoption that would establish an Oversight Committee of between five to seven members to be appointed- by Council and would set forth the specific duties, responsibilities and terms for the Committee members. A resolution responding to this Council request is attached. Following adoption of the resolution by Council, staff will proceed expeditiously with a process to receive applications from interested citizens that can then be presented to Council for review and appointment to the Oversight Committee. Background The Clean Beaches and Ocean Parcel Tax (Measure V) was passed by 67% of Santa Monica voters in November 2006 for the purpose of implementing the City's Watershed 1 Management Plan. The goals of the Watershed Management Plan are to reduce urbari runoff pollution; reduce urban flooding; increase water reuse and conservation; increase recreational opportunities and open space; and increase wildlife and marine habitat. Revenues generated by Measure V 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 urban runoff, 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 Regional Water Quality Control Board relating to Total Maximum Daily Loads (TMDLs). Compliance with these regulatory standards over the next several years will require a significantly enhanced effort by the City, with consequences for non-compliance resulting in significant fines. Measure V created a Citizens Oversight Committee for "audit responsibility" over use of Measure V revenues. Measure V specifies that the membership, scope and responsibilities of the Committee shall be determined by the City Council. Measure V also requires that each year the City's Chief Financial Officer 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. The first such report will be completed following the creation of the Citizens Oversight Committee and Council authorization of capital projects to be completed using Measure V funds. Progress Since Adoption of Measure V The following provides an update of actions taken and progress made since the adoption of Measure V by Santa Monica voters in November 2006: • The Clean Beaches and Ocean parcel tax was collected as a part of each parcel's property tax assessment for the first time during FY 2007-08 and generated $2.34 million in revenue. 2 • On January 10; 2008 the Rent Control Board granted approval for apass- through of applicable Measure V costs by the owners of rent-controlled properties to tenants. • Staff has consolidated the Measure Vlow-income exemption process with the existing Rent Control low-income exemption process to maximize the efficiency and cost-effectiveness for administration of waiver applications, reviews and approvals. Letters to tenants of rent controlled units regarding the Measure V exemption process are scheduled to be sent out during spring and summer 2008 and letters to the owners of the properties are scheduled to be sent in September 2008. • Staff has begun working with the City's consultants to initiate a sale of municipal bonds to provide approximately $25 million in funding to design and construct the highest priority projects indentified in the Watershed Management Plan. These projects include- upgrades of the Pier and Pico-Kenter Storm drains, upgrades to the Santa Monica Urban Runoff Recycling Facility, funding for the Ocean Park Boulevard Green Street Project, funding for additional Beach Greening Projects in the City's beach parking lots, as well as funding for joint projects with the City of Los Angeles that affect Santa Monica's watershed. It is expected that these - bonds will be issued in late 2008. • Staff has been proceeding with a number of important urban runoff projects and initiatives that are not tied to Measure V as they are funded by both outside grants as well as the City's long-standing stormwater parcel fee revenues. These recently .completed or substantially completed projects include dry-weather capture and sewer diversion systems for the Montana Avenue storm drain and the Wilshire Boulevard storm drain, and the Beach Greening project in the South Beach parking lot: A conceptual design for the Bicknell Green Street project has also been completed as have engineering and feasibility analyses for runoff mitigation improvements to the Pier storm drain and the Pico-Kenter storm drain. • On April 21, 2008 staff submitted a comprehensive response to the Notice of Violation letter that the Regional Water Quality Control Board transmitted to Santa Monica as well as nearly two-dozen other Southern California cities in March 2008. Santa Monica's response, that was forwarded to Council under separate cover, clearly identifies the unprecedented level of resource investments both in capital projects and operational improvements related to stormwater pollution control that have been made by the City of Santa Monica over the past several years. 3 Discussion Citizens Oversight Committee Resolution The. attached resolution establishes a five (5) member Citizens Oversight Committee. The responsibilities of the Committee are solely advisory to the City Council and fall into three categories: 1) review of proposed capital and operating expenditures from Measure V funds; 2) review of actual Measure V capital and operating expenditures; and 3) review of proposed Measure V capital projects to confirm consistency with established water quality improvement goals of the program. The staff liaison to the Committee shall be designated by the Director of Environmental and Public Works Management. The Committee will set its own meeting schedule, but will be expected to meet at least bi-annually. The Resolution stipulates that each Committee member will be appointed for atwo-year term and can be reappointed by Council for additional terms without limitation. The Committee, with the assistance of its staff liaison, will be charged with preparing and submitting an annual report to Council on the responsibilities set forth above. Financial Impacts & Budget Actions Staffing for the Citizens Oversight Committee will be conducted by existing staff from the Environmental and Public Works Management Department and will not require any additional budgetary allocation. Supplies and expenses for the Citizens Oversight Committee are expected not to exceed $1000 per year and will be funded annually by revenues generated by the Measure V parcel tax. Next Steps Staff plans to return to Cduncil this summer with an updated Measure V capital projects plan based on the most updated regulatory compliance information, project budget cost estimates, and bond financing information. 4 Prepared by: Dean Kubani, Environmental Programs Manager roved: ~_ Joarf~~<ins Acting Director, Environmental and Public Works Management Forwarded to Council: 1 P. G ont Ewell City Manager Attachment: Resolution 5 ~-r Supplemental Santa rion~;ca City Council Report City Council Meeting: May 27, 2008 . Agenda Item: ° ~ To: Mayor and City Council From: Joan Akins, Interim Director - Environmental and Public Works Management Subject: Update on Status of Measure V Implementation Executive Summary This report is to provide supplemental information to Council's consideration of establishirig a Measure V Oversight Committee. The Clean Beaches and Oceans Parcel tax (Measure V) revenues are. expected to be $2.35 million by the end of FY 2007-08. The fund will increase by an additional $2.45 million by the end of FY 2008- 09. Measure V into provide funds to design and implement projects in furtherance of the City's Watershed Management Plan. Staff is currently developing a financing plan to provide the most cost effective and timely funding for the design, construction, operation and maintenance of high priority projects identified in the City's Watershed Management Plan. The financing plan will be presented for Council approval of mid-year.. In parallel with development of the financing plan, work has begun on the highest priority project to be completed as part of Measure V, replacement of the Pier storm drain. Staff is initiating the process to hire a firm to complete design of the project, and to hire a contract project manager to oversee the project until the recruitment of a Stormwater Engineer can be completed. The total costs for this phase of the project are estimated at $550,000, which will be taken from existing Measure V funds. It is anticipate that if the consultant selection process is expedited that the design can be completed by year-end 2008 and construction can begin shortly thereafter. The estimated cost of the replacement project is $2 million; however, the actual cost of the project will not be known until completion of design and the bid process The Stormwater Engineer position is anticipated to be filled by January 2009. The position will also be funded by Measure V funds. The Pier Strom Drain Replacement project is part of the Phase I Implementation Plan approved by Council in September 2007. Included in Phase I are funds that Santa Monica is required to contribute from Measure V funds to the City of Los Angeles to construct joint watershed management projects in the local watershed to reduce beach bacterial levels, Pico-Kenter Improvements for $2 million. However, changes required by the Regional Water Quality Control board to the Santa Monica Bay Beaches 1 Bacterial Total Maximum Daily Load (TMDL) Implementation Plah have resulted in a an increase in the amount of which Council previously approved from a total of $2 million to $11.9 million. Staff has worked with the City of Los Angeles to ensure that $10.5 million of this new total will be spent on projects that collect and treat runoff from approximately 600 acres of Santa Monica that were previously presented to Council as part of phase I implementation of Measure V. Staff will return to Council for authorization to enter into a Memorandum of Agreement with the City of Los Angeles and other partner agencies once the terms are completed and the Measure V financing plan is finalized. Finally, there is a projected deficit in the Stormwater Fund which is occurring because the fee is not indexed to CPI so the revenues do not keep pace with expenditures Staff will return to Council during the mid-year budget with a recommendation of how to address this projected deficit. Discussion Current Status of Measure V -The Clean Beaches and Ocean Parcel Tax was collected for. the first time during FY 2007-08 and has generated $2.43 million in revenue as of May 2008. After low income -and other ekemptions are refunded it is expected that the total funds available for expenditure will be approximately $2.35 million., The rates are subject to increase each year based on. the Consumer. Price Index and it is anticipated that the amount of revenue will increase by approximately $100,000 for FY 2008-09. Staff is currently developing a financing plan to provide the most cost effective and timely funding for the design, construction, operation and maintenance of high priority projects to safeguard Santa Monica's beaches and bay and ensure that the city is in compliance with its National Pollution Discharge Elimination System (NPDES) permit requirements and all regulations promulgated by the Regional Water Quality ControC Board (RWQCB). The financing plan involves the review of timelines and costs for the priority 'projects idehtified in the Phase I Implementation Plan that was presented to City .Council on September 25, 2007. A copy of that staff report is attached to this update. The list of proposed Phase I projects along with estimated costs is presented below. 2 Priority Projects -Phase 1 (next 10 years) 2009-10 Pier Stormdrain Replacement/Upgrade Pico-Kenter Improvements Bicknell Green Street Project 2011-12 Ocean Park Blvd Green Street Project No set date Beach Greening Parking Lot Conversion Multi-Benefit Projects in Pico-Kenter sub-basin Cost sharing with City of LA (2009 - 2015) 16~h St and Airport/Penmar Project Airport Watershed BMPs Other Misc. projects in J2/3 $2 million $2 million $0.5 million $1 million $4 million $4 million $7.5 million $3 million $1.5 million Staff will return at mid-year with a detailed financing plan for Council approval. This plan will consist of an analysis of the estimated project costs, timelines and available funding to determine which projects are recommended to be funded on a pay as you go basis and which should be debt financed. Near Term Strategy The highest priority project for Measure V funding is the replacement of the Pier Storm Drain and staff recommends that design of this project begin immediately. .The estimated cost for project design is $350,000. In order to expedite this project, it will be necessary to hire a contract project manager to oversee the design .process. The estimated cost for project management services is $200,000 for six months. If the selection processes for the project management staff and the design firm are expedited, it is anticipated that the design can be completed by year-end 2008. It is proposed that funds for the project design and management be taken from the existing Measure V funds. Expediting the design process will allow construction to begin on the project as soon as the financing strategy is complete and funds for construction are identified. This would be in early 2009. 3 Over the longer term a dedicated Stormwater Engineer Position will is proposed to manage all of the Measure V watershed management projects: This position will be funded through Measure V revenues.. It is anticipated that this position can be filled by January 2009, following completion of the financing plan. This position will be included in the mid-year budget recommendation. Watershed implementation Plan To meet the requirements of the federal Clean Water Act the RWQCB has required the development of Implementation Plans for seven watersheds (or jurisdictions) that comprise the. Los Angeles region. Santa Monica is located within Jurisdictions 2 and 3 (J2/3). Other participating partners in J2/3 include the City of Los Angeles, City of EI Segundo, the. County of Los Angeles, and the California-Department of Transportation (CalTrans). On July 8, 2003 Council authorized the City Manager to negotiate and execute a Memorandum of Understanding (MOU) with the J2/3 participating partners to develop the Plan for the J2/3 watersheds. This, MOU commits Santa Monica to meet water quality goals throughout the J2/3 watersheds (not just within our city limits). The Plan for J2/3 that was approved by Council was submitted to the RWQCB on July 15, 2005. That Plan contained .information on cost sharing. for joint water quality improvement efforts among the participating agencies in the jurisdictions, based upon the land area that each agency occupies within J2/3 and on the number and cost of the individual projects each agency will undertake as part of the Plan. On April 24, 2007 Council authorized the City Manager to execute a Memorandum of Agreement with the J2/3 agencies at an annual cost of $283,195 for seven years (total cost of $1.98 million). That money was intended to construct projects within the J2/3 watersheds, with the City of Los Angeles acting as Lead agency and project manager for the joint projects. Following the Plan's submittal, the RWQCB requested a quantitative analysis of the Plan to determine if its full implementation-would achieve compliance with the bacterial 4 TMDL requirements. The results of the analysis were received by staff in late October 2007 following the September 25, 2007 presentation to Council of the proposed phase I plan for use of Measure V funds. The analysis indicated that the initial Plan would fall significantly short of meeting the TMDL targets and recommended significant expansion in the scope of the projects within the watershed in order to meet the targets. Based on that expansion in scope, Santa Monica's share of the joint costs would increase to $1.7 million annually for seven years (total cost of $11.9. million). This money would be transferred to the City of Los Angeles as project manager for implementation of the joint projects within the J2/3 watersheds. Staff has been working closely with City of Los Angeles staff to structure the projects and payments in order to minimize the impact of Santa Monica's ability to obtain bond funding with its Measure. V revenues and maximize it's ability to complete projects within Santa .Monica that meet the goals of the city's Watershed Management Plan. The September 27, 2007 report to Council contained information on two priority projects - the 16`h Street and Airport Watersheds Retention system and the Airport Watersheds BMPs -that would have accounted for $10.5 million in Measure V funds. Those projects as proposed would treat runoff from 600 acres of the southeast portion of Santa Monica. In our discussions with City of Los Angeles staff, they have agreed that $10.5 million of the funds from the cost sharing agreement would continue to be used to fund these projects. The difference from the September 27, 2007 proposal is that these projects would now be managed by the City of Los Angeles, and the stormwater treatment systems would be installed on City of Los Angeles property at Penmar Park instead of Marine Park. This proposal will minimize costs for Santa Monica and disruption to residents while achieving the same runoff reduction goals. The remaining $1.4 million of the cost sharing money would be used to fund other projects within the J2/3 watersheds outside of Santa Monica. The City of Los Angeles has also indicated that it is willing to work with Santa Monica to structure the payments in any way feasible in order to facilitate the issuance of bonds and completion of other priority projects as part of Measure V. Once the terms of an MOA with the City of Los Angles and the other 5 J2/3 partner agencies are finalized and the Measure V financing plan is completed, staff will return to Council for authorization to sign the MOA. This will need to be completed before any joint projects within the J2/3 watersheds can be undertaken. Stormwater Fund Update One of-the issues that will need to be addressed in future budgets is the status of the Stormwater Fund. This fund receives revenue from a stormwater fee that is billed to propertyowners, which is used to pay for existing stormwater operations. The fee is not indexed by CPI and therefore revenues do not keep pace with increases in operating costs. The fund is projected to be in a $500,000 deficit position by the end of FY 2008- 09, growing to $1.5 million by the end of FY 2009-10. Staff will come back to Council during the mid-year budget with a recommendation of how to addressthis shortfall. Prepared by: Dean Kubani, Environmental Programs Manager Approved: Interim Director, Environmental and Public Works Managemenf Forwarded to Council: ~~Y ont Ewell Manager 6 Reference Resolution No. 10295 (CCS).