To: Common Council From: Ari Lavine, City Attorney Subject: Adjustments to Stormwater User Fees Date: October 3, 2018
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1 CITY OF ITHACA 108 East Green Street Ithaca, New York OFFICE OF THE CITY ATTORNEY Aaron O. Lavine, City Attorney Telephone: 607/ Robert A. Sarachan, Assistant City Attorney Fax: 607/ Krin Flaherty, Assistant City Attorney Kevin Levine, Assistant City Attorney Jody Andrew, Executive Assistant To: Common Council From: Ari Lavine, City Attorney Subject: Adjustments to Stormwater User Fees Date: October 3, 2018 As you know, the City launched its Stormwater Utility law in January The ensuing three-plus years of activity enable us to evaluate the functionality of the law. Overall, the law is functioning well. Stormwater User Fees ( SUF s ) have successfully funded a variety of crucial work in support of the City s stormwater systems. But one fact stands out: the City spends markedly more each year on stormwater-related expenses than it collects in SUF s. This, in turn, means that the City continues to spend, on average, well over half a million dollars per year on stormwater services paid for by funding sources other than SUF s much of it, tax dollars. Taxes, of course, do not account for the amount of stormwater generated by impervious surfaces located on any given parcel and do not provide any incentive for property owners to reduce the amount of runoff generated by their properties. Additionally, employing taxes as the funding mechanism for stormwater-related expenses omits tax-exempt properties from participation in the funding of the stormwater programming and infrastructure needed to handle runoff generated by such properties. As a result, the local law accompanying this memo would adjust the Stormwater User Fees so as more closely to align the amount annually collected with the amount of annual expenditures on stormwater-related expenses. This adjustment would enable the City to expend elsewhere tax dollars that have historically been dedicated to stormwater expenses. In particular, the new street-paving crew under consideration is proposed at a total budget impact of $550,000 per year. The local law accompanying this memo would free up an estimated $583,000 per year in non-stormwater funding sources (i.e., taxes, grants, etc.) that could be spent on that new crew. This proposed increase in SUF s would enable the City to pay for a host of necessary stormwater services that have to date not been funded by SUF s. A few examples of such services from recent years include the 2016 Six Mile Creek Wall replacement project, the 2017 Cascadilla Creekway Project, the 2018 Warren Place culvert project, and the stormwater components of a variety of road reconstructions projects. Additional examples include staff time that is devoted to stormwater services and stormwater-related equipment costs.
2 As you can see in this local law, the proposed SUF rate, which would continue to be billed on a quarterly basis, is $14.25 per quarter for Residential Lots, meaning those tax lots containing 1-, 2-, or 3-family homes. For all other lots, the proposed rate is $21.75 per quarter per ERU (i.e., per each 2,300 square feet of impervious surface on the lot). Since 2015, these rates have both been set at $12 per quarter. While it is of course ultimately up to Council, the anticipated timeline for consideration of this local law runs parallel to the budget process, in order to enable you to account, if you choose, for the increased SUF revenue when making other determinations in the budget, such as the above-referenced street-paving crew. To that end, this memo and local law will be posted to the City s Budget website on October 4, included in the agenda for the October 18 budget meeting for discussion, and included in the agenda for the October 30 budget meeting for a vote (by Committee of the Whole). It could then come to a final vote at the November 7 Council meeting along with the full budget. Important Note: Because this is a local law, and thus subject to aging requirements, I note that if you plan to take your final vote on this local law on November 7 you will be unable to amend it in any way when voting it out of committee on October 30. I would therefore recommend a complete discussion of any changes that you may seek to this local law on October 18 so that they can be included in the version on which you could vote on October 30.
3 A Local Law Entitled Adjustments to the Stormwater User Fee WHEREAS, the City previously adopted Local Law , authorizing the creation of a stormwater utility and the establishment of a stormwater user fee, and WHEREAS, that Local Law created a user fee funding stream to support stormwaterrelated expenses, such as construction and maintenance of storm sewers and channeled streams, environmental management, and regulatory compliance, and WHEREAS, Council s stated intent in that Local Law was for a stormwater user fee to replace taxes as the funding mechanism for stormwater-related expenses, because taxes do not account for the amount of stormwater generated by impervious surfaces located on any given parcel and do not provide any incentive for property owners to reduce the amount of runoff generated by their properties, and WHEREAS, Council noted in that Local Law that employing taxes as the funding mechanism for stormwater-related expenses omits tax-exempt properties from participation in the funding of the stormwater programming and infrastructure needed to handle runoff generated by such properties, and WHEREAS, City staff have been able to evaluate the functionality of that Local Law based upon the ensuing three-plus years of activity, and have concluded that the City spends markedly more each year on stormwater-related expenses than it collects in stormwater user fees, meaning that, on average, the City spends well over half a million dollars per year on stormwater services paid for by funding sources other than stormwater user fees much of it, tax dollars, and WHEREAS, Municipal Home Rule Law Section 10(1)(ii)(a)(9-a) authorizes the City to provide for the fixing, levy, collection and administration of rentals, charges, rates or fees, penalties and rates of interest thereon, liens on local property in connection therewith and charges thereon, now, therefore, BE IT ENACTED by the Common Council of the City of Ithaca as follows: Section 1. Legislative Findings, Intent, and Purpose. The Common Council makes the following findings of fact: A. The City currently expends far more funding on Stormwater Services, as defined in Section of the City Code, than it collects in total Stormwater User Fees, thus necessitating substantial expenditures from other funding sources to provide necessary Stormwater Services. Those other funding sources include the General Fund (i.e., tax dollars) and outside funding sources, particularly state and federal grant funding. B. The City seeks more closely to align the Stormwater User Fees annually collected with the annual expenditures on Stormwater Services.
4 C. Every parcel of real property that contains impervious surface areas, both public and private, uses and benefits from the maintenance of the stormwater system, and those impervious surfaces that generate larger quantities or dirtier runoff use and benefit disproportionately. D. Those parcels of property constituting Non-Residential Lots, often containing parking lots and other automotive-intensive uses, are substantially more likely than Residential Lots, even when measured on a per-eru basis, each term as defined in Section 283-1, to produce stormwater containing hydrocarbons, trace metals (including cadmium, copper, lead and zinc), and chlorides, each of which are substantially attributable to automotive operations ranging from leaking oil and grease to shedding brake pads to salts that are applied to parking lots, as documented in the Department of Environmental Conservation s 2015 Stormwater Management Design Manual Chapter 2, Section 2.1. For example, that Manual notes that some areas that produce runoff with high runoff concentrations [of hydrocarbons] include gas stations, commuter parking lots [and] convenience stores. E. These more concentrated quality impacts on the stormwater managed by the City (i.e., more polluted stormwater on a per-square-foot basis) necessitate a higher per-eru User Fee Rate, as defined below, for Non- Residential Lots. F. Because an array of Stormwater Services remain to date funded by sources other than Stormwater User Fees, changed incentives continue to be required in order to motivate individual property owners to reduce the rate and volume of runoff from their respective properties and to increase the water quality of that runoff. Properties with large, impervious surfaces, such as parking lots, are often assessed at a lower value for property tax purposes than smaller properties with a residential building surrounded largely by pervious surfaces, even though the former properties have a much larger effect on the City s stormwater infrastructure. As a result, the costs of stormwater services required to meet the City s regulatory obligations, increase waterway quality, and protect City residents and businesses from flooding are not currently shared by each property fully in proportion to the demands it places on such services. G. Impervious surfaces that tax-exempt property owners have chosen to construct or maintain on their properties substantially increase the need for, and cost of providing, stormwater services. However, because a substantial portion of those costs to date continue to be paid out of the City s tax revenues, the owners of those properties do not proportionately participate in funding the infrastructure and services required by the runoff generated due to their decisions. Pursuant to Municipal Home Rule Law Section 10(1)(ii)(a)(9-a) the City of Ithaca is authorized to adopt a local law relating to the adoption of user fees. The user fee adjusted by this Local Law will be used to pay the costs incurred by the City in offering services and infrastructure to handle runoff caused by a property owner s choice to
5 construct or maintain impervious surfaces on a given property. Further, this dedicated source of funds for stormwater programming is needed for the City to address its aging infrastructure, the increasing number of federal and state regulations regarding the handling of stormwater with which the City must comply, and the increases in overall precipitation and heavy precipitation events that have already occurred, and are anticipated to continue, due to climate change. Section 2. Amendment to Section Section of the City Code, Definitions, is hereby amended to add at the end thereof: USER FEE RATE. The monthly User Fee Rate for Residential Lots is four dollars and seventy-five cents ($4.75); for Non-Residential Lots it is seven dollars and twenty-five cents ($7.25). Section 2. Amendment to Section 283-2(A). Section 283-2(A) of the City Code, Stormwater User Fees, is hereby amended as follows: A. Each Developed Lot in the City shall be subject to a monthly Stormwater User Fee equal to the product of [four dollars ($4.00)]the applicable User Fee Rate and the number of ERUs of Impervious Surface Area on the Lot as calculated below, less any credits for the Lot approved by the Superintendent pursuant to Section (1) Every Residential Lot, and each Non-Residential Lot with an Impervious Surface Area less than or equal to one (1) ERU, shall be deemed to have an Impervious Surface Area equal to one (1) ERU. (2) The number of ERUs of Impervious Surface Area on a Non- Residential Lot with an Impervious Surface Area greater than one (1) ERU shall be calculated by dividing the Lot s Impervious Surface Area by the value of one (1) ERU, and rounding the result up to the nearest one-quarter (1/4) of an ERU. Section 3. Severability Clause. Severability is intended throughout and within the provisions of this Local Law. If any section, subsection, sentence, clause, phrase, or portion of this Local Law is held to be invalid or unconstitutional by a court of competent jurisdiction, then that decision shall not affect the validity of the remaining portions of this Local Law. Section 4. Effective and Operative Date. This Local Law shall take effect January 1, 2019, provided it is first filed in the office of the Secretary of State, or upon filing in the office of the Secretary of State thereafter.
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