Piedmont’s much belabored efforts and those by other public entities to meet legal obligations to reduce sewage inflow and spills into San Francisco Bay has resulted in a settlement agreement.  

Weeks prior to the settlement, the City Council had considered whether or not to place an additional tax before the voters for approximately $1 million derived from an increased Real Property Transfer Tax. When the Council learned of significant unexpected funds garnered from existing Real Property Transfer Taxes, they decided it was not appropriate to ask voters for more money.

The EPA law suit and overstated sewer costs were used as the impetus to ask Piedmont voters to increase taxes in 2012.

 In February 2012, the City Council asked Piedmont voters to double their already high sewer property tax to gain $11 million to increase the  Sewer Fund.  When citizens calculated the City’s sewer cost numbers and discovered large overstatement of costs through miscalculations and unsubstantiated EPA threats, Piedmont voters rejected the heavily endorsed 2012 Sewer Tax Measure.

Questions remain on the large differential from $11 million to the now $1 million to accomplish the same amount of sewer replacement work.  The city has recently stated costs were miscalculated.

Sewer Fund expenditure records were previously not kept in a manner to verify proper use of the Fund.

The City now states that the current funds generated by the ongoing Sewer Tax will allow rehabilitation to proceed in a timely and cost-effective manner without additional tax revenues.  

There have been no statements by the City on the long term impact of sewer rehabilitation on the sewer tax amount.  Will the sewer tax be reduced once sewer lines are updated and operating properly? 

The consent decree imposes civil penalties on EBMUD and seven communities totaling $1.56 million to be paid to the US EPA and the California Water Quality Control Board (CWQCB). The civil penalties to be paid to the US EPA are identical to the penalties due to CWQCB except that Oakland is penalized $850,000 by US EPA and EBMUD is penalized $170,800 by US EPA and $30,800 by CWQCB.  Piedmont’s penalties are approximately $20,500 to CWQCB and the same amount to US EPA for a total penalty of approximately $41,000. 

The Council’s consideration of the Consent Decree and Piedmont’s Sewer System Management Plan revisions are on the August 4 Council meeting agenda. There are three staff reports related to Piedmont’s sewer system.

http://www.ci.piedmont.ca.us/html/govern/staffreports/2014-08-04/consentdecree.pdf

http://www.ci.piedmont.ca.us/html/govern/staffreports/2014-08-04/ssmp.pdf

8/4/14 – Consideration of a Revised Sewer System Management Plan (SSMP) Pursuant to the Consent Decree and the State Sewer Audit of June 26, 2014

The  7:30 p.m. meeting in the Council Chambers will be recorded and broadcast.

– READ MORE BELOW – 

EPA press release of 7/28/2014 follows:

Historic Clean Water Act settlement will prevent millions of gallons of sewage discharges into San Francisco Bay

Seven East Bay communities and municipal utility district to repair systems and pay civil penalties

SAN FRANCISCO – The U.S. Environmental Protection Agency today announced a Clean Water Act settlement requiring the East Bay Municipal Utility District (EBMUD) and seven East Bay communities to conduct extensive system repairs aimed at eliminating millions of gallons of sewage discharges into San Francisco Bay. Under today’s agreement, EBMUD and the communities will assess and upgrade their 1,500 mile-long sewer system infrastructure over a 21-year period. 

The work is expected to cost approximately $1.5 billion. The entities will pay civil penalties of $1.5 million for past sewage discharges that violated federal environmental law.

Since 2009, EPA, state and local regulators and environmental groups have worked to reduce sewage discharges from East Bay communities. During that period, interim actions required EBMUD and the East Bay communities to improve their sewer maintenance practices and gather information to identify priorities for investment. 

The San Francisco Bay covers 1,600 square miles and is the largest Pacific estuary in the Americas, a host for millions of migratory birds and a hub of commerce and recreation for more than 7 million Bay Area residents. 

Unfortunately, the Bay is under threat from many sources of pollution, including crumbling wastewater infrastructure that allows sewage to escape from the system. During rainstorms, in particular, older sewer systems can be overwhelmed, releasing rivers of sewage before being fully treated.

In addition to polluting waterways, raw and partially treated sewage can spread disease-causing organisms, metals, and nutrients that threaten public health. Sewage can also deplete oxygen in the bay, threatening fish, seals and other wildlife.

“For many years, the health of San Francisco Bay has been imperiled by ongoing pollution, including enormous discharges of raw and partially treated sewage from communities in the East Bay,” said Jared Blumenfeld, EPA’s Regional Administrator for the Pacific Southwest. “Many of these discharges are the result of aging, deteriorated sewer infrastructure that will be fixed under the EPA order.”

Today’s settlement is the result of a Clean Water Act enforcement action brought by the EPA, U.S. Department of Justice, State Water Resources Control Board, San Francisco Bay Regional Water Board, San Francisco Baykeeper and Our Children’s Earth Foundation.

“This settlement will result in major reductions of sewage discharges into the San Francisco Bay,” said W. Benjamin Fisherow, Chief of Environmental Enforcement in the Justice Department’s Environment and Natural Resources Division. “These improvements will help reach our goal of eliminating pollution in the neighborhoods in these cities and in the Bay so that citizens may rest assured that they reside in a safe, clean environment.” 

The seven East Bay communities in the EBMUD settlement are:

City of Alameda
City of Albany
City of Berkeley
City of Emeryville
City of Oakland
City of Piedmont
Stege Sanitary District (serving El Cerrito, Kensington, and a portion of Richmond) 

“The public has been required to repair their own sewer laterals for over two years now, so it is past time that the local agencies aggressively repair their sewer systems,” said Bruce Wolfe, Executive Officer of the San Francisco Bay Regional Water Board. “This settlement spells out how the agencies will work with the public over the next 21 years to do just that and protect the Bay.”

“Baykeeper will be watching the progress of these repairs closely to ensure that pollution of San Francisco Bay is reduced and eventually eliminated, and we will take action if the repairs fall short,” said Baykeeper Executive Director Deb Self. 

On an annual basis, hundreds of millions of gallons of raw and partially treated sewage are discharged directly to San Francisco Bay. Also, as much as 600,000 gallons of raw sewage from community sewer systems is first discharged onto streets and other public areas—through outlets such as manhole covers—before it drains to the Bay.

As part of the agreement, EBMUD and the seven communities will:

repair and rehabilitate old and cracked sewer pipes;
regularly clean and inspect sewer pipes to prevent overflows of raw sewage; 
identify and eliminate illegal sewer connections;
continue to enforce private sewer lateral ordinances; and
ensure proactive renewal of existing sanitary sewer infrastructure.

EBMUD will also immediately begin work to offset the environmental harm caused by the sewage discharges, which are expected to continue until these sewer upgrades are completed, by capturing and treating urban runoff and contaminated water that currently flows to the Bay untreated during dry weather.

Keeping raw sewage and contaminated storm water out of the waters of the United States is one of EPA’s National Enforcement Initiatives.

The proposed settlement is subject to a 30-day public comment period and final court approval. 

Read the settlement at: http://www.usdoj.gov/enrd/Consent_Decrees.html

Learn more about the settlement and earlier EPA wastewater enforcement in the East Bay at:http://www.epa.gov/region9/water/npdes/compliance.html#ebmud 

EPA is working to restore San Francisco Bay, learn more at: http://epa.gov/sfbay-delta 

Learn more about EPA’s national wastewater enforcement initiative at: http://go.usa.gov/5pak

Contact Information: Suzanne Skadowski, 415-972-3165 (d) / 415-265-2863 (c), skadowski.suzanne@epa.gov

Excerpts from the decree follow:

“11. No later than 30 Days after the Effective Date of this Consent Decree, each Defendant identified below shall pay to the Water Boards the sum appearing next to its name, as a civil penalty, together with interest accruing from the date on which the Consent Decree is lodged with the Court, at the rate specified in 28 U.S.C. § 1961 as of the date of lodging:

City of Piedmont $20,519 “

Following is Piedmont’s  July 29 press release:

“City and EPA Agree to Consent Decree Regarding Sewer Suit

– Opponents of Sewer Tax Measure Proven Correct – 

While the Environmental Protection Agency (EPA) lawsuit against the East Bay Municipal Utility District (EBMUD) and communities has been the primary argument on behalf of increasing the Sewer Tax, the EPA settled for an agreement to have the sewer repairs in the involved communities replaced over the next 21 years. In addition, the City of Piedmont will pay two $20,519 civil penalties (to federal and state agencies) for historic discharges. Former Council member Garrett Keating explained the decree penalty will likely be offset by future smoke testing and flow monitoring being done by EBMUD rather than Piedmont, saving the city $20,000 each year.

The City has previously hired E2 Consulting Engineers to conduct the tests, which involve blowing harmless smoke into parts of the sanitary sewer system to find damage, improper connections, and where unwanted storm water may be entering the City’s sanitary sewer system.

The consent decree contains a number of future penalties for failure to fulfill its requirements. The comment period is July 31, 2014 to September 2, 2014.  The Council will explore the ramifications of the agreement at the August 4 City Council meeting. 

The sole signer of the opposing ballot argument to the failed February, 2012 Sewer Tax measure was resident Rick Schiller, who provided context to the agreement:

“The $11 million that was needed 3 years ago magically went down to $1  million earlier this year [2014], and then zero when Real Property Transfer Taxes came in higher than expected. Under our current budget, we can complete the mainline sewers by utilizing inexpensive state loans.  In addition, I suspect a high percentage of Piedmonters, are replacing their private sewer laterals at considerable individual household cost. Piedmont remains at the forefront in compliance.”

Schiller also commented on details of the decree:

“1. Piedmont’s Asset Management Implementation Plan (AMIP) put in a year ago is accepted. We knew it would be.

2. Paragraph 96(a) requires a minimum of 1.15% of our system be rehabilitated annually. We are already doing that.

3. We are to categorize needed repairs and Paragraph 100(a)(i) establishes what is high-priority. If repairs are included in that, per Paragraph 100(a)(i) which states P100(a)(i) work counts toward the P96(a) requirements, then we are well ahead. This should be clarified.

4. As I recall, at our current pace without doing three rapid phases utilizing state loans, our system would be finished in about 17 years. The Consent Decree is requiring 21 years. The Council will be going ahead with phasing the rest using the State loans and likely be complete in 12 years.

5. Paragraph 103 makes little sense to me. EPA is requiring a 5 year cleaning schedule of the entire system and this would included the 65% of our mainline that is already replaced? Why?

6. There are Private Sewer Lateral (PSL) mandates for the City at Paragraph 97(a)(b) et al and we voluntarily signed on to that several years ago; we are the “poster child.” We already have those requirements codified.

7. Related to 6 above, would homeowners found to have even a slight offset in their existing PSL be required to repair/replace their entire lateral? Illegal cross-connections should trigger repair, but a single leak in a pipe several feet down contributes virtually nothing to an infiltration of rainwater into the sewer system and realistically a clay PSL triggers total replacement. “

On June 24, 2014, at a Special Meeting, the Council voted to direct staff to cease action to place the sewer tax surcharge on the November 2014 ballot.  With a large surge in Real Property Transfer Tax revenue, the windfall of money produces sufficient funds to cover the cost of an expedited rehabilitation of Piedmont’s sanitary sewer system. 

Council members Teddy King, Bob McBain and Tim Rood addressed potential lack of voter support, use of available funds, and advice of the Budget Advisory and Financial Planning Committee.  Mayor Margaret Fujioka joined the majority with her vote. Vice Mayor Jeff Wieler advocated the tax should continue to be pursued to build up City reserves, and he did not support the motion to cease action on the sewer tax surcharge.

The East Bay Municipal Utility District (EBMUD) water distribution system includes about 4,100 miles of pipe with the average age being 53-years-old. According to Director of Engineering  Xavier Irias, “50 years is not old for a pipe. It’s just middle-aged. Some pipes last for 100 years. Ripping out everything and starting over doesn’t make sense.”

The infrastructure renewal program is mostly based on leak rate, not age of pipe. Cast iron pipes from the 1930’s, 1940’s and 1950’s leak more than the very thick-walled cast iron pipes from the late 1800’s. Asbestos cement pipe is more age sensitive than cast iron pipe; over time calcium leaches out of asbestos cement pipe, accelerating its deterioration. Slip-lining is a possible rehabilitation option for the asbestos cement pipe when the hydraulics allow for a reduction in pipe diameter.

The single most important cause of pipe failure is unstable soil; for example, in filled land or land slide areas. Each year EBMUD replaces less than .2% of the total network, a replacement cycle of 400 years. Of the current 10 miles per year, one to two miles will be replaced using horizontal directional drilling in place of open trench installation, but only in flat residential neighborhoods with straight pipe alignments and minimal utility conflicts. Over the coming decades the goal is to increase the annual replacement rate to 40 miles of pipe per year, or 1% of the pipe system.

Council might back off of a tax measure for new money to fix sewers.

Recent information from Alameda County  shows an unprecedented increase in the Real Property Transfer Tax flowing into Piedmont’s budget causing the City Administrator and Council to take another look at placing a sewer tax measure on the November 2014 ballot.  The City has been considering a ballot measure to generate new money derived from an increase in the tax on real estate transfers. For cost effectiveness and water quality, the City seeks to expedite the 30% remaining of the sanitary sewer rehabilitation  program.

The matter will be considered at a Special Meeting of the City Council in the Council Chambers on Tuesday, June 24 starting at 7:30 p.m. The meeting, open to the public, will be broadcast on KCOM Channel 27 and available live streamed from the City’s website.

“At the June 2nd meeting, the staff report for the first public hearing on the 2014-15 Budget included an update to Real Property Transfer Tax (RPTT) receipts. Based on the information provided by Alameda County through May 15, 2014, the City was estimated to receive
approximately $2.95 million and on pace to have a record year. At that time, staff continued to propose that funds in excess of budgeted amounts be allocated for unfunded retiree medical liabilities, facilities maintenance, and equipment replacement.

Based upon receipt of new data provided by the Alameda County Assessor’s Office, FY 2013-14 will be unprecedented, with RPTT receipts through June 9th at $3.78 million. This is largely due
to an historic total of approximately $972,000 for the month of May. The total for May is only $43,000 less than what the City received for April through June combined for Fiscal Year 2012-13. The previous record for a single month of transfer tax was June 2006, with receipts of $694,840.”

City Administrator Paul Benoit’s Report to the Council

The voter approved Sewer Fund originally was intended to rebuild and maintain Piedmont’s sanitary sewer system, however it was soon changed to include the City’s storm drain system. Both systems are recognized as important to protecting waterways from damaging effluent.

Historically, the City has used excess General Funds for purposes other than sewers: beautification projects, recreation facilities, employee compensation,  $2.5 million for private undergrounding problems, etc.

The City Council offered a 2011 ballot measure to complete the remaining 30% of the aged sanitary sewers. The tax proposed would have essentially doubled property owners ‘ Sewer Fund Taxes from $471 to $849  and $707 to $1,274 depending on lot size. Piedmont voters rejected the tax increase when they learned of errors in the City’s cost estimates and incorrect statements on Environmental Protection Agency (EPA) requirements.  Supporters of the sewer tax were undeterred by the new information and continued to support the sewer ballot measure that would have provided the City with new funds of approximately $11 million.

In a recent turn around on how much money was needed to accomplish EPA requirements, the City reduced the needed amount from approximately $11 million to approximately $1 million. City explanations of the dramatic change in needed funds to complete the sewer rehabilitation included overstated and incorrect calculations.

For years records were not kept by the Public Works Department on specific work hours or various projects charged to the Sewer Fund.  Council members did not have information on the actual work charged the Sewer Fund.

A priority list weighing various uses, including sewers, with available City funds has not been produced by the Council.

Former Mayor Al Peters stated in an opinion:

“The City has an annual general fund budget of approximately $22 million.  Allocating two percent a year to this project for three years would produce over $1.3 million.  As of June 30, 2013, the City had over $10 million in reserves, including over $4 million undesignated and an additional $4 million set aside for capital improvements and equipment replacement.  Why not use a portion of these funds to loan to the Sewer Fund rather than requesting an additional tax?  If reserves are inadequate, the Council should address that issue in a comprehensive way, not by this piecemeal approach.”

As the City looks for new money for sewers, it places other projects ahead of sewers.

Capital Improve Project (CIP) funds are generally used for special projects. There is no information indicating the City  prioritizes projects based on unavoidable expenses such as the completion of EPA required sewer work.

Although CIP funds and General Funds can be used for sewers, it is unknown if CIP allocations for sewer projects will be considered by the City Council.  As of this writing, the significant infusion of funds supplied by the Real Estate Transfer Tax changes the budget numbers. Without a new sewer tax, it appears special projects could be implemented and the Sewer Fund could be provided with the funds necessary for renovation of the remaining sanitary sewers in a cost effective, expeditious manner.

To read detailed analysis on Piedmont’s Sewer Fund, go to the left side of this page and click on “Sewer Fund”.

Read the City Administrator’s Report to the Council

The Piedmont City Council has a full and important agenda at their meeting on Monday, June 2, starting at 7:30 p.m. in the City Council Chambers, 120 Vista Avenue.

Click on items below to read staff reports.

Budget Approval Hearing; 

Staff report on budget.

Budget Advisory and Financial Planning Committee Report: 

Police Officer Body Cameras:

Use of WW Funds of over $500,000 for parks, senior facility, pool or other recreation purposes

Emergency Tree Removal in Blair Park 

Additional Sewer Tax 

Election Date change to State General Election Date: 

Full agenda 

New sources of revenue for sanitary sewers are sought despite years of diverting funds away from the Sewer Fund for other City purposes.

At a recent Council meeting, the Budget Advisory and Financial Planning Committee (BAFPC) made recommendations to seek new sources of revenue to pay for remaining renovations to the City’s aged sanitary sewer pipes.  The recommendations included:

1. A Sewer Tax surcharge of 20 – 25% for two to three years.

2. A temporary Real Estate Property Transfer Tax surcharge of $2 -$3 per $1000 of sale price

3. A $1.2 to$1.4 million loan from the General Fund to the Sewer Fund

Piedmont property owners have for decades been paying into the Piedmont Sewer Fund via their property tax bills and provided ample funds to cover EPA required renovations and maintenance of the sanitary sewer pipes. However, starting many years ago, much of the Sewer Fund money was diverted to pay for various General Fund activities, such as maintaining the storm water system and street sweeping. The sanitary sewer system is separate from the storm water system. Since the Sewer Fund was used as a revenue source for the storm water system and undefined public works activities, the General Fund was relieved of paying for these and other   standard City services.

The assignment of storm water expenses to the Sewer Fund has had little recognition by those assessing the need for “new taxes” such as increased property taxes, property transfer taxes, or debt instruments including loans. The draw down of funds from the Sewer Fund transferred to the General Fund has been largely unknown to property owners, who now might be asked by the City for more taxes through an upcoming ballot measure.

Piedmonters, in general, have appeared eager to comply with EPA decrees and requirements.   The transfer of Sewer Fund money to the General Fund has raised questions.

When looking at Public Works Department employee positions, significant costs are attributed to the Sewer Fund without backup information to support hours worked or projects completed by certain public works positions.

The City’s reserves have recently grown providing funds to support projected emergencies and general maintenance, while the Sewer Fund continues to have its funds transferred to support the General Fund activities.

Some have stated that transferring money to the General Fund from the Sewer Fund has allowed the City to enhance playfields, parks, and provide more services.

– Budget Hearing June 2 –

Changes to a recommended Budget are rarely made at the Council’s public hearings, as most of the actual work on the Budget has already been done during the Budget Workshop.  These workshops are held away from broadcast systems in the Police Emergency Operations Center and are not available for public viewing. 

The public will have an opportunity to voice opinions on the sewer issue and the entire Budget at the Council’s June 2 Budget Hearing. As required by the City Charter, this is the first of two public hearings.

Staff report on Sewer Fund.

The City has enough money to pay for sewers.

I listened with interest to the Piedmont City Council’s discussion on financing future sewer projects at its May 19^th meeting.  In response to the Council’s request for community input, I have the following comments:

The Council should explain why voters were asked to pass an $11 million tax for sewer repairs a little over two years ago, and after that measure failed, are now considering a $1.2 million tax measure to complete the very same work.  This is a significant issue and needs to be addressed, particularly if the Council chooses to place a tax on the November ballot.

The Budget Advisory and Financial Planning Committee’s recommendation is that the Sewer Fund needs a one-time infusion of cash of at least $1,000,000 over the next 3 years to maintain a prudent Sewer Fund balance.  The Fund would then have the seed money to proceed with replacing all the remaining substandard sewer lines during the next 20 years.  In my judgment, the Council should fund this request out of current general fund revenues. Instead, the Council is considering seeking passage of a tax measure which would increase most homeowners’ property taxes from $120 to $150 a year for 3 years or by adding a surcharge to the already steep real estate transfer tax.

The City has an annual general fund budget of approximately $22 million.  Allocating two percent a year to this project for three years would produce over $1.3 million.  As of June 30, 2013, the City had over $10 million in reserves, including over $4 million undesignated and an additional $4 million set aside for capital improvements and equipment replacement.  Why not use a portion of these funds to loan to the Sewer Fund rather than requesting an additional tax?  If reserves are inadequate, the Council should address that issue in a comprehensive way, not by this piecemeal approach.

Al Peters, Former Mayor of Piedmont

May 22, 2014

Editors’ Note:  The opinions expressed are those of the author and not necessarily those of the Piedmont Civic Association.  Comments are welcomed below.

Former Council Member Garrett Keating comments on the City Council’s May 19 consideration of funding for sewers, maintaining recreational facilities, employee health benefits, the Budget and General Fund Reserves.

Sewers:

Council chose not to go forward with the “no tax”option and will likely choose one of the two tax options at the next Council meeting, June 2.

 The Budget Advisory and Financial Planning Committee (BAFPC) had no issues with the no tax option, so it is odd that Council felt there was some risk associated with it.   Other reasons were offered to accelerate the replacement program by adopting a tax rather than draw from the General Fund.  Environmental stewardship?

Sewer emergencies are declining and honestly, those concerned with Bay water quality would do better to contribute to the repair programs of other cities that are far greater polluters than Piedmont.

Maintain recreational facilities?  The biggest recreational need for Piedmont is field space and hours of use, not maintenance, but there are no proposals for that before City Council.

Increased contributions for retiree health benefits? A definite problem for the city.   Staff suggested Council would not address this need until 2021.

The Sewer Fund only needs $1M within the next 3 years, after which it is quite stable and an accelerated replacement program can likely be achieved. Piedmont has historically maintained high reserves, 20% of the General Fund. The current reserve for 2014-2015 is estimated at 21.5% and this would decline to 15% with the $1M loan from the General Fund.

The General Fund dropped $1M between 2006-2007 and 2007-2008 with virtually no impact on city services and $2M was found in city accounts to address undergrounding over-runs. There are more than adequate reserves to address this short-term loan. And Council could lower that need even more when year end transfer tax receipts come in. Transfer tax receipts are headed for $3.4M and Council has budgeted for $2.8. That $0.4 – 0.6 excess could be transferred to the Sewer Fund and offset a loan from the General Fund. That excess will manage to find its way into city balance sheets, no doubt, but Council could help that “15%” by using it to reduce this new tax.

Editors’ Note:  The opinions expressed are those of the author and not necessarily those of the Piedmont Civic Association.  Comments are welcomed below.

Prior PCA article.

How should Sewer Fund money be used?  

In the 1980’s, Piedmont voters approved a special parcel tax to pay for sanitary sewer rehabilitation of Piedmont’s aging sewer system.  Voters were informed that the tax was needed specifically for updating the sanitary sewer system.  (Sewer Tax amounts can be found on property owner’s Alameda County property tax statement.)

Sewer tax revenues were and are deposited into Piedmont’s Sewer Fund. However, soon after establishing the Sewer Fund, Piedmont needed additional revenues to support City services. Items historically paid for with General Fund monies were reallocated to the Sewer Fund; for example street sweeping, some tree maintenance, staff salary and other ad hoc public works maintenance activities. Records of hours worked by public works employees and projects completed using Sewer Fund money were not kept.

Over the years, more money was taken from the Sewer Fund to pay for ongoing public works maintenance items, rather than primarily being reserved for costs associated with rehabilitation of the sanitary sewer main system, emergency repairs, and maintenance of sanitary sewer mains.

Transferring funds from the Sewer Fund to the General Fund to pay for ongoing City services has allowed General Fund monies to be freed up and available to pay for other items. In recent years these have included employee benefits, utility undergrounding payments ($2.5 million), special capital projects (Blair Park $800,000 and Civic Center Development plans), and increases to the General Fund Reserves.

The FY 2014-15 Budget proposal continues the practice of transfers from the Sewer Fund to the General Fund with a $780,000 allocation.

“The City reviewed the transfer from the Sewer Fund to the General Fund and made some adjustments based on actual costs. First, minor sewer maintenance were being charged to the General Fund for approximately $150,000 and reimbursed through the transfer. The City will begin charging these costs directly to the Sewer Fund in FY 2014-15. Second, after reviewing time spent by the Public Works Department, maintenance and fuel costs for vehicles, and administration costs; the transfer is estimated at $780,000. Staff will continue to refine the estimate as this is the first year using this process.”  Excerpted from the City Administrators report

In 2012, the City proposed a ballot measure consisting of a large increase in the Sewer Fund parcel tax to cover capital improvements to the sanitary sewer mains. At the time, no suggestion was made that the City should or could cease the heavy draw down on the Sewer Fund monies to pay for normal City services.  The increased sewer parcel tax was not approved by voters.  Yet, the City continues to consider the Sewer Fund a source of monies for regular ongoing maintenance items rather than primarily a fund to pay for EPA required sewer rehabilitation.

The recently presented FY 2014-15 Piedmont Budget Proposal states:

The City of Piedmont is in a financially sound and stable position. As was the case in Fiscal Year 2013-14, we are projecting a positive net income for FY 2014-15. This net income is estimated at $699,687 and will bring the projected ending General Fund  [Reserve] balance to $4,232,099, which is 19.1% of total expenditures, inclusive of debt service.

In addition to the above noted measures, the City continues to enjoy a strong and improving economy which is driving a robust real estate market, resulting in Real Property Transfer Taxes (RPTT) projected at $3,000,000 for FY 2013-14.

Overall, the proposed budget ensures no reduction in the range and quality of services which City of Piedmont staff provide to the community. Importantly, it also ensures our ability to continue to set aside funds for the maintenance of our city facilities and equipment replacement needs. Excerpts from the City Administrators report. 

The City Council’s Budget Advisory and Financial Planning Committee (BAFPC) optionally suggests increased taxation to accelerate sewer rehabilitation. Alternatively, the BAFPC suggested a temporary $1.2 to $1.4 million loan from the General Fund to the Sewer Fund in order to replace the remaining one-third of sewer lines ahead of schedule. (The most problematic lines have been replaced first-175,000 lineal feet of the total $269,000 feet.)  Nevertheless, the Council’s Budget Advisory and Financial Planning Committee (BAFPC) found the Sewer Fund has adequate funds to proceed on schedule to meet the requirements of the Environmental  Protection Agency (EPA) for rehabilitation of the old sanitary sewer mains.  

The BAFPC concluded:

“The net result of our analysis is that the Sewer Fund does not have an operating deficit problem or a long term revenue problem, but a short term capital need for the replacement of the remaining original sewer system.”

To accelerate the scheduled completion of sanitary sewer ahead of the EPA requirement, the BAFPC looks to additional funding or loans. Projecting future construction costs, it is anticipated there would be a cost saving by replacing the remaining older lines not in one early phase, but in three equal phases over the next 12 years.

A significant part of the Public Works Department’s budget comes from the Sewer Fund.  The BAFPC noted the $300,000 emergency repairs budget for the Sewer Fund without indicating if the tasks performed are emergency repairs or potential General Fund expenses.

It is unknown if the Budget Advisory and Financial Planning Committee considered the appropriateness of current drafts made on the Sewer Fund to cover Public Works Department expenses.  

The Council will consider the Sewer Fund at their May 19 meeting.

Read the Budget Advisory and Financial Planning Committees Report to the City Council.

Read the City’s proposed budget for 2014-15.