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HomeMy WebLinkAboutAgenda Packet 120809 CITY OF ATASCADERO CITY COUNCIL AGENDA Tuesday, December 8, 2009 City Hall Council Chambers 6907 EI Camino Real, Atascadero, California Community Redevelopment Agency• 6.00 P M City Council Immediately following the conclusion of the Community Redevelopment Agency meeting PLEDGE OF ALLEGIANCE. Council Member Kelley ROLL CALL. Mayor Beraud Mayor Pro Tem Fonzi Council Member Clay Council Member Kelley Council Member O'Malley APPROVAL OF AGENDA. Roll Call 1 CITY COUNCIL REORGANIZATION 1 Council Appointment of Mayor — The City Clerk will accept nominations from the Council Members 2. Council Appointment of Mayor Pro Tem — The new Mayor will accept nominations from the Council Members COUNCIL COMMENTS COUNCIL REORGANIZATION RECESS PRESENTATIONS 1 Employee Service Awards A. CONSENT CALENDAR (All items on the consent calendar are considered to be routine and non-controversial by City staff and will be approved by one motion if no member of the Council or public wishes to comment or ask questions If comment or discussion is desired by anyone, the item will be removed from the consent calendar and will be considered in the listed sequence with an opportunity for any member of the public to address the Council concerning the item before action is taken DRAFT MINUTES Council meeting draft minutes are listed on the Consent Calendar for approval of the minutes Should anyone wish to request an amendment to draft minutes, the item will be removed from the Consent Calendar and their suggestion will be considered by the City Council If anyone desires to express their opinion concerning issues included in draft minutes, they should share their opinion during the Community Forum portion of the meeting ) 1 City Council Meeting Draft Minutes — November 10, 2009 ■ Recommendation. Council approve the Draft Meeting Minutes of November 10, 2009 [City Clerk] 2. Property Donation Acceptance - Approval of the Acceptance of Grant Deed from the Morgan Stanley Dean Witter Trust to the City of Atascadero - Lot No. 50, Unit 6 located in California Valley, APN. 084- 211-011 ■ Description. This property is being donated to the City as a gift to benefit the City's Zoo and/or Parks System ■ Fiscal Impact: The property is currently worth an estimated $10,000 ■ Recommendation. Council authorize the City Manager to execute the Acceptance of Grant Deed for real property being donated to the City as a gift by Morgan Stanley Dean Witter Trust to benefit the City's Zoo and/ or Parks System, a lot, No 50, Unit 6, located in California Valley, as per 2 the Record of Survey recorded in book 10, page 86 records of the County of San Luis Obispo [Community Services] 3. Resolution Authorizing Energy Efficiency and Conservation Block Grant Application ■ Fiscal Impact: Approval of this Resolution will allow the City of Atascadero to apply for $152,644 in grant funds specifically allocated for energy efficiency improvements ■ Recommendation. Council approve the Draft Resolution authorizing the City Manager to apply for Energy Efficiency and Conservation Block Grant Funds from the Small City and County Grant Program under the American Recovery and Reinvestment Act of 2009 [Public Works] UPDATES FROM THE CITY MANAGER (The City Manager will give an oral report on any current issues of concern to the City Council ) COMMUNITY FORUM (This portion of the meeting is reserved for persons wanting to address the Council on any matter not on this agenda and over which the Council has jurisdiction Speakers are limited to three minutes Please state your name for the record before making your presentation The Council may take action to direct the staff to place a matter of business on a future agenda. A maximum of 30 minutes will be allowed for Community Forum, unless changed by the Council ) B. PUBLIC HEARINGS None. C MANAGEMENT REPORTS 1 Naming of Stadium Park Features in Memory of Marjorie Mackey ■ Fiscal Impact: Depending upon the option chosen, funding for two attractive and durable signs for the location could cost $300 to $1,200 It is recommended that donations for the costs of this sign be solicited from the community ■ Recommendation. Parks and Recreation Commission recommends Council name both the "Stadium Park Trail", leading into the park, and the "bowl area" inside the park, in memory of the late Ms Marjorie Mackey, to honor her memory and contributions to the community [Community Services] 3 2. Storm Water Management Plan (SWMP) Implementation Strategy ■ Fiscal Impact: Estimated at $5,000 00 of additional staff and consultant time to prepare exhibits, work with RWQCB staff, and attend meetings and hearings ■ Recommendations. Council 1 Receive information, discuss the attached letter approving the City's SWMP, and provide direction to staff on concerns regarding the implementation of the SWMP with respect to required revisions and creek setbacks, and, 2 Authorize the Director of Public Works to submit a request for a hearing in front of the Regional Water Quality Control Board to amend conditions imposed on City's SWMP [Public Works] 3. Allocation of Funds for Zoo Entrance and Gift Shop Project ■ Fiscal Impact: The City will receive $670,660 from the Redevelopment Agency and will expend $670,660 on completion of the City's Zoo Entrance and Gift Shop Project. ■ Recommendations. Council 1 Authorize the City Manager to execute, if necessary, a Financing Agreement between the Community Redevelopment Agency of Atascadero and the City of Atascadero, and, 2 Authorize the Director of Administrative Services to amend, if necessary, the budget by increasing Transfer from Redevelopment Agency Revenues by $670,660 and appropriating $670,660 of these revenues for the Zoo Entrance and Gift Shop Project. [Administrative Services] 4 Allocation of Funds for Lake Park Sign and Frontage Improvements Proiect ■ Fiscal Impact: The City will receive $430,180 from the Redevelopment Agency and will expend $430,180 on completion of the City's Lake Park Sign and Frontage Improvements Project. ■ Recommendations. Council 1 Authorize the City Manager to execute a Financing Agreement between the Community Redevelopment Agency of Atascadero and the City of Atascadero, and, 2. Authorize the Director of Administrative Services to amend the budget by increasing Transfer from Redevelopment Agency Revenues by $430,180 and appropriating $430,180 of these revenues for the Lake Park Sign and Frontage Improvements Project. [Administrative Services] 4 5 Allocation of Funds for Zoo Wall Improvement Proiect ■ Fiscal Impact: The City will receive $240,000 from the Redevelopment Agency and will expend $240,000 on completion of the Zoo Wall Improvement Project. ■ Recommendations. Council 1 Authorize the City Manager to execute a Financing Agreement between the Community Redevelopment Agency of Atascadero and the City of Atascadero, and, 2 Authorize the Director of Administrative Services to amend the budget by increasing Transfer from Redevelopment Agency Revenues by $240,000 and appropriating $240,000 of these revenues for the Zoo Wall Improvement Project. [Administrative Services] 6. Strategic Planning 2010 - Phase II — Financial Information ■ Fiscal Impact: None ■ Recommendations. Council 1 Review and discuss staff's budget update, and, 2 Affirm staff's analysis of the City's risk areas, and, 3 Accept the updated seven-year projection [City Manager] COUNCIL ANNOUNCEMENTS AND REPORTS (On their own initiative, Council Members may make a brief announcement or a brief report on their own activities Council Members may ask a question for clarification, make a referral to staff or take action to have staff place a matter of business on a future agenda. The Council may take action on items listed on the Agenda.) D COMMITTEE REPORTS (The following represent standing committees. Informative status reports will be given, as felt necessary) Mayor Beraud 1 City/ Schools Committee 2 County Mayors Round Table 3 Finance Committee 4 Homeless Services Governing Board 5 Integrated Waste Management Authority (IWMA) Mayor Pro Tem Fonzi 1 Air Pollution Control District 2. Finance Committee Council Member Clay 1 City/ Schools Committee Council Member Kelley 1 Atascadero State Hospital Advisory Committee 2 Atascadero Youth Task Force 5 Council Member O'Malley 1 Economic Vitality Corporation, Board of Directors (EVC) 2. League of California Cities — Council Liaison and CITIPAC Board Member 3 SLO Council of Governments, Vice President (SLOCOG) 4 SLO Regional Transit Authority, Vice President (SLORTA) 5 Central Coast Regional Water Quality Control Board, Member (RWQCB) E. INDIVIDUAL DETERMINATION AND/OR ACTION 1 City Council 2. City Clerk 3 City Treasurer 4 City Attorney 5 City Manager F ADJOURNMENT Please note: Should anyone challenge any proposed development entitlement listed on this Agenda in court, that person may be limited to raising those issues addressed at the public hearing described in this notice or in written correspondence delivered to the City Council at or prior to this public hearing. Correspondence submitted at this public hearing will be distributed to the Council and available for review in the City Clerk's office. I, Victoria Randall, Deputy City Clerk of the City of Atascadero, declare under the penalty of perjury that the foregoing agenda for the December 8, 2009 Regular Session of the Atascadero City Council was posted on December 1, 2009 at the Atascadero City Hall, 6907 EI Camino Real, Atascadero, CA 93422 and was available for public review in the Customer Service Center at that location Signed this 1"day of December, 2009, at Atascadero, California. /I LJ,4a Vi oria Randall, Deputy City Clerk City of Atascadero 6 City of Atascadero WELCOME TO THE ATASCADERO CITY COUNCIL MEETING The City Council meets in regular session on the second and fourth Tuesday of each month at 6.00 p.m unless there is a ;ommunity Redevelopment Agency meeting commencing at 6:00 p m in which event the Council meeting will commence immediately following the conclusion of the Community Redevelopment Agency meeting. Council meetings will be held at the City Hall Council Chambers, 6907 EI Camino Real, Atascadero Matters are considered by the Council in the order of the printed Agenda. Copies of the staff reports or other documentation relating to each item of business referred to on the Agenda are on file in the office of the City Clerk and are available for public inspection during City Hall business hours at the Front Counter of City Hall, 6907 EI Camino Real, Atascadero, and on our website, www.atascadero.org An agenda packet is also available for public review at the Atascadero Library, 6850 Morro Road. Contracts, Resolutions and Ordinances will be allocated a number once they are approved by the City Council. The minutes of this meeting will reflect these numbers. All documents submitted by the public during Council meetings that are either read into the record or referred to in their statement will be noted in the minutes and available for review in the City Clerk's office Council meetings are videotaped and audio recorded, and may be reviewed by the public. Copies of meeting recordings are available for a fee. Contact the City Clerk for more information (470-3400) In compliance with the Americans with Disabilities Act, if you need special assistance to participate in a City meeting or other services offered by this City, please contact the City Manager's Office or the City Clerk's Office, both at (805) 470-3400 Notification at least 48 hours prior to the meeting or time when services are needed will assist the City staff in assuring that reasonable arrangements can be made to provide accessibility to the meeting or service TO SPEAK ON SUBJECTS NOT LISTED ON THE AGENDA Under Agenda item, "COMMUNITY FORUM", the Mayor will call for anyone from the audience having business with the Council to approach the lectern and be recognized. 1 Give your name for the record (not required) 2. State the nature of your business. 3. All comments are limited to 3 minutes 4 All comments should be made to the Mayor and Council. 5. No person shall be permitted to make slanderous, profane or negative personal remarks concerning any other individual, absent or present This is the time items not on the Agenda may be brought to the Council's attention A maximum of 30 minutes will be allowed for Community Forum (unless changed by the Council) TO SPEAK ON AGENDA ITEMS(from Title 2, Chapter 1 of the Atascadero Municipal Code) Members of the audience may speak on any item on the agenda. The Mayor will identify the subject, staff will give their report, and the Council will ask questions of staff The Mayor will announce when the public comment period is open and will request anyone interested to address the Council regarding the matter being considered to step up to the lectern. If you wish to speak for, against or comment in any way* 1 You must approach the lectern and be recognized by the Mayor 2. Give your name (not required) 3 Make your statement 4 All comments should be made to the Mayor and Council 5 No person shall be permitted to make slanderous, profane or negative personal remarks concerning any other individual, absent or present 6 All comments limited to 3 minutes If you wish to use a computer presentation to support your comments, you must notify the City Clerk's office at least 24 hours prior to the meeting. Digital presentations must be brought to the meeting on a USB drive or CD You are required to submit to the City Clerk a printed copy of your presentation for the record. Please check in with the City Clerk before the meeting begins to announce your presence and turn in the printed copy The Mayor will announce when the public comment period is closed, and thereafter, no further public comments will be heard by the Council 7 J J ITEM NUMBER A- j DATE. 12/08/09 i9ys'i r'rr r ia7e L CITY OF ATASCA DERO CITY COUNCIL DRAFT MINUTES Tuesday, November 10, 2009 City Hall Council Chambers 6907 EI Camino Real, Atascadero, California VOW Community Redevelopment Agency- 6 00 P M City Council Immediately following the conclusion of the Community Redevelopment Agency meeting Mayor Beraud called the meeting to order at 7 00 p m and Mayor Pro Tem Fonzi led the Pledge of Allegiance ROLL CALL. Present: Council Members Clay, O'Malley, Kelley, Fonzi and Mayor Beraud Absent: None Others Present: City Clerk/Assistant to City Manager Marcia McClure Torgerson Staff Present: City Manager Wade McKinney, Assistant City Manager Jim Lewis, Administrative Services Director Rachelle Rickard, Community NOW Draft CC Minutes 11/10/09 Page 1 of 5 9 ITEM NUMBER A- 1 DATE 12/08/09 Development Director Warren Frace, Public Works Director Russ Thompson, Police Chief Jim Mulhall, and City Attorney Brian Pierik. APPROVAL OF AGENDA. Roll Call MOTION By Mayor Pro Tem Fonzi and seconded by Council Member Clay to approve the agenda. Motion passed 5.0 by a roll-call vote. PRESENTATION 1 Recognition of Ann Hatch for her service as Parks and Recreation Commissioner Ms Hatch thanked the City Council for the recognition for her service on the Commission A. CONSENT CALENDAR 1 City Council Meeting Draft Minutes — September 22, 2009 ■ Recommendation. Council approve the Draft Meeting Minutes of September 22, 2009 [City Clerk] r.rri� 2. Title 9 Planning and Zoning Text Amendment - PLN 2009-1335 / ZCH 2009-0155 (City of Atascadero) ■ Fiscal Impact: None ■ Recommendation. Adopt on second reading by title only, the Draft Ordinance approving PLN 2009-1335 (Zone Text Change 2009-0155) [Community Development] 3 Final Map 2009-0171 (Parcel Map AT 08-0076) 5455 Bajada Ave. (TPM 2008-0094) Matthew and Sarah Cameron ■ Fiscal Impact: None ■ Recommendations. Council 1 Adopt and approve Final Parcel Map 2009-0171 (Parcel Map AT 08- 0076), and, 2 Authorize and direct the City Clerk to endorse the Council's approval on the Map [Public Works] 4 Temporary Road Closure — Holiday Musical Walk Around the Lake ■ Fiscal Impact: $320 00 in Public Works staff time for placing barricades ■ Recommendation. Council adopt the Draft Resolution establishing associated tow-away zones, no parking zones and road closures for the Holiday Musical Walk Around the Lake on December 5th, 2009 [Public Works] Draft CC Minutes 11/10/09 Page 2 of 5 10 ITEM NUMBER DATE 12/08/09 MOTION By Mayor Pro Tem Fonzi and seconded by Council Member Kelley to approve the Consent Calendar Motion passed 5.0 by a roll-call vote. (#A-2 Ordinance No. 547, #A-4 Resolution No. 2009-091) UPDATES FROM THE CITY MANAGER City Manager Wade McKinney announced the Colony Square festivities underway this evening outside the Council Chambers, including an outdoor movie being shown in celebration of the groundbreaking for the Colony Square project. Police Chief Jim Mulhall updated the Council on a new service the City is providing through the Police Department. This service is an online crime reporting system that allows victims of crime to directly access the Police Department through the City's website, type in the information about the crime, and submit it to the Police Department without having to go to the Police Department or have an officer respond to a call We encourage citizens to call for a police officer when they are a victim of a crime, but there are many times where citizens would prefer to file a report in a quick manner and get on with their day COMMUNITY FORUM Mike Brennler approached the lectern and asked the Mayor if he could have a handout distributed to the Council by the City Clerk. Mayor Beraud responded that he could Mitch Paskin said that he is here to continue his discussion about Oak Ridge Estates and what is happening in and around the project. He explained his concerns with the current condition of the roads in that area. George Schroff asked for an update on the progress of the WalMart project. Mike Brennler stated that he has submitted tonight a public records request to the City Clerk, the City Council, and staff requesting documents that he had requested last year He feels that he was purposefully deceived in his effort to examine certain documents related to the Rotunda Building foundation issues He stated that he feels very strongly that the documents he has requested do exist. (Exhibit A) Mayor Beraud closed the COMMUNITY FORUM period. City Manager Wade McKinney responded to comments made during Community Forum B PUBLIC HEARINGS None. *tar Draft CC Minutes 11/10/09 Page 3 of 5 11 ITEM NUMBER A- 1 DATE. 12/08/09 C MANAGEMENT REPORTS None COUNCIL ANNOUNCEMENTS AND REPORTS 1 Council Member O'Malley - SPECIAL ECONOMIC VITALITY CORPORATION (EVC) BOARD MEETING The EVC has scheduled a Special Board Meeting for November 18th The meeting will feature a presentation by Collaborative Economics the consulting firm that the EVC is hiring to create a countywide economic strategic plan as requested by the County of San Luis Obispo This is the first of several input sessions that will occur during this next year The elected officials on the Board have been asked to invite their City Manager and their Mayor, or another elected official, to this special meeting Council Member O'Malley would like Council input as to who should attend Council Member O'Malley explained to the Council about the upcoming meeting He recommended that Mayor Pro Tem Fonzi and Council Member Kelley attend the meeting There was Council consensus to send Mayor Pro Tem Fonzi and Council Member Kelley to the Special EVC Board meeting Council Member Clay asked for Council consensus to bring to the Council the signs for the Lake Park, including the sign for the Veterans Memorial, as he has some concerns He asked that the Council be the body that approves the signage at the Lake Park. There was Council consensus to bring the Lake Park signage to the City Council for review and approval. Council Member Kelley asked for Council consensus to bring to the Council the Arts and Public Places policy on a future agenda to amend the policy by removing the requirement to appoint a Public Arts Committee There was Council consensus to bring the Arts and Public Places Policy to the City Council to consider amending the policy by removing the requirement to appoint a Public Arts Committee. D COMMITTEE REPORTS Mayor Beraud 1 County Mayors Round Table — met at the City of Arroyo Grande and also met with Assemblyman Sam Blakeslee He updated the Mayors on the new Water Conservation bill Draft CC Minutes 11/10/09 Page 4 of 5 12 ITEM NUMBER A - 1 DATE 12/08/09 Council Member Kelley 1 Atascadero State Hospital — attended a presentation at the Hospital on how they are working on trying to predict violence with the inmates Council Member Kelley asked them if they would give a presentation on their release program F ADJOURNMENT Mayor Beraud adjourned the meeting at 7 35 p m MINUTES PREPARED BY Marcia McClure Torgerson, C M C City Clerk/Assistant to the City Manager The following exhibit is available for review in the City Clerk's office Exhibit A— Public Records Request from Mike Brennler Draft CC Minutes 11/10/09 Page 5 of 5 13 ITEM NUMBER A- 2 r rinFrT DATE 12/08/09 es r 1978 Atascadero City Council Staff Report - Community Services Department Property Donation Acceptance Approval of the Acceptance of Grant Deed from the Morgan Stanley Dean Witter Trust to the City of Atascadero Lot No 50, Unit 6 located in California Valley, APN 084-211-011 (This property is being donated to the City as a gift to benefit the City's Zoo and/or Parks System.) RECOMMENDATION Council authorize the City Manager to execute the Acceptance of Grant Deed for real property being donated to the City as a gift by Morgan Stanley Dean Witter Trust to benefit the City's Zoo and/ or Parks System, a lot, No 50, Unit 6, located in California Valley, as per the Record of Survey recorded in book 10, page 86 records of the County of San Luis Obispo DISCUSSION Background The City of Atascadero has received an offer of real property to benefit the Zoo and/or parks in the City of Atascadero The Morgan Stanley Dean Witter Trust, FSB, the restated Declaration of Trust for the Carson Sisters Trust dated December 5, 1989, has offered a lot in California Valley to the benefit of the City of Atascadero The parcel is an unimproved lot, zoned single family residential (RS) The lot is located in the Shandon/Carrizo Planes area and is within a mile of the San Andreas Fault. The City has no plans to develop the site, only to allow it to appreciate and then sell it at some point in the future to benefit the City's Zoo or parks Staff has determined that the lot has no obligations or encumbrances and it can be held by the City until such time as it may be worthwhile to sell Most properties in the surrounding area have an assessed value of $10,000 or greater As a public agency, the City of Atascadero would not be obligated to pay property taxes on the lot. 15 Staff recommends Council authorize the City Manager to execute the Acceptance of Grant Deed for real property being donated to the City as a gift to benefit the City's Zoo and/or Parks System, a lot, No 50, Unit 6, located in California Valley, as per the woe Record of Survey recorded in book 10, page 86 records of the County of San Luis Obispo FISCAL IMPACT The property is currently worth an estimated $10,000 ALTERNATIVES Council may decline the property gift. ATTACHMENT Acceptance of Grant Deed and Grant Deed 16 V*AW ACCEPTANCE OFGRANT DEED This is to certify that the interest in real property conveyed by the foregoing Grant Deed dated , from the MORGAN STANLEY DEAN WITTER TRUST FSB, as Successor Trustee under the Restated Declaration of Trust for the Carson Sisters Trust dated December 5, 1989 to the City of Atascadero,a California general law city is hereby accepted by order of the City Council of the City of Atascadero on and the City of Atascadero consents to recordation thereof by its duly authorized officer DATED' CITY OF ATASCADERO By Wade McKinney, City Manager STATE OF CALIFORNIA COUNTY OF SAN LUIS OBISPO CITY OF ATASCADERO On this day of 2009 before me,Victoria Randall,notary public,personally appeared Wade McKinney who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity and that by his signature on the instrument the person or the entity upon behalf of which the person acted,executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct, Witness my hand and official seal. (sea!) W*ar 17 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO.- City,of Atascadero 6907 El Camino Real Atascadero,CA 993422 Ann. City Clerk Exempt Recording Per Government Code Sections 6103 and 27383 Space AI*Ve Thi,5tie-hw Rat-.Ide,-4 Lim GRANT DEED AX NO.. 084-211-4111 THE UNDERSIGNED GRANTOR DECLAREsTlIA:rTHE CITY OVAfAS(ADERONS ACQUIRING-ITTLEANDIS L\EMPT FROM DOCUMEKrAR)TRANSFER TAX PURSUANTTO REVENUE&YAXATION CODE SECUI(M 11922 FOR NO MONETARY CONSIDERATION AND AS A GIF-T, MORGAN STANLEY DEAN WITTER TRUST FSB, as Successor Trustee under the Restated Declaration of Trust for the Carson Sisters Trust dated December 5 19819 ("Grantor"), hereby grants to the CITY OF ATASCADERO,a municipal corporation ("Grantee"), all that certain real property located in the County of San Luis Obispo State of California, described in Exhibit A attached hereto and incorporated herein by this reference (the `Property"). Thus grant is made with the Intent on the part of the Grantor that the Property be used by the Grantee to benefit its parks and wo IN WITNESS WHEREOF, the undersigned has executed this Grant Deed as of ,2009 to he effective upon its recordation in the Official Records of the County of San Luis Obispo,California. GRANTOR. MORGAN$TANLEY DEAN WITTER TRUST FSq,Successor Trustee under the Restated N:41aration of Trust for the Carson Sistcr's Trust dated Dmcrnb"5, 1989 B (Print Name Title) LA#4914-3379-3029 V2 18 ACKNOWLEDGMENT State of New Jersey )ss County of huj �c n On Cj[-�el- 2009 before me I (Name of Notary) personally appeared kc;]F f L)/I e— whoproved to me on the basis of satisfactory evidence to be the person(}(]whose names) are subscribed to the within instrument and acknowledged to me that thev executed the same in their authorized capacities, and that by their signature(Y)on the instrument the persons,or the entity upon behalf of which the persons acted,executed the instrument. I certify under PFNAury OF PERJURY under the laws of the State of New Jersey that the foregoing paragraph is true and correct. WITNESS my hand and official seal. ix ntc/i , (Notary Signatuk) VERONICA VEDA Notary Public,State 011 New Jersey *11111w My Commission expires on October 9,2013 Cum ID 2306410 LA 44824.3379-30?8 v2 2 19 1"00 EXHIBIT"A"TO GRANT DEED Legal Description of Property The real property located in the County of'Sun Luis Obispo State of California,described as follows: LOT 150 UNIT 6, CALIFORNIA VALLEY AS PER RECORD OF SURVEY RECORDED IN BOOK 10 OF RECORDS OF SURVEY PAGE 86, RECORDS OF SAID COUNTY TOGETHER WITH A NONEXCLUSIVE EASEMENT FOR INGRESS AND EGRESS OVER, ALONG, AND ACROSS THE' STREETS AS REFERRED TO AND SHOW ON ALL PRESENTLY RECORDED RECORDSS OF SURVEY OF UNITS OF CALIFORNIA VALLEY AP` 084-211-011 1000, LA#4924.3379-3028 Q 3 1410. 20 DECLARATION The undersigned, MORGAN STANLEY DEAN WITTLR TRUST FSB, declares as follows for the benefit of the Cite of Atascadero- 1 The undersigned is the Successor Trustee under the Restated Declaration of Trust for the Carson Sisters Trust dated December 5 1989(the"Declaration of Trust")and has on this date executed and delivered,as Grantor,that certain Grant peed (the `Grant Decd") in favor of the City of Atascadero,as Grantee,relating to certain real property located in the County of San Luis Obispo,State of California,and bearing Assessor s Parcel Number 084-211-011 2. On the date hereof,the trusts created under the Declaration of Trust are in full force and effect. 3 The Grant Deed has been executed in accordance with all of the provisions of the Declaration of Trust, is authorized thereunder and is binding upon all persons interested in the trust created under the Declaration of Trust 4 The undersigned has been properly appointed as Successor Trustee under the Declaration of Trust and is entitled to so act, is fully vested with all right. title, estate, power authority duties and obligations of Successor Trustee under the Declaration of Trust and has good right to snake, execute and deliver the Grant Deed in the capacity of Successor Trustee under the Declaration of Trust. The undersigned declares under penalty of penury tinder the laws of the State of California that the foregoing is true And correct. "'�rri► MORGAN STANLEY DEAN"G ITTER TRUST FSB,Successor Trustee under the Restated Declaration of Trust for the Carson Sisters Trust dated December 5 1989 By V P, (Print Name&Title LA#4633.6657-8692 v I 21 ..r ..� ITEM NUMBER A- 3 DATE. 12/8/09 1918 ' 1979 A tascadero City Council Staff Report - Public Works Department Resolution Authorizing Energy Efficiency and Conservation Block Grant Application RECOMMENDATION Council approve the Draft Resolution authorizing the City Manager to apply for Energy Efficiency and Conservation Block Grant Funds from the Small City and County Grant Program under the American Recovery and Reinvestment Act of 2009 DISCUSSION Background. The federal Energy Independence and Security Act of 2007 (EISA) established the Energy Efficiency and Conservation Block Grant (EECBG) program to assist eligible entities in creating and implementing strategies to 1) Reduce fossil fuel emissions in a manner that is environmentally sustainable and, to the maximum extent practicable, maximizes benefits for local and regional communities, 2) Reduce the total energy use of the eligible entities, and 3) Improve energy efficiency in the building sector, the transportation sector, and other appropriate sectors On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 which appropriated funds to the U S Department of Energy (DOE) for the EECBG program Under the EECBG program, the U S Department of Energy (DOE) provides grant funds to states, of which, no less than 60% is to be passed through to eligible small cities and counties The California Legislature has provided the California State Energy Commission guidance on implementing California's EECBG program Based on the formula established for distribution of funds to California cities and counties, the City of Atascadero will receive an allocation of $152,644 to be used for qualifying energy efficiency improvements 23 Analysis On October 28, 2009, staff from the California Energy Commission , 00 conducted an energy audit at various City of Atascadero facilities to determine potential eligible energy efficiency projects that would qualify for reimbursement from Energy Efficiency and Conservation Block Grant Funds The following City facilities were audited, Fire Station #1, Fire Station #2, Pavilion, Police Department, and the Wastewater Treatment Plant. This audit focused primarily on potential energy efficiency projects that could be funded by Direct Purchase provisions of the American Recovery and Reinvestment Act's (ARRA) Small Community Block Grant that is being administered by the Commission This energy efficiency audit identified $160,657 in eligible energy efficiency improvement expenses In order to qualify for reimbursement of eligible expenses, local agencies must submit an application to the California Energy Commission, with an authorizing resolution from the agencies governing body Conclusion. Staff recommends that the City Council approve the Draft Resolution authorizing the City Manager to apply for the $152,644 00 in Energy Efficiency and Conservation Block Grant Funds allocated to the City of Atascadero through Small City and County Grant Program of the American Recovery and Reinvestment Act of 2009 FISCAL IMPACT Approval of this Resolution will allow the City of Atascadero to apply for $152,644 in grant funds specifically allocated for energy efficiency improvements ATTACHMENT Draft Resolution -- Authorizing application for Energy Efficiency and Conservation Block Grant funds 1404 24 DRAFT RESOLUTION ''fir►: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ATASCADERO, CALIFORNIA AUTHORIZATION TO SUBMIT ENERGY EFFICIENCY AND CONSERVATION BLOCK GRANT APPLICATION WHEREAS, the City of Atascadero recognizes that it is in the interest of the regional, state, and national economy to stimulate the economy- create and retain fobs, reduce fossil fuel emissions, and reduce total energy usage and improve energy efficiency within our jurisdiction, and WHEREAS, Energy Efficiency and Conservation Block Grant (EECBG) funds are available through the California Energy Commission's EECBG Program for grants to eligible local governments for cost-effective energy efficiency projects, and WHEREAS, the City of Atascadero is eligible for EECBG funding under the California Energy Commission's EECBG Program, and WHEREAS, the City of Atascadero is proposing to implement the energy efficiency project/s described in Exhibit A in order to qualify for EECBG funds from the California Energy Commission, and, WHEREAS, the Atascadero City Council has considered the application of the California Environmental Quality Act (CEQA) to the approval of the energy efficiency project/s described in Exhibit A, and, NOW, THEREFORE, BE IT RESOLVED, that in compliance with the CEQA, the Atascadero City Council finds that the approval of the energy efficiency project/s described in Exhibit A is administratively exempt as a maintenance project. Be it also resolved that the City of Atascadero authorizes the submittal of the application to the California Energy Commission's EECBG Program for funds to execute the proposed project described in Exhibit A. Be it also resolved, if recommended for funding by the California Energy Commission, the Atascadero City Council authorizes the City of Atascadero to accept a grant award up to the amount of this application for$ 152,644 00, and, that the City Manager acting for the City of Atascadero is hereby authorized and empowered to execute in the name of City of Atascadero, all necessary contracts and agreements, and amendments hereto, to implement and carry out the purposes specified in the application PASSED AND ADOPTED at the regular meeting of the City Council of the City of Atascadero held on the Sch of December, 2009 `err►° 25 CITY OF ATASCADERO ATTEST Marcia McClure Torgerson, C.M.0 City Clerk APPROVED AS TO FORM. Brian A. Pienk, City Attorney 26 EXHIBIT A [Description of proposed project(s)] Energy efficiency improvement projects are proposed at various City of Atascadero facilities Below is a summary of the specific energy efficiency projects at the following City facilities, Fire Station #1, Fire Station #2, Pavilion, Police Department, and the Wastewater Treatment Plant. Fire Station #1 • Replace T8 (first generation type) fluorescent lamps with T12 fluorescent lamps • Replace all incandescent lamps with screw-in compact fluorescent lamp (CFL) equivalents. • Replace the station's heating, ventilating, and air conditioning (HVAC) system with new energy-efficient unit. Fire Station #2 • Replace T8 (first generation type) fluorescent lamps with T12 fluorescent lamps • Replace all incandescent lamps with screw-in compact fluorescent lamp (CFL) equivalents • Replace the station's heating, ventilating, and air conditioning (HVAC) system with new energy-efficient unit. Pavilion • Replace T8 (first generation type) fluorescent lamps with T12 fluorescent lamps. • Replace all incandescent lamps with screw-in compact fluorescent lamp (CFL) equivalents • Replace the buildings three heating, ventilating, and air conditioning (HVAC) systems with new energy-efficient unit. • Replace exit signs with new energy-efficient LED exit signs • Replace exterior lighting high pressure sodium (HPS) wall packs and chandelier-type incandescent lamps on the building exterior and pole-mounted HPS fixtures in the parking lot with new energy-efficient induction light equivalents and the chandelier lights should be converted to CFL. • Install An energy management system (EMS) with direct digital controls for the HVAC units enabling the units to be controlled remotely Police Department • Replace T8 (first generation type) fluorescent lamps with T12 fluorescent lamps • Replace all incandescent lamps with screw-in compact fluorescent lamp (CFL) equivalents • Replace the stations four heating, ventilating, and air conditioning (HVAC) systems with new energy-efficient unit. • Replace exit signs with new energy-efficient LED exit signs 27 Wastewater Treatment Plant (WWTP) , • Replace T8 (first generation type) fluorescent lamps with T12 fluorescent lamps • Replace all incandescent lamps with screw-in compact fluorescent lamp (CFL) equivalents. • Replace a small heating, ventilating, and air conditioning (HVAC) system with new energy-efficient unit. • Replace all of these aerators and recirculation pumps with NEMA "Premium Efficient" variety Summary of Estimated Energy and Cost Savings, Project Costs The estimated energy savings represents approximately 7% of the City's total annual electric energy usage and cost. IWO 28 ITEM NUMBER C- 1 DATE 12/08/09 m n 1918 , Atascadero City Council Staff Report - Community Services Department Naming of Stadium Park Features in Memory of Marjorie Mackey RECOMMENDATION Parks and Recreation Commission recommends Council name both the "Stadium Park Trail", leading into the park, and the "bowl area" inside the park, in memory of the late Ms Marjorie Mackey, to honor her memory and contributions to the community DISCUSSION Background The City of Atascadero has a policy (created in 1995) for the naming of public facilities, parks, buildings and amenities (Attachment A) The policy lays out naming criteria. The passing of the late Marjorie Mackey has led many people in the community to request that the City consider naming something to honor her They feel Ms Mackey should be recognized for her lasting and significant contributions to the City of Atascadero and the community Consistent with the policy, she has made "substantial contributions in terms of volunteer services providing a broad public benefit to the residents of the City of Atascadero " In particular, Ms Mackey provided instrumental leadership prior to and during Atascadero's incorporation There is a well defined connection to Ms Mackey's importance in the history of the City, and the appropriateness of naming a City owned facility in her honor Some of Ms Mackey's (Mart s), achievements include - Marj was elected to the first City Council, and was the first woman ever to become the Mayor - Marj served on the Atascadero Advisory Committee prior to cityhood for 11 years, and helped write the original General Plan - Marj started the Historical society in 1965, and was the museum's curator for over 20 years 29 Marj started the Atascadero Land Preservation Society in 1989, and was instrumental in helping the City to purchase Stadium Park in 1996 Marj was active in the Atascadero Kiwanis club, Loaves and Fishes and many other organizations that benefitted Atascadero as a whole over many years Marj had nearly 50 years of community service to Atascadero making significant contributions to the quality of life Due to Marj Mackey's tireless and tremendous record of service to the City of Atascadero, the following areas were considered by the Parks and Recreation Commission at their regular meeting held on October 15, 2009, to be named in honor of Ms Mackey- - The new playground at Paloma Creek Park. - The equestrian arena at Anza Estates near the Salinas River - The new group picnic area at Colony Park. - The Trail around Atascadero Lake - The "Stadium Park Trail" leading into Stadium Park. - The bowl area inside Stadium Park, proposed to be named "Marj Mackey Meadow" - Other The Parks and Recreation Commission considered all of these options and is recommending that both the "Stadium Park Trail", leading into the park, and the "bowl area" inside the park, be named in memory of Ms Mackey City staff concurs with the Commission's recommendation FISCAL IMPACT Depending upon the option chosen, funding for two attractive and durable signs for the location could cost $300 to $1,200 It is recommended that donations for the costs of this sign be solicited from the community ATTACHMENTS A - Policy on the Naming of Public Buildings, Parks, and other Public Facilities B - Aerial photo of Stadium Park 14801i` 30 ATTACHMENT A CITY OF ATASCADERO `fir COMMUNITY SERVICES DEPARTMENT POLICY ON THE NAMING OF PUBLIC BUILDINGS, PARKS, AND OTHER PUBLIC FACILITIES I PURPOSE To establish a uniform policy for naming public buildings, parks and other facilities. II POLICY A. Public buildings will be named by their function For instance, a city hall will be called a city hall, and a recreation building will be called a recreation building B Public facilities will be named by their location in the City, either by proximity to a geographical feature, location in an identified area in the City (such as a street, neighborhood, subdivision, etc.) C The name of a park or recreation facility should, if possible, have geographic, botanical, zoological, agricultural, or historical significance generally recognized and known through the City or local area. VOW D A public building, park, or other city facility should not be named after a person, unless one or more of the following exceptions apply- 1 The facility was acquired by means of a substantial gift or donation of funds by an individual, family or corporation Consent of the donor to naming the facility will be required 2 The individual made a substantial contribution in terms of volunteer services providing a broad public benefit to the residents of the City of Atascadero 3 The individual has been deceased for more than two years and, in the opinion of the Parks and Recreation Commission and City Council, the person's contribution to the aspect of the City, which the facility represents, was of such value to the City that the person's memory should be honored by the naming of the facility 1*W 31 4 The facility can be named after a government fund or grant if the circumstances are deemed appropriate by the Parks and Recreation , Commission and the City Council E. In addition to the naming of public facilities by using the criteria established above, the City can provide for the recognition of individuals, either deceased or living, by the placement of memorial objects (symbols), such as, living trees, public benches, rocks, memorial flagpoles, sculptures, etc., in public facilities. The placement and identification of these recognition symbols will be at the discretion of the Parks and Recreation Commission and the City Council on a case-by-case basis 32 s s `� ,,��'"'✓'�tip,�..---�,."`+,.._, �.:, A-1 s777 , a e c t c CL .r q k � b 9 ITEM NUMBER C-2 DATE. 12/08/09 -q : � ar 1818 , ------ Atascadero City Council Staff Report - Public Works Department Storm Water Management Plan (SWMP) Implementation Strategy RECOMMENDATIONS Council 1 Receive information, discuss the attached letter approving the City's SWMP, and provide direction to staff on concerns regarding the implementation of the SWMP with respect to required revisions and creek setbacks, and, 2 Authorize the Director of Public Works to submit a request for a hearing in front of the Regional Water Quality Control Board to amend conditions imposed on City's SWMP DISCUSSION On November 19, 2009 the City received the Regional Water Quality Control Board's (RWQCB) "Notice of Enrollment" approving the City's SWMP submitted on March 30, 2009 (see Attachment 1) The approval letter includes required modifications to the SWMP, one of which requires the implementation of potentially increased buffers along Atascadero watercourses In light of recent public deliberations that the City initiated regarding creek setbacks, staff requests the Council's careful consideration of the issue, and direction in moving forward with the City's SWMP Background. The National Pollutant Discharge Elimination System (NPDES) program was established under the Federal Clean Water Act in 1977 to protect and restore surface waters of the United States Surface waters include wetlands, lakes, creeks, and rivers The enforcement of NPDES is delegated by the Federal government to the states The California State Water Resources Control Board (State Board) is responsible for State implementation of NPDES The State Board, and the nine RWQCBs coordinate implementation throughout California. The RWQCB that oversees Atascadero is Region 3 - Central Coast Regional Water Quality Control Board Our RWQCB covers a six-county area, including San Luis Obispo County, Santa Barbara County, Monterey County, San Benito County, Santa Clara County and Santa Cruz County The RWQCB is composed of nine officials (including our Council Member %taw, O'Malley) that are appointed by the Governor and serve four-year terms The RWQCB appoints an Executive Officer who is responsible for day-to-day operations and enforcement of regulations 35 SWMP A SWMP is required for every City and County in the State as part of NPDES Phase II NPDES was implemented in two phases depending on the size of agencies Phase I required agencies with populations over 100,000 to comply NPDES Phase II required cities with populations smaller than 100,000 to comply SWMPs define strategies and provide guidelines for the protection of water quality and the reduction of pollutant discharge A SMWP was originally required to address six minimum requirements 1 Public Education 2 Public Participation 3 Illicit Discharge Detection and Elimination 4 Construction Site Storm Water Runoff Control 5 Post Construction Storm Water Management 6 Pollution Prevention/Good Housekeeping for Municipal Operations The RWQCB has required the City to prepare a SWMP in order to comply with the federal NPDES Phase II storm water regulations The General Order from the State Water Board requiring the development and implementation of a SWMP is mandatory for all county and local agencies City staff has been working to prepare a SWMP since 2003 The City Council directed staff to submit a draft SWMP in 2003, but like most other Central Coast cities, the SWMP was not approved by the RWQCB because the approval process was postponed In February 2008, the RWQCB issued a letter regarding SWMP approval, which included new regulations that would need to be incorporated into the City's SWMP The February 2008 RWQCB letter established a June 2008 submittal deadline for the City of Atascadero City staff have been working with the RWQCB and staff from other agencies to better understand and respond to these additional requirements Process to Prepare the SWMP In February, 2002, the City Council directed staff to begin development of a SWMP as required by NPDES Phase II The City retained URS Inc , to assist staff in drafting the plan In March 2003, the City Council directed staff to submit the SWMP to the RWQCB The RWQCB reviewed the plan and requested a number of revisions By December 2004, the City and RWQCB had completed three re-submittal cycles of the SMWP and responded to comments from the RWQCB Shortly after December 2004, RWQCB staff indicated that the City of Atascadero's Storm Water Plan adoption would be delayed because of problems with staffing and heavy opposition to other cities' plans from environmental groups Coincidentally, the City of Paso Robles' SWMP, which had been submitted in the same timeframe as Atascadero's, was approved The City's draft SWMP remained under review with the RWQCB for several years Staff did not receive any further comments from the RWQCB until November 2007 In Ifto November 2007, the RWQCB notified Atascadero and other agencies that a new 36 timeline and process for adopting the outstanding SWMPs would be imposed The new 1%0e process and timeline was presented and approved at the RWQCB meeting on December 7, 2007 At this meeting many agencies were concerned about the lack of detail provided in the Board's staff report regarding the additional SWMP requirements imposed by the local RWQCB On February 15, 2008, RWQCB staff notified the City of Atascadero and other cities of the new requirements and timeline for Storm Water Plan adoption The letter included new requirements that will have major impacts on future development projects in Atascadero (and all other cities, counties, etc ) and our own "housekeeping" practices At this time the City and our consultant worked with the Regional Board staff to work through several iterations of the SWMP culminating in the submittal of the current version on March 30, 2009 (see Attachment 2) The final draft then went through a required 60-day public review period which closed in May 2009 Recent Actions Since May 2009 the Water Board staff has addressed the public's comments, reviewed the City's SWMP, and determined that with a number of specific revisions (described in the Final Table of Required Revisions, see Attachment 1) the SWMP will be in compliance with the State's General Permit requirements Item 5 of the Final Table of Required Revisions includes a requirement to include provisions for establishing riparian buffer widths (setbacks) that are consistent with their Basin Plan standards Setback Issue r The major named creeks (Atascadero Creek, Graves Creek, and Boulder Creek) are located within creek reservation parcels established with the original recording of the Atascadero Colony subdivision in 1913 These parcels are currently designated as open space and no new development can occur within these parcels There are 60 parcels in total ranging in width from approximately 50-feet to in excess of 250-feet and were sized to capture a majority of the riparian area within the reservation boundaries The City currently has a 20-foot building setback from these creek reservations (measured at right angles from the creek reservation boundary) At this time the only permitted exceptions to the 20-foot setback regulation require a Conditional Use Permit and must be approved by the City's Planning Commission To allow any development, the Planning Commission must find that creeks, riparian areas, and site improvements will not be negatively impacted by the exception based on information provided by a qualified biologist and geotechnical engineer The City, as part of the submitted SWMP implementation, has proposed to tighten the control on potential development in the riparian corridors The RWQCB's Table of Required Revisions, Item 5, in the SWMP approval letter (see Attachment 1) requires the City to revise the SWMP to change existing City standards to be consistent with RWQCB riparian protection policies within the first two years Additionally, the City's SWMP requires the City to "track projects located in close proximity to riparian and wetland habitats " I%W 37 The following is an excerpt from the RWQCB's response document (dated November 19, 2009, included as Attachment 3) to submitted SWMP comments by agencies and the public Attachment 3, Page 13, Paragraph 4 In the City's Storm Water Management Program, BMP PC-4 (Table 12d) requires the City to "review the effectiveness of existing City standards for consistency with RWQCB required riparian buffer widths" by the end of Year-2 The Water Quality Control Plan for the Central Coastal Basin (Basin Plan) section V G Erosion and Sedimentation, item 4 states, `A filter strip of appropriate width, and consisting of undisturbed soil and riparian vegetation or its equivalent shall be maintained, wherever possible, between significant land disturbance activities and watercourses, lakes, bays, estuaries, marshes, and other water bodies. For construction activities, the minimum width of the filter strip shall be thirty feet wherever possible as measured along the ground surface to the highest anticipated waterline"(page V-12) (Emphasis added) The requirements and terms included in the Basin Plan requirements are subject to interpretation and are poorly defined The terms and phrases "appropriate width", "or its equivalenf', "wherever possible", and "highest anticipated waterline" are some examples Depending on how these terms and phrases are interpreted, the impact on adjacent landowners can vary dramatically The RWQCB staff has stated that they understand staff's concerns, agree the terms and phrases are vague, and they recommend working with the City on developing an acceptable refinement of the creek -m setback issue as the SWMP is further developed in Year 2 Recommendation. Staff does not feel that the RWQCB staff's view on the setback issue will change appreciably through further refinement. It is City staff's recommendation that the City Council direct staff to appeal the terms of the Notice of Enrollment and request the terms of the approval be modified ALTERNATIVES 1 Submit a revised SWMP that agrees to the requested changes as outlined in the November 19, 2009 Notice of Enrollment letter, and attempt to craft applicability standards acceptable to the City Council and RWQCB by the end of Year 2 of the SWMP 2 Resubmit the SWMP with new BMP measures that include reduced setback requirements, and an additional Public Process to allow additional public input on the issue w FISCAL IMPACT Estimated at $5,000 00 of additional staff and consultant time to prepare exhibits, work *40# with RWQCB staff, and attend meetings and hearings 38 `err ATTACHMENTS 1 Notice of Enrollment— NPDES Small MS4 General Permit from RWQCB 2 City's March 30, 2009 Submittal to RWQCB 3 RWQCB Staff Response to Comments on City SWMP "wow Nbw 39 Attachment 4104 California Regional Water Quality Control Board = �A Linda S.Adams Central Coast Region Arnold Schwarcen Agency Secretary egger Internet Address: http://www waterboards.ca.gov/centralcoast Governor 895 Aerovista Place,Suite 101 San Luis Obispo,California 93401 7906 Phone(805)549-3147 FAX(805)543-0397 November 19, 2009 BY ELECTRONIC AND REGULAR MAIL Mr Russel Thompson rthompson@atascadero org City of Atascadero 6907 EI Camino Real Atascadero, CA 93422 Dear Mr Thompson NOTICE OF ENROLLMENT — NPDES SMALL MUNICIPAL SEPARATE STORM SEWER SYSTEMS GENERAL PERMIT, CITY OF ATASCADERO, SAN LUIS OBISPO COUNTY, WDID # 3 40MSO4027 The Central Coast Regional Water Quality Control Board (Water Board) received a Notice of Intent, Storm Water Management Plan (SWMP), map, and fee for the City of Atascadero's (City's) Municipal Separate Storm Sewer System (MS4) These items are required to enroll in the National Pollutant Discharge Elimination System General Permit for the Discharge of Storm Water from Small Municipal Separate Storm Sewer Systems, Order No 2003-0005-DWQ (General Permit) Water Board staff reviewed the City's SWMP and found it, combined with a number of specific revisions described in the Final Table of Required Revisions, Attachment 1, to be in compliance with the General Permit and to meet the maximum extent practicable (MEP) standard set forth in the General Permit. The City's SWMP was available to the public for a 60-day comment period, and Water Board staff received comments from stakeholders The comments are contained in Attachment 2. Water Board staff responses to these comments are contained in Attachment 3 The Home Builders Association initially requested a hearing on March 30, 2009 After working with City of Atascadero staff and Water Board staff, the Home Builders Association withdrew its request for a hearing for the Water Board to consider approval of the SWMP and enrollment of the City under the General Permit on April 8, 2009 (see Attachment 2) In light of the withdrawal, the General Permit states that if no hearing is requested, the Regional Water Board Executive Officer will notify the regulated MS4 that it has obtained permit coverage only after Water Board staff has reviewed the SWMP and has determined that the SWMP meets the MEP standard established in the General Permit. I am hereby approving the City's SWMP with the following conditions California Environmental Protection Agency Recvcled Paper 41 City of Atascadero - 2 - November 19, 2049 As required by the General Permit, the City must submit a report that summarizes activities preformed during the annual reporting period. The City's first annual reporting + period ends September 30, 2010 The City's first annual report is due to the Water Board on December 30, 2010 (90 days after the reporting period ends) As of the date of this letter, discharges from the City's MS4 are authorized by the General Permit. The City is required to implement the SWMP and comply with the General Permit. Thank you for your cooperation and efforts to enroll the City of Atascadero under the General Permit. If you have questions regarding this matter, please contact David Innis at (805) $49-3150, or dbinnisOwaterboards.ca.gou, or Phil Hammer at (805) 549-3882 or phamrnerraterboards.ca.gov Sincerely, 44,- Roger W Briggs Executive Officer cc: (by electronic mail) David Athey dathey@ataseadero.orq Debbie Skinner- babywoozerftvahoo.com Gordon Hensley- coastkeeperfcDeoicenteronline.org Jerry Bunin ibunin@hbacc.ora Mark Hutchinson: rnhutchinsonQco.slo.ca.us Attachment 1 f=inal Table of Required Revisions Attachment 2: Comment Letters Received during 60-day Public Comment Period Attachment 3: Response to Comments S,Zt0rmwatw'St0rmwa1er FadiitieMSen Luis Obispo CoWunicipaf)AtascaderolEO Approvat AtasIATAS SWMP APPROVAL_ LET7EMPInal ApprowalWascadero S1MMP Approval-at<i final.doc California Environmental Protection Agency *40 &,Xkd Paper 42 N L N F�, O > (o T N V L > 0 0 N V 0 N(� O L � Q F— O N E O N N � = -0 > >- t1 )CL a -C O O O Q L = cd V r o CD N CT `Z N a) O O N .- 0 NJ •-- -, M a) 'i '- O r " L ON OE � Nm o -oa ° � cz '-- — co > � °ami aciniU � :? °«- o Mm a°ri �L � UE � vicn g � o � � v°iN � ,_ a) � � °� UNNcaa) cac U) T, cz N � Y � N c°iU E -0 cz aM "u° cz i c OcnN tS1 ° N ° -° N Es a ° O o _0 m i E cca � �m cc -o<In N o = ;- c) o 0 co ° a ?' � LcooNc0 -a , � ac) � to CL O -° a- N C co ai Z o' O N o0 cn � � NSU a >, aEi ON a) c a c aU) E 0 � > 0 c X o c ca a) � � m e ° Ny- ° ° "- c ca cd .E N ° N >, a) 0E- co 0) cn a) ca > E ca °� cc � g L Upp N o �= Eu5 NU o ° � W � a ,= o > o • cUcaON o C� p N Q t= U V 0 >i > O N M > N °L N O S U cz c t] p E p N N a cow o Q W a) — � > U) is N N ° co a p i NQaN Nur � c� cac � 'c �000 o � N N IL O XW a � L a OC� d "-' ?z a) r- >+ a N ) 2 co F- C N L CL 0 A O O >, U >+d a N -a y t) � CL N m N N L a) L cL Ncn LI)� " 0 Q CJ 0 0 0 M W � 3 N � � � d cz a � WCL cz o N cA N 3 a) E o N cL 0 in Em " ED >.0 �41r✓ UNE L N =3 r_ E EUc = 0 — WO *5w° px o J to p Wta QN � 0' � L cz�� cnzZ � Z N cn c U a. o +-� Co Y U N C- V L co U- _ N C Co (D d (> o (o 0 O O a) N O O U 't j 0 iZ N 7 O = V N a) N CL a- C/) N 'c � E o � � Ea i� c U � CD n N O co Co cn c C7 � >� EUa) a`) n � - � � � Z cg cccS � c — � � � 0 om � Eo0ENE v u .c C N E N cu .O O d O V M O N _ a O W ctjwa � � tn N W a) n N [L c t�3 Q co co cn CL i Q E cz Ea ? a) - g m.6 CD aa)) UC7 � E ,- U < m () ui Z 43 cu CU .t: r H1 N > m cz O C U O > _O C c r U O CZ - a) •� T E c Ln o cu o � cn � 0) Q 0 co o 0 Q � > co -0 � Qc3o �aoia' asap > o0 > a) O - 70 O Ex a) � 'v L � � .: U U Z •8 -p 'j N �- o (� c0 i p c0 -U O .N cCZ0 CZ cz �' � E � 0 cczc�n -o0 (n -co 700a) ° cam u7 j •• U a a) E U c = 0 w a) Q-a O U a) � � ai � 0) CD c .c o O 0 o a� o ° E _ _ U � oa� E aEi > U � EO0U of c Q-a)� obi N cn0 C) E E aD E mo � � a� U a) Q= 0 � 0 � ( Cc D 0 c -C 0 — OC 2 ;ESU S O � 0 _0 -a 0N 0 0 co 0)_ 0 CO .�= cis _ p v N 'p a) . cn a) O �' O .r W z c co c0 a) co > E O M �- C V U) N ca O d �° .N C N QN N (Z N 3 � +�— In c C O L � Q) U _ c r — .— i c _ c _ W CZ O (n — C'3 � _E � 0 � r o "�o � � E ° � Qj cn ° w �y 0C a) o cn a ° a) E o -o c ca a? o min ' o o c E 'T � � c nom :. 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Z 'd > C � � N O a) � U LU}- O 7 V O O czOnCL O d) _ cc Via) � � � WNU n v 4 N n" CDw N O co s O N O@ Q Q En O CO N cz Occ o > � « L ~ O oo co OUJ O O_ O O c m OppOO,� U � " � d O (Z U-0 CZ .�• O L N V L O y C o O co c`s C: a) L11 N 4 v L ++ r-+ Co O CL) LU CCS Nom" C p U G N U U 'o V 'O co a) Cl) O �' CL O 'N � (/) CL t3 ca cz N E Co O c W L N 'X O t0 COQ J N N CL �i 4r L LU C) n' d 'U O O Op ."'. 3V - 00 g t3 ON U O cn � V > p cn 0 0 0 U +. cn CS N 0O p co O n n U) ccs N d Q N 'D tz V (� U W O J 22 20- (n R N N V U N LLv O `- cri O r. O O Ta C) t? a) O t�CD 0 -5 (DCD N w I N = V >) O E Q. cNCm CnCC N O_ a> OC o _ � ' v N �' Q n m E CLI d E LO ca conn cn a> E z VAW 4 .a f ATTACHMENT 2 1� rn P � .Ijy , . r ��y CITE' OF .ATAS CAD ERO is of q�rrQ r Mrs) 6907 El CAMINO REAL, ATASCADERO,CA 93422 Telephone(805)461-5000 *Fax(805)461-7612 March 30, 2009 Mr Roger Briggs Executive Officer Central Coast Water Board 895 Aerovista Pl. San Luis Obispo, CA 93401 Subject: City Response to March 912009 Draft Table of Revisions Dear Mr Briggs. As you are aware the 60 day public review of the City of Ataseadero's (City) Storm Water Management Program ends on March 30, 2009 The City has decided not to request a Storm Water Management Program (SWMP) hearing before the Central Coast Water Board (Water Board), and therefore; we are resubmitting the SWMP for Executive Officer approval. The City has been working closely with your staff and is satisfied with the final SMWP that incorporates your March 9, 2009 Draft Table of Revisions. The final SWMP and our responses to the March r 9, 2009 Draft Table of Revisions are attached to this letter The City appreciates the opportunity to address the Water Board staff's March 9, 2009 Draft Table of Revisions. The table outlines the Water Board staff's comments related to the City's January 29, 2009 SWMP The January 29, 2009 SWMP and associated Table of Revisions outlines the City's upcoming efforts to comply with Federal NPDES Phase II and State of California General Storm Water Permit requirements In addition, the SWMP addresses your February 15, 2008 and July 10, 2008 letters that require additional hydromodification and riparian protection efforts. The City will implement the SWMP once we receive final confirmation of plan approval In the meantime, please feel free to contact me should you have any questions I can be reached at(805) 470-3180 should you have any questions. Sin erely, �i Russell S Thompson, Public Works Director City of Atascadero 51 6 o °? N O? c m o Cit co ° 21n:c O V;0O m -t CoE > cv} c 3 m o- 0 - O O 16ma13 w L U w C O O N YO w oo CO 0— m c O 3 = 3 a— o N G O U O E8 a) U is D) a)a) T _ q c X a CL co m r C U C O E X 0 O... 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V) N U O U a) .2V) V) Y a) aI f9 Vj N F— a) > d (c)U V1 1 0) m MEa E= Em CL ao m moo c `p 7 IV)O Vj C d N ti r- (7 u 00Lu-E . N a cr 7 () M a) ca € a) a) N Q my a)Z5 C mL w a mea�a(Da U) co E m a 0 a ; d H V N d 'C w a Vl 00� tC r Q ao �2 O � a en Lo V dz0 57 58 ATTACHMENT 2 •*4ft,y March 30, 2009 To Mr Innis and Mr Thompson, Central Coast Water Quality Control Board Regarding: Public Comment on City of Atascadero Storm Water Management Plan recommendations I am writing to express my concern with the CRWQCB's comments to City of Atascadero's storm water management plan dated March 9, 2009 Because I am a resident of beautiful Atascadero, I am especially interested in knowing that the City is taking its stewardship of the creeks and riparian habitats seriously in accordance with federal and state regulations and policies. After reviewing the recommendations made by you, and the city's Table 12d-PC4, I would propose that no new permit applications in watershed areas be considered until the city has had the opportunity to clearly and consistently define the riparian and watershed areas with closer alignment to federal definitions and educate the public regarding the necessity and importance of these areas to our unique community While your recommendations seem to provide a move in the right direction with regard to "tracking" development near riparian and wetland habitats for five years, and educating the public of the important functions that are provided by them, it falls short of actualizing the understanding already known to be necessary for protecting these habitats in a timely manner The current provisions are better than no mention of these needed steps, however they are not acceptable in that they are vague compared with what is needed. Tracking will only allow a window period for development in an area which after further study it might be determined it was critical not to allow After the fact is too late! It will be difficult to evaluate whether or not the city is mitigating damage with self proposed plans on projects that are already in progress with the city Secondly,the city can identify and commit to work with local community groups interested in protecting the local natural resources, tapping fir►' into community resources that would be willing to work in partnership with them to provide education about how the watersheds and riparian habitats enhance the community and participates in the larger water process in our county The Regional water quality control board has the ability to encourage and educate the city to protect the riparian area wetland area now and loosen the requirements later just to be safe, rather than putting the city in the position of crying later after further significant damage has occurred, After all, "An ounce of prevention is worth a pound of cure" As you know,the city recently intended (2007)to adopt a city ordinance which would have satisfied its commitment to ECOSLO to provide a 35 foot setback on three Atascadero creeks and a 50 foot setback from the Salinas River Unfortunately,this effort was negated by a petition circulated by some special interests who were getting signatures by presenting inaccurate information to local residents about what the setback would mean for local property owners. Your leadership and guardianship of our water resources is invaluable to our community I urge you to tighten and shorten the requirements of protecting our riparian habitat. Sincerely, Deborah Skinner Atascadero,California 59 'PUBLIC II��� ✓✓ EPI-Center,1013 Monterey Street,Suite 20San Luis Obispo,CA 93401 Phone:805-781-9932• Fax:805-781-9384 5al-1 Luis 06,5po COASTKEEPER" Central.Coast Regional Water Quality Control Board ATTN Tamara Presser 895 Aerovista Place, Suite 101 San.Luis Obispo, CA 93401 March 30, 2009 Via. Email ( resser4xi)wat€rboards.ca. ow) Subject: City ofAtaseadero Stormwater Management Plan Dear Ms Presser, Thank you for the opportunity to review and comment on the proposed Stormwater Management Plan of the City of Atascadero San.Luis Obispo COASTKEEPER*, a program of Environment in the Public Interest,is organized for the purpose of ensuring that the public has a voice with agencies and official responsible for enforcing water quality,watershed and coastal planning regulations on the California Central Coast. As such,the SLOCOASTKEEPER. and our 800 central coast supporters are concerned that the proposed SWIVIP- • Is impermissibly vague for some components. • Does not clearly identify the proposed programs and the financial resources available to implement the proposed program. • Fails to provide specificity to all types of education and.outreach programs; mechanisms to measure effectiveness of BMP, and timeline of when it will be done • Fails to identify what and how many of the proposed measures will demonstrate the protection of water quality in Atascadero Specific comments,included in the table below, outline SLC}Coastkeeper concerns. I urge the Regional Board to direct additional.modification of the proposal to meet federally mandated MEP standards prior to final approval. 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Citi. �, � i., cd CO ,� y 0�., o 3 5v tz o ca Ntn o �" ct U .r r R C w rn N A sytv 10. opo -03 w � p3 ct c� d G V v s� s~ y O o y O 'd M y p p a, p -0 c '� vi O a d C,3 y O un vp it c s✓ RS t 3 y O to � � " � c') �O y O G f O w C) ct o Ww W 7 Ln ar •d o O S:k, � o 0 a 0OAq Hone Builders Association OF THE CENTRAL COAST creating quality housing and communities Monday,March 30,2009 David Innis Regional Water Quality Control Board 895 Aerovista Place,Suite 101 San Luis Obispo,CA 93401 RE.Phase 11 MS4 Storm Water Management Plan—City of Atascadero Dear David Innis: The Home Builders Association appreciates the opportunity to comment on the City of Atascadero's Storm Water Management Plan(SWMP)dated January 29,2009 and published on your web site,with public comment due by March 30,2009 Our goal remains to advocate for storm water management plans that achieve the maximum extent practicable for handling rainfall cleanly in a sensible,achievable,and fiscally and technically feasible manner We support solid science and the flexibility necessary to make sure each situation is treated based on local conditions and realities. General Comments and Information Requests Commendations for Explaining the City's SWMP Process:The Home Builders Association commends the city staff and consultant for an excellent job explaining the city's process developing its storm water plan. Request Withdrawal of Requiring Hydromodification Controls for Redevelopment/Infill/Smart Growth Projects:When we raised this issue of the EPA comments in Morro Bay's storm water plan,the water board staff did not respond to this point in the Feb. 17,2009,Notice of Enrollment for Morro Bay and Attachment 3 reply to input from the association and others.Therefore,we continue to address this substantive regional issue. Current land planning philosophies being encouraged and mandated on cities and counties promote infill and redevelopment in order to reduce the negative environmental impacts of sprawl.The Central Coast Regional Water Quality Control Board(CCRWQCB)failure to exempt most infill and redevelopment from hydromodification, matching pre-development hydrology,replicating natural hydrology,and impervious coverage limitations will result in less smart growth being proposed and accomplished.It is our experience that such an approach will make compact urban development(smart growth)fiscally difficult-to-infeasible to achieve.Bankers and investors will shy away from such projects which will result in builders not proposing the project. Our smart growth concern is documented in the EPA publication EPA 231-B-05-002"Using Smart Growth Techniques as Stormwater Best Management Practices" A table with the heading"Language Hindering Creation of Joint Smart Growth and Stormwater Policies"(emphasis added)lists among those hindrances: • `Language specifying that post-development hydrology match the pre-development hydrology"; • "Language requiring that BMPs replicate natural systems or non-structural natural BMPs";and • "Impervious coverage limitations" Additionally,the EPA publication sites the Wisconsin Department of Natural Resources as an example of incorporating infill into Stormwater Regulations.Those regulations state(emphasis added): NWAO 72 • `For the infiltration standards,redevelopment sites are exempt"and • "The peak discharge standards do not apply to-Sites classified as redevelopment and infill development less that 5 acres" Atascadero and other cities should not disregard the EPA's own publications and recommendations. Ignoring such recommendations will make it harder for local governments to create the"Sustainable Community Strategies"state Senate Bill 375 requires to apply Assembly Bill 32,reduce green house gas emissions,and tackle climate change. We recommend hydromodification control requirements not be applied to urban infill and redevelopment projects. Request that CCRWQCB Staff Provide the Public Record with Supportive Documentation: Staff's response to this request in its Feb. 17,2009,Notice of Enrollment for Morro Bay and Attachment 3 was disappointing.On Page 15 of Attachment 3,the staff states that it"believes dissemination of the information requested may support greater understanding of hydromodification requirements.However,dissemination of the information would not cause Water board staff to recommend substantive changes to the City's SWMP Therefore, Water board staff finds it unnecessary to make available the requested information in the context of approving the City's SWMP" Since the water board staff has not complied with this request,we continue to ask that the Central Coast Board introduce into the public record for Atascadero's SWMP the economic and technical information and research that the board publicly referenced regarding post-construction stormwater management on Page 3,Item 12,in the Oct. 17,Lompoc Resolution R-3 2008-0071 We assume Atascadero's resolution will substantially resemble Lompoc's, where the Water Board stated that it: A. " has been evaluating,as demonstrated in the administrative record,the various options for control of water quality conditions affected by post-construction stormwater discharges and has concluded that controlling hydromodification typically associated with urbanization is reasonably achievable." B. " considered economics and found that the best information available indicated that controlling hydromodification through,among other approaches,implementation of low impact development principles,is technically feasible,practicable,and cost-effective";and C. " found that the required revisions would not affect regional housing supply Hydromodification controls have been applied in this and neighboring regions with no demonstrated affect on housing availability" We doubt that the CCRWQCB staff really meant to imply that it has its mind made up and is unwilling to consider changing it if qualified industry experts present new information after examining the public record.We believe that upon reconsideration,staff will see that as a tax-supported public agency,it has a legal and public service responsibility to present information in the administrative record to the public when it is requested. We request that the public record specifically include(a)the methodology and standards used to determine what is "reasonably achievable"in item A above,(b)what"best information available"was used to determine what is "technically feasible,practicable and cost-effective"and how it was determined to be the best information available in item B above,,and(c)what data and methodology were used to decide that hydromodification controls will not impact housing supply or availability and which communities are referenced"in this and neighboring regions"in item C above. Request for a Written,Detailed Comparison between State and Regional Stormwater Criteria and Standards:We made this request in the Morro Bay letter and received no response in Attachment 3 So we are restating the request and reference the above point for expecting a public agency to supply the public with information it is duly,officially requesting.The association requests a clear,step-by-step description of the differences between the criteria established in the California MS4 General Order,including Attachment 4,and the criteria identified in the Feb. 15 CCRWQCB letter,and what technical findings support the CCRWQCB differences. Request Public Hearing: For the reasons cited above below specific to the plan,because we have not yet received the information we requested or the answers to questions we asked in the Morro Bay comment letter on Nov 26, 2008,and for a thorough public analysis and understanding of the city's proposed storm water management plan,the association believes that there are sufficient issues and concerns raised to warrant a public hearing on Atascadero's plan before the Water Board. 246 South Higuera 805.546.0418 phone *40W3401 3333 San Luis Obispo ornia 805.546.0339-fax 8www.hbacc.org- internet An Affiliate of the National Association of Home Builders and the California Building Industry Association 73 3 We hereby request a public hearing pursuant to the March 9,2009 RWQCB letter to the City of Atascadero,with adequate time to present and discuss our positions/comments. Specific Comments Concerning Atascadero's Storm Water Management Plan 1 Time to develop interim hydromodification control criteria should be two years: As we previously wrote to you,hydromodification experts and supporters repeatedly note that it is unrealistic for a small city,facing fiscal difficulties and staffing shortages like Atascadero,to develop properly technically founded interim hydromodification criteria within 1 year It is obviously critical to protect public safety by insuring that the interim criteria are thoroughly researched before being applied.Criteria should not be"hurried"into practice to meet an artificial deadline at the risk of unintended consequences that could jeopardize public safety or to implement criteria that does not have "technical findings"that demonstrate their feasibility and effectiveness. As we have done previously,we are attaching for the public record on Atascadero s plan the June 27,2008, California Stormwater Quality Association(CASQA)letter to Central Coast Regional Water Quality Control Board Executive Officer Roger Briggs.CASQA is an expert on storm water quality management. It provides consulting services to more than 26 million Californians on storm water management.CASQA states that it will take more than a year to do the appropriate,scientifically valid research on interim criteria and that larger cities"have been expending significant effort on the technical challenge of developing appropriate hydomodification criteria for a number of years.Since 2001,the San Francisco Bay Area Phase 1 permittees have been working to address this issue,yet there is still no accepted common approach." The association requests a two-year interim hydromodification control criteria development process. 2. SWMP post-construction application cut-off point should beat"Deemed Complete"- It is our understanding based on the water board star's responses on page 18 in the Feb. 17,2009,Notice of Enrollment for Morro Bay and Attachment 3 to the issues the association raised previously on applying moo, new hydromodification requirements adopted after a project meets the legal California requirements for being"deemed complete,"the association understands that water board staff and board agree that: • The"deemed complete milestone is an appropriate cut-off point in the entitlement process,after which projects would not be subject to new hydromodification requirements;"and • This defined cutoff point will be added to all Central Coast SWMPs If our understanding stated herein is incorrect,we request that the Water Board provide us with the necessary clarification. 3 Incorporating assessments from project geotechnical and soils consultants is imperative: Our understanding,based upon CCRWQCB replies to comments on prior SWMPs,is that the CCRWQCB staff agrees with prior HBA comment letters,regarding incorporating geotechnical consultant assessments. If our understanding is incorrect,we request that the Water Board provide us with the necessary clarification. 4. Normal maintenance of existing infrastructure by public agencies,project developers,and home owners associations be exempted from the new standards: The association agrees with the Water board staff response to our concern on page 19 in the Feb. 17,2009, Notice of Enrollment for Morro Bay and Attachment 3 We understand that in the Atascadero and in all storm water plans,routine maintenance will not be subject to new LID or hydromodification requirements, 246 South Higuera 805.546.0418. phone San Luis Obispo,California 805.546.0339 fax 93401 3333 www.hbacc.org:internet 1"00 An Affiliate of the!National Association of Home Builders and the California Building Industry Association 74 4 but 'would be subject to education as well as potential enforcement on source control,pollution prevention, and illicit discharges rw We expect that this will be clearly spelled out in Atascadero s final storm water plan and future ones. 5 The"pre-development"definition must be"immediate are-proiect": After reading the water board staff's response to this issue on page 20 in the Feb. 17,2009,Notice of Enrollment for Morro Bay and Attachment 3,the association needs more clarity and remains convinced of the need to receive the public records we requested above regarding material previously introduced into the administrative record. In the Morro Bay response,the staff says it"views changing the definition of pre-development condition as described in the(HBA)comment as lowering the standard for post-construction runoff control, but also notes that hydrologic performance `should not outweigh other important environmental goals,such as infill,redevelopment priorities, etc.The staff seems to state that cities like Atascadero will build flexibility into the definition of"pre-development"as they develop interim and permanent hydromodification criteria. Is that a correct interpretation of the staff's response in the Monro Bay Attachment 3? Defining pre-development as the original natural condition,regardless of current usage,will make many urban infill, smart growth projects fiscally and technically infeasible and is counterproductive to the current sustainability and new urbanism planning concepts intended to reduce sprawl,long-distance commuting, and air pollution. In addition,a"pre-development"standard harkening to when the land was vacant presents a liability issue that will further hamper urban infill by making insurers refuse to support a project because adding more subsurface water to an area than has been the standard for a lengthy time period could undermine nearby buildings constructed to withstand less groundwater.Insurers will not take that risk.Projects will not get built.There will be no redevelopment improvements in storm water management. The EPA publication,referenced in the General Comment Section above,also states regarding the pre- VOW development definition(emphasis added): "When you write your ordinance,however,you may want to avoid confusion by specifying that the pre- development condition refers to the site immediately prior to redevelopment. In Attachment C—Definitions,the San Diego Region California Regional Water Quality Control Board in order No.119-2007-0001 for the incorporated cities of San Diego County,the San Diego Unified Port District,and San Diego County Regional Airport Authority defines: "Pre-Project or Pre-Development Runoff Conditions(Discharge Rates,Durations,Etc.)—Runoff conditions that exist onsite immediately before the planned development activities occur.This definition is not intended to be interpreted as that period before any human-induces land activities occurred.This definition pertains to redevelopment as well as initial development." We recommend that Atascadero define pre-development as"the immediate pre-project condition"just as recommended by the EPA,and the San Diego Regional Water Quality Control Board. 6 Economic balance: The association remains concerned that the water board staff sees storm water management as the paramount land use issue among the many regulations that various government agencies,all with important and legitimate public benefit goals,impose on municipalities and the building industry We also note that the Water Board's comments on page 21 in the Feb. 17,2009,Notice of Enrollment for Morro Bay and Attachment 3 state that you will not be"dictating specific applicability requirements,and 246 South Higuera 805.546.0418 phone San Luis Obispo, California 805.546.0339•fax VMW 93401 3333 www.hbacc.org:internet An Affiliate of the National Association of Nome Builders and the California Building Industry Association 75 5 instead has provided the opportunity for the(small cities)to develop applicability criteria that strike an appropriate balance of social,economic,and environmental goals." We recommend that Atascadero's plan include a clearly worded statement that recognizes that storm water '490, management improvement must `strike an appropriate balance with such social,economic,and environmental goals as affordable housing,reduced air pollution,market-place economics,municipal economics,and local public acceptance. 7 Comments on March 9 Water board staff comments: Item No.5 requires Atascadero to coordinate site inspection information exchanges with SLO Green Build and other stakeholders.We recommend that no groups be singled out by name and that the city be required to meet with stakeholders to receive public input on site inspection. 8. Additional specific comments reeardine Atascadero's storm water manaeement plan. a.We suggest formatting adjustments so the document is easier to read.It would help to make more use of numbers or letters instead of bullets.It is easier to make specific references to issues and requirements if there are numbers or letters on specific pages to allude to.This might seem minor But clarity will help the plan's end users when they want to know what is required or communicate with staff or consultants. b.In several instances the SWMP quotes from the Feb 15,2008,CCRWQCB's Executive Officer's letter but doesn't reflect the exact quote. We recommend correcting to the exact language from the letter c. In several instances the SWMP definition of deemed complete does not agree with the deemed complete definition requested by the association,agreed to by CCRWQCB staff and defined in the Permit Streamlining Act.We recommend utilizing the definition established by the Permit Streamlining Act. d. In instances where the point in time to apply post-construction controls is defined as one year(per RWQCB timing on page 69),we recommend replacing the phrase"by the end of year 1"with the phrase "when the city has adopted interim hydromodification control criteria and a low impact development manual."Post-construction controls cannot be put in place until the interim criteria or the LID manual are in place. f. The list of"Projects exempted from infiltration requirements"(page 70)should include: i. normal project and home owner association maintenance work(as noted above); ii. projects"deemed complete"before the adoption of interim hydromodification criteria,and iii. infill and redevelopment projects(referencing the above EPA recommendation to exempt infill and redevelopment projects from infiltration requirements in order to encourage what is known as smart or strategic growth.) g.The bottom of page 70 introduces the concept that if projects are exempted from infiltration they are required to choose from three options that will require the project to provide costly methods to provide what they have been exempted from providing.By adding these costly requirements,including an in-lieu fee,the proposal runs directly counter to the previously cited studies and recommendations by the EPA and the Center for Watershed Protection regarding encouraging smart growth. Incorporating the options for projects exempted from infiltration will add project costs,increase the likelihood of project infeasibility, and discourage smart growth. We request that the section beginning at the bottom of page 70 titled"Projects exempted from infiltration requirements will be required to choose from one of the following three options"be deleted from the SWMP 246 South Higuera 805.546.0418 phone San Luis Obispo,California 805.546 0339•fax 93401-3333 www.hbacc.org internet An Affiliate of the National Association of Nome Builders and the California Building Industry Association 76 6 h. On Page 74,under Notes,city plans to hold at least one meeting to gather public input on ordinance revisions is inadequate.The city should hold several public meetings on different days and different times of day in order to maximize public opportunities for participation. i.On Pages 76 and 77,under Assessment Measures,the city seems to be proposing only 30 minutes of annual staff training and refresher courses on post-construction storm water management considerations. This is perhaps a typo since 30 minutes is a very minimal time period. We appreciate your consideration of our comments. Sincerely yours, \, J Jerry Bunin Government Affairs Director Home Builders Association cc: Russ Thompson,City of Atascadero Public Works Director Davis Athey,City of Atascadero Deputy Director Public Works Roger Briggs,Executive Officer,RWQCB Attachment 246 South Higuera 805.546 0418.phone San Luis Obispo California 805.546 0339,fax 1411W 93401-3333 www hbacc org:internet An Affiliate of the National Association of Home Builders and the California Building Industry Association 77 III California Stormwater Quality Association Dedicated to the. 4dmicemeut ofSiontttortterQtnlity,4lenegemettt,Sciencr rtttd Regulation June 27,2008 Mr Roger Briggs Executive Officer Central Coast Regional Water Quality Control Board 895 Aerovista Place,Suite 101 San Luis Obispo,CA 93401-7906 Subject: 2/15/08 Letter regarding Notification to Traditional Small MS4s on Process for Enrolling under the State's General NPDES Permit for Storm Water Discharges Dear Mr Briggs. The California Stormwater Quality Association(CASQA)would like to take this opportunity to submit this comment letter regarding the subject notification and,in particular,Central Coast Regional Water Board staff's"expectations"for Phase II Stormwater Management Program (SWMP)content to receive approval for complying with the State's April 2003 Phase II General Permit. CASQA is composed of stormwater quality management organizations and individuals,including cities,counties,special districts,industries,and consulting firms throughout California. Our membership provides stormwater quality management services to over 26 million people in California and includes most every Phase I and many Phase 11 municipal programs in the State. CASQA was formed in 1989 to recommend approaches for stormwater quality management to the State Water Resources Control Board(State Water Board). CASQA typically refrains from commenting on issues associated with a specific Regional Water Board. However,the implications of your notification letter are significant and we believe inconsistent with the current standard of practice of stormwater quality management. Beginning on page 4 of the subject 2/15/08 notification letter,Central Coast staff outlines its expectations for the smaller MS4s within the Central Coast region for meeting the following "conditions"- • Maximize infiltration of clean stormwater and minimize runoff volume and rate, • Protect riparian areas,wetlands,and their buffer zones, • Minimize pollutant loadings,and • Provide long term watershed protection. Our concerns primarily regard staff's expectations for meeting the first"condition." These are nearly identical to proposed requirements from the draft' Phase I Ventura permit written by Los t Draft Tentative Order Ventura County MS4 permit,4/29/08,Los Angeles Regional Water Board staff P.O.Box 2105 Mento Park CA 94026-2105 650.366.1042 www.casga.org info@casga.org 78 CASQA comments to Central Coast RWQCB re:2/15/08 Phase II Enrollment Letter 2 of 6 Angeles Regional Water Board staff. Many of these draft proposed Phase I requirements have / not been finalized and adopted by any Water Board. In fact,many of the draft proposed Phase I requirements are the subject of much scientific and technical study and discussion,and accordingly,are being debated and contested by a large number of municipalities and industry representatives. The final outcome of these discussions will likely not be known before December 2008. We want to recognize and express our support for the Central Coast Regional Water Board's decision to support the implementation of Low Impact Development(LID)through the establishment of an endowment and provision of LID and hydromodification design and implementation services as needed. However,based on the knowledge gained by the Phase I MS4s with the most experience with LID and hydromodification,focusing on implementation before establishing technically sound and integrated criteria and approaches is akin to putting the cart before the horse. As a result,CASQA firmly believes that Central Coast staff has created requirements that the Phase H MS4s will be at a considerable disadvantage,compared to Phase I MS4s,to meet(and may never be able to meet due to technical and economic reasons). We make this statement based on the following insights. • Hydromodification criteria—Phase I programs have been expending significant effort on the technical challenge of developing appropriate hydromodification criteria for a number of years. Since 2001 the San Francisco Bay Area Phase I permittees have been working to address this issue,yet there is still no accepted common approach(witness the different approaches between the Santa Clara and Contra Costa Counties). Given the need to establish an accepted approach that is fully integrated into water quality management programs,the Southern California Stormwater Monitoring Coalition and the Southern California Coastal Water Research Project have initiated grant-funded efforts to evaluate stream impacts and to develop a series of hydromodification management tools. These tools will support implementation of appropriate hydromodification management actions to better protect the physical,chemical,and biological integrity of streams and their associated beneficial usesZ This study is currently in year two of a three-year schedule. These tools will ultimately assist both Phase I and H municipalities in developing appropriate hydromodification management approaches. Consequently requiring Phase II communities in the Central Coast region to independently develop their own criteria/approach to this technically complex subject is unreasonable. • Effective impervious area—The possible creation of"Effective Impervious Area(EIA)" threshold requirements as a"driver'for LID approaches is currently the subject of intense controversy within the stormwater quality management/science community as well as among planners and practicing landscape architects. Specifically,there is disagreement as to-whether this EIA criterion should be used(and,if used,whether it should be translated from its originally conceived watershed scale and applied on a site-by-site or regional basis)along with the implications upon urban redevelopment—whether it is compatible with smart growth concepts,and possibly increase urban sprawl. For example, underground storage vaults for urban runoff may not be technically feasible on many project sites. Locations with shallow groundwater or underground contamination(i.e., SCCWRP Research Project A6—Assessment and Management of Hydromodification Effects. err° 79 CASQA comments to Central Coast RWQCB re 2/15/08 Phase II Enrollment Letter 3 of 6 *400 brownfields)may not be able to install tanks to hold stormwater There are other methods that permittees can use to meet maximum extent practicable(MEP)requirements that should not be eliminated with an EIA criterion. These requirements need thorough evaluation to ensure that societal goals,such as redevelopment of brownfields and infill development are not interfered with,but rather encouraged,by the permit. Additionally, it is not clear that there is a reasoned technical basis to require such a relatively restrictive site design rule. The concept of total impervious area on a watershed scale has been shown to have a deterministic relationship with channel enlargement in the receiving stream. The studies that have demonstrated this relationship have been in watersheds without contemporary hydromodification mitigation controls. A recent study on this issue(Coleman et. al.,2005)3 notes that effective impervious area is one of the recommended management strategies to be considered,depending on the current conditions of the receiving stream and the future anticipated conditions. The report notes that in- stream strategies are more appropriate for application where the stream course alignment has been altered or there are other drainage improvements in the watershed. This debate has been taking place on several tracks(e.g.,technical,policy)at the local, statewide,and national scales. The recent deliberations of the California Ocean Protection Council.(OPC)are particularly noteworthy because the OPC has taken the recent lead on examining from a broader perspective the status of the development and use of LID as a BMP strategy in California. OPC commissioned a report4,held two OPC meetings and two public staff workshops,and adopted a resolution last month promoting the use of LID principles,including planned and recommended actions. Appendix A. Options for Enhancing LID in California Policies in the report on LID policies provides a list of about 50 ° recommended"Opportunities and Action Items"(Legislative,Aspirational,and Funding) through which LID can be promoted or enhanced. That report makes several observations, lists issues,and provides recommendations that relate to the development and use of LID as a BMP strategy in California, including: Observations In California,there has been an upsurge in district planning.New models of district planning have been launched and fine-tuned in California,including form-based codes, new urbanism,transit-oriented development,and a new Leadership in Energy and Environmental Design(LEED)pilot for neighborhood development(LEED-ND). Issues Hl.LID requirements are often written to apply to individual projects,which results in uneven application. 3 Coleman,D.,MacRae,C.,and Stein,E.,"Effect of Increases in Peak Flows and Imperviousness on the Morphology of Southern California Streams" Technical Report 450,Southern California Coastal Water Research Project,April 2005 4 State and Local Policies Encouraging or Requiring Law Impact Development in California—Final Report, Prepared by Tetra Tech,Inc.for Ocean Protection Council,January 2008 arti11� 80 CASQA comments to Central Coast RWQCB re: 2/15/08 Phase II Enrollment Letter 4 of 6 H3.LID often designates hydrology as the indicator of environmental impacts.By their regulatory nature,stormwater rules have the farthest reach into zoning codes. These rules tend to emphasize stormwater peak flow attenuation and volume capture, causing hydrologic performance to outweigh other important environmental issues that are considered in non-regulatory planning documents,such as infill and redevelopment priorities and regional growth patterns that can affect watershed health. H4.Suburban-style LID requirements can run counter to the planning, transportation and climate emphasis on compact design. Meeting strict stormwater performance standards in urban areas can be much more difficult than in open areas with room for swales,infiltration and detention.While LID techniques can decrease costs for greenfields applications,they can pose higher costs for urban developers, since underground vaults are often needed to augment urban green building,streetscape and landscape BMPs to meet performance standards. Actions H12.Sponsor an analysis of pilot neighborhoods in the LEED-ND program to see if they meet stringent stormwater requirements(for volume,treatment and flow control). H14.Sponsor a pilot study to align major water planning documents(e.g.,Basin Plan, Integrated Regional Watershed Management Plan)with regional and local requirements (e.g.,stormwater permit requirements and local zoning codes)with respect to LID goals and requirements. H17 Fund a project to better describe LID techniques based on development settings in California similar to the effort underway within the Congress for New Urbanism5 based on the"transect."The transect establishes seven transect zones based on intensity of development and urban form.This approach was used to develop new street standards and could serve as a model for stormwater management as well. Based on the commissioned report and input received at the OPG meetings and workshops, the Ocean Protection Council adopted a resolution on May 15,2008 that CASQA supported(including amendments provided by NRDC)that included the following actions related to stormwater and LID(and by extension EIA) underline added) 2.State Regulatory Actions a.State Water Board LID Policy—The State Water Board is encouraged to adopt a statewide policy for addressing all elements associated with changes in runoff due to hydromodification impacts,including those specifically related to urbanization.This policy would include direction on when and how to use LID to avoid,minimize and mitigate runoff so that downstream water bodies are protected. s At the national scale,NRDC,Congress for the New Urbanism,USEPA,and the U.S.Green Building Council have been developing the LEED-ND standard,which is a comprehensive attempt to integrate land use,financial, transportation,environmental,and urban design components into a single system for evaluating neighborhood design. 81 CASQA comments to Central Coast RWQCB re:2/15/08 Phase II Enrollment Letter 5 of 6 3.Incentives,Technical Support,and Research c. Research and Development of LID—Promote and consider funding technical research for development of a LID design manual,including example designs and specifications for LID features,and post-construction evaluations of the effectiveness of constructed LID features in removing pollutants and controlling runoff flows. • Consistency—We are not suggesting that the small MS4s not move forward with implementing LID strategies and provide protection of stream bed integrity We do recommend that the Central Coast staff also review the approach being proposed by State Water Board staff in the Draft Construction General Permit. In making this recommendation,CASQA is not taking a position on this other approach,rather we are recognizing the approach being proposed by the Central Coast Water Board staff is inconsistent with(and will add considerable confusion)to the State Water Board proposed approach. At a minimum,the difference in approaches once again raises the question as to why the Water Boards are proposing such inconsistent approaches to basically the same ends and whether the inconsistency is necessary and appropriate. • Patchwork—The somewhat patchwork approach being proposed by Central Coast staff for water quality management(i.e.,the discharger is implementing treatment control BMPs, LID strategies,and hydromodification controls)will add confusion to an already confusing situation. We believe developing a statewide policy statement is the appropriate vehicle for considering and integrating these concepts. This will provide better public opportunities to consider potential conflicts and craft a fully integrated approach to water quality management. All of the above demonstrates that Central Coast staffs expectations regarding hydromodification and LID criteria are not SWMP-ready Given the current state of knowledge and experience,CASQA has recommended to Water Boards that they work with permittees, CASQA,researchers,and stakeholders to • Identify an initial list of LID strategies that must be considered for all development. • Develop a performance standard for LID strategies that considers the lessons learned in translating the concept of LID into projects(e.g.,San Francisco Bay Area Phase I research and experience)and recommendations from other drivers such as urban design(e.g., LEED-ND standard). • Produce findings that can form the basis of permit provisions,guidance,SWMPs, implementation plans,etc. In summary,CASQA believes Central Coast staff should reconsider their expectations for new development within the Phase H Stormwater Management Plans. Phase I communities are expending significant effort and resources,yet still struggling to meet the technical challenge of developing appropriate hydromodification and LID criteria that are both practical and that will lead to achieving our water quality goals. Placing such an effort on the Phase II communities is 82 *taw CASQA comments to Central Coast RWQCB re.2/15/08 Phase II Enrollment Letter 6 of 6 inherently impractical as they lack the technical and financial resources to deal with this complex issue. Thank you for the opportunity to provide comments. If you have any questions please contact Geoff Brosseau,CASQA Executive Director Very truly yours, Chris Crompton,Chair California Stormwater Quality Association cc. Tam Doduc,Chair, State Water Board Gary Wolff,Vice-Chair,State Water Board/Liaison,Central Coast Regional Water Board Dorothy Rice,Executive Director,State Water Board Jonathan Bishop, Chief Deputy Director,State Water Board Bruce Fujimoto,Section Chief-Stormwater,State Water Board Christine Sotelo, Staff-Phase 1I Stormwater,State Water Board Greg Gearheart,Unit Chief-Industrial/Construction Stormwater,State Water Board Alexis Strauss,Director,USEPA Region IX `ftw CASQA Executive Program Committee CASQA Board of Directors 83 oe^Q Dome Builders Association OF THE CENTRAL COAST creating quality housing and communities Wednesday April 08,2009 David Innis Regional Water Quality Control Board 895 Aerovista Place,Suite 101 San Luis Obispo,CA 93401 RE.Withdrawal of Public Hearing Request for Atascadero Phase II MS4 Storm Water Management Plans Dear Dominic Roques: The Home Builders Association of the Central Coast is hereby withdrawing its prior request for a public hearing that we made in a March 30,2009,letter on the Atascadero Phase II MS4 Storm Water Management Plan(SWMP). The association is making this request(a)after evaluating the water board staff responses to some of our previous correspondence and(b)comparing the referenced comment letters with the association's Grover Beach SWMP comment letter of Dec. 12,2008. The substantive comments and issues we raised in the Atascadero letter can be addressed in the Grover Beach SWMP May 8 public hearing. Our request,in this letter,to withdraw our previous request for a public hearing is predicated on the: 1 RWQCB holding a public hearing for the Grover Beach SWMP, 2. The enrollment of the Atascadero SWMP be deferred until after the Grover Beach public hearing such that any changes that result from it can be applied to the Atascadero SWMP as appropriate, 3 The language in the Atascadero SWMP for 4.5.2 Strategy,Item 4 be changed to"Develop interim hydromodification control plan by end of year 1 (PC1D) Develop long-term hydromodification criteria specific to watersheds within the City's jurisdiction by the end of year 5(PC 1 E.),"and 4 Addition of language to Atascadero's SWMP to state that"Pre-development refers to the soil type, vegetation and amount of impervious surface existing on the site prior to the development project." (Language from the CCWQCB April 3,2009 Notice of Enrollment for the City of Watsonville Table of Required Revisions,Item Number 13,Option 213). Please acknowledge receipt of and agreement with this letter to the association by letter or email. Sincerely yours r-� Jerry Bunin Government Affairs Director Home Builders Association CC. Russ Thompson,Atascadero Public Works Director David Athey,Atascadero Deputy Public Works Director Matt Thompson,Regional Water Quality Control Board Roger Briggs,Regional Water Quality Control Board 246 South Higuera 805.546 0418:phone San Luis Obispo California 805.546 0339•fax 93401 3333 www.hbacc.org• internet An Affiliate of the National Association of Nome Builders and the California Building Industry Association 84 �wrrr +err►' ATTACHMENT 3 CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD CENTRAL COAST REGION Staff Response to Comments City of Atascadero Stormwater Management Plan January 2009 Introduction This document includes the Central Coast Regional Water Quality Control Board (Water Board) Staff Responses to the comments received during the Water Board's 60-day public comment period (January 29 — March 30, 2009) for the City of Atascadero's (City) Stormwater Management Plan (SWMP) and Water Board staff's Draft Table of Required Revisions Water Board staff has responded to all comments based on the most current draft, the January 2009 version of the City SWMP Water Board staff received comments from the following parties March 30, 2009 City of Atascadero March 30, 2009 Debbie Skinner March 30, 2009 Atascadero Coastkeeper March 30, 2009 Home Builders Association of the Central Coast (also, included by reference, was the California Stormwater Quality Associations (CASQA) June 27, 2008 letter to the Water Board) April 8, 2009 Home Builders Association of the Central Coast Withdrawal of Public Hearing Request Comments from the City of Atascadero March 30, 2009 Comment 1. In their March 30, 2009 letter (Attachment 2), the City presented their comments in NOW the form of an amended Table of Required Revisions that indicates how the City has modified the SWMP in response to Water Board Draft Table of Required Revisions for the City's January 2009 Draft SWMP Staff Response 1. In Table 1, Items 1 through 18, Water Board staff indicates whether or not the City's SWMP, including the March 30, 2009 revisions submitted as public comment, are responsive to Water Board staff's Draft Table of Required Revisions. Table 1 Water Board Staff Responses to the City of Atascadero's March 30, 2009 Draft SWMP Revisions Addressing Water Board Staff's March 9, 2009 Draft Table of Required Revisions. Item Subject Required Revisions Water Board Staff Responses 1 Key Water The City must check all hyperlinks The City revised the SWMP as Quality and revise to provide functional required by updating the hyperlinks, Criteria links which were functional as of October 5, 2009 The revision is in Section 2.1, page 7 of the March 30, 2009 SWMP The City's revision adequately addresses Water Board staff's Required 86 City of Atascadero - 2 - Attachment 3 November 19, 2009 Item Subject Required Revisions Water Board Staff Responses Revision 2 BMP ID3 The City must clarify the language The City added language to clarify Illicit in Section 4.3 to meet the that the City will adopt an ordinance Discharges, requirements of the General prohibiting non-stormwater Specifically Permit for section D.2.c.3 Include discharges into MS4 Additionally, Mobile mobile pressure washers and the City updated the bulleted list of Washers and mobile commercial vehicle categories of non-stormwater the City's washers in the City's regulation discharges or flows found to be Term "Street and definition of street wash potential contributors of pollutants to Wash Water" water the MS4"to explicitly include mobile pressure washers and mobile commercial vehicle washers. The revision is in Section 4 3 2, page 54 of the March 30, 2009 SWMP The City's revision adequately addresses Water Board staff's Required Revision 3 CON113 In Table 11, the BMP CON1 B The City modified the text to read Construction language is confusing The City exactly as suggested Site Runoff must clarify CON1 B to indicate, Control 100% of City staff with The revision is in Table 11, page 64 BMPs discretional review duties are of the March 30, 2009 SWMP The trained to ensure each project City's revision adequately addresses includes appropriate BMPs Water Board staff's Required Reece and are in conformance Revision with City-adopted BMP Reference Manuals and City Standards " 4 CON1A In Table 11a, the SWMP language The City revised the SWMP as Construction is confusing for BMP CON1 A. required by selecting common terms and revising the text as follows Discretionary A) The City must indicate what the Review Community Development A) The City clarified that the purpose Tools Department will implement of BMP CON1 A is to minimize risk of through BMP CON1 construction related discharges B) The City uses terms design B) The city selected "BMP reference guide, 'reference manual," and manual" as the common term "manual" several times. Please standardize terms or describe separately, if more than one document. C) The SWMP indicates in Year 1 C) The City added language to the City will "Confirm E&SC clarify triggers are appropriate "The City 1 The City will examine the must explain how this will interact need for and possibility of with the ordinance and Policy creating an Erosion Control 8 1 8 on page 27 We Assistance Program utilizing the "�rrrr 87 City of Atascadero - 3 - Attachment 3 November 19, 2009 Item Subject Required Revisions Water Board Staff Responses recommend the City post its Upper Salinas Las Tablas informational brochures and Resource Conservation District manuals/guides on the City's as an aid to developers in order stormwater webpage to minimize sedimentation of creeks and the Salinas River 2. The City will review existing municipal code for compliance with a list of specific criteria, including applicability criteria. 3 The City will post BMP reference manuals and construction site E&SC practices brochure on the City's stormwater webpage as part of PE 6 D) The City must revise the D) The City selected 'BMP reference section and make consistent manual" and clarified that municipal reference to municipal codes, code revisions may be required to be manuals, or design guides. implemented via an ordinance adopted by the City council E) The City must revise the 'Goals Targeted"description to indicate E) The City modified the wording to the BMP will "increase awareness read exactly as requested `"Nov of public employees, businesses, and the general public of about the pollutant potential of in stormwater runoff from construction sites " F) We recommend the City revise F) The City modified the wording to the 'Notes"to indicate, Revisions read exactly as requested to Grading Ordinances, if required, will be distributed for public review prior to Adoption hy The revisions are in Table 11 a, the City Council. City staff will pages 66-67 of the March 30, 2009 hold at least one public meeting SWMP The City's revision to solicit public input will held, if adequately addresses Water Board revisions are required staff's Required Revision 5 BMP CON2 A) Revise Table 11—CON2 BMP A) The City revised BMP descriptions Educate descriptions to align more in Table 11 to match wording stakeholders accurately with Table 11 b described in Table 11 b about potential B) The City must post the B) The City modified BMP PE4 to pollutants construction site runoff control indicate the construction site runoff associated brochure on the City's stormwater control brochure will be developed 88 Citi, of Atascadero -4 - Attachment 3 November 19, 2009 Item Subject Required Revisions Water Board Staff Responses with web page as part of its BMP under PE4 and posted on the web construction CON2A commitment to post links site under BMP PE6 The research sites for Contractor E&SC training and posting of contractor E&SC (Table 11) opportunities training opportunities to the City's web site will be tracked via Measurable Goal CON2A. C) We recommend the City add a C) The City added a series of Notes "Note" at the bottom of Table 11 b in Table 11 b consistent with our indicating the City will coordinate recommendation construction site inspection information exchanges with SLO The revisions are in Table 11, page Green Build and other 64, Table 7, page 36, and Table 11 b, stakeholders as part of BMP page 69 of the March 30, 2009 PE1 C SWMP The City's revision adequately addresses Water Board staff's Required Revision 6 BMP CON3 A) In Table 11 c, the City uses A) The City modified the wording to Erosion and vague and non-specific language read Eliminate pollutants in Sediment in the "Purpose," "BMP Details," construction related discharges to Control and "Goals Targeted" statements the maximum extent practicable " (E&SC) The City must modify the The City corrected the word Plans (Table 'Purpose" description to indicate commencing" in the BMP Details 11c) the BMP will "eliminate pollutants The City revised the Goals Targeted in construction related to read "Increase awareness of discharges" The City must modify public employees, businesses, and the "BMP Details"to correct the the general public about the pollutant word "commending"to potential in stormwater runoff from commencing" The City must construction sites " modify the "Goals Targeted" statement to indicate the BMP will "Increase awareness of public employees, businesses, and the general public of the pollutant potential of in stormwater runoff from construction sites B) In Table 11 c, the SWMP does not indicate BMPs and MGs B) The City modified the wording and associated with CON3 coordinate Notes to correct errors and include with other BMPs and MGs We the suggested Notes. recommend the City adds a"Note at the bottom of Table 11 c indicating the City will coordinate E&SC planning with 1) IDDE The revisions are in Table 11 c, page tracking (BMP ID1A) and 2) the 70 of the March 30, 2009 SWMP The City's revision adequately City staff will follow up construction site enforcement addresses Water Board staff's actions lack of SWPPPs or E&SC 'fir✓' 89 City of Atascadero - 5 - Attachment 3 November 19, 2009 Item Subject Required Revisions Water Board Staff Responses Plans) as part of BMP CON2 Required Revision 7 CON4 The `Purpose statement in Table The City modified the wording in Construction 11 d is vague The City must Table 11 d to read "Eliminate Site modify the "Purpose"description pollutants in construction related Complaint to indicate the BMP CON4 will discharges to the maximum extent Mechanisms eliminate pollutants in practicable construction related discharges The revision is in Table 11 d, page 71 of the March 30, 2009 SWMP The City's revision adequately addresses Water Board staff's Required Revision 8 Post A) The City modified the wording to Construction read exactly as requested stormwater management A) On page 69, the City's Program controls Goal III mentions only Program subdivisions and does not include Goals all facilities Atascadero is mostly subdivided, so this language would severely limit applicability of post-construction runoff control measures The City must modify the post-construction stormwater management controls Program Goal to indicate, "III Assure a mechanism is in place for long- term maintenance of post- construction facilities in new subd*Yis+eRs development and re-development. B) The City modified the wording to B) The `Goals Targeted"entry in read exactly as requested Table 12e does not adequately Note Table 12e is now 12d This was describe the title, task, or purpose a result of combining BMP language for BMP PC5 The City must from PC3 into BMP CON2 and modify the `Goals Targeted" in deleting PC3 The remaining Table 12e to indicate the BMP sections and tables were seeks to increase stakeholder renumbered accordingly awareness of the important functions riparian and wetland The revisions are in Section 4 5 1, habitats provide to maintain water page 72 and Table 12d, page 82 of quality in the City's waterways and the March 30, 2009 SWMP The groundwater City's revision adequately addresses Water Board staff's Required Revision 9 MG PC1 D A) As indicated in our July 10, A) The City modified MG PC1 D to 90 City of Atascadero - 6 - Attachment 3 November 19, 2009 Item Subject Required Revisions Water Board Staff Responses Gain 2008 letter to MS4s Water Board say "Gain approval for interim Approval of staff will approve, or recommend hydromodification control plan The Interim/ approval by the Water Board, City added a new MG PC1 E to Long-Term SWMPs that require MS4s to include development of long-term Hydro- adopt and implement interim hydromodification criteria specific to Modification controls by the end of Year 1, and watersheds within the City's Control Plan long-term criteria during the jurisdiction Included as course of the 5-year permit cycle Appendix C The SWMP indicates the City will develop "interim/long-term" hydromodification controls to apply to eligible projects deemed complete by the end of Year 2 The City makes no distinction between interim and long-term criteria. The City must revise MG PC1 D to indicate the City will "gain approval for interim hydromodification criteria in Year- 1, and earnestly develop long- term hydromodification criteria specific to watersheds within the City's jurisdiction (e g , Atascadero Creek, Graves Creek) during the 5-year permit cycle " B) The City presents a Hydromodification Plan and a B) The City revised the timetable for Technical Basis for that Plan in MG PC1 D to reflect development of SWMP Appendices C and D, interim and long-term respectively Water Board staff hydromodification control plans The has not required the City to City revised the scheduling of MGs include the hydromodification PC1 B and PC1 C to the end of Year control requirements in the 2 SWMP, but rather to include in the SWMP a commitment to develop hydromodification control requirements. The Water Board has pursued an enrollment strategy and schedule for Phase II The revisions are in Table 12, page MS4s that does not include review 75 and Table 12a, page 77 of the of hydromodification controls prior March 30, 2009 SWMP The City's to SWMP approval The City's revision adequately addresses Water Hydromodification Plan is an Board staff's Required Revision earnest effort by the City and contains several good elements. However, because Water Board approval of a SWMP containing a Hydromodification Plan and supporting information could be *AW 91 City of Atascadero - 7 - Attachment 3 November 19, 2009 Item Subject Required Revisions Water Board Staff Responses construed as an approval of the Plan and concurrence with the supporting information, Water Board staff cannot recommend approval of the SWMP with Appendices C and D The City must remove Appendices C and D and all references to them from the SWMP The City must submit its proposed Hydromodification Plan according to the schedule described above 10 MG PC213 - The City must revise MGs PC213 The City modified the implementation Revise and PC2C to indicate the Initial timetable to reflect the Initial Study CEQA Initial Study Checklist and Post- Checklist and Post-Construction Study Construction SWMP Checklist will SWMP Checklist will be available for Checklist, be available for project review project review staff by the end of and MG staff by the end of Year 2. Year 2. PC2C - Develop a The revisions are in Table 12, page Post 75 and Table 12b, page 79 of the Construction March 30, 2009 SWMP The City's SWMP revision adequately addresses Water Checklist Board staff's Required Revision 11 BMP PC5 A) The Assessment Measures" in The City combined language from Construction Table 12e indicate the City will BMP PC3 into BMP CON2 and Projects in tabulate the 'number of permits deleted BMP PC3 The City Close issued along creeks and account renumbered subsequent post- Proximity to for the percentage of those construction BMPs accordingly This Riparian and permits that have improvements change also impacted the table Wetland within toe 30-ft of the creek bank. numbering, eliminating the original Habitats Language in BMP PCSA is vague Table 12c, revising Table 12d to and does not address these Table 12c and Table 12e to Table Assessment Measures "The City 12d must provide a specific measurable goal in Table 12 to track construction in close A) The City modified the revised proximity to riparian and wetland BMP PC4 (formerly PC5) to include habitats throughout the 5-year tracking of projects in close proximity permit cycle to riparian and wetland habitats throughout the 5-year permit cycle B) The 'Goals Targeted"entry listed in Table 12e does not B) The City modified the wording to adequately describe the title, task, read exactly as requested in the or purpose for BMP PC5 The City newly renumbered Table 12d must modify the 'Goals Targeted" (formerly Table 12e) entry in Table 12e to indicate the 92 City of Atascadero -8 - Attachment 3 November 19, 2009 Item Subject Required Revisions Water Board Staff Responses BMP seeks to increase The revisions are in Table 12d, page stakeholder awareness of the 82 and Table 11 and 11 b, pages 66 important functions riparian and and 69 of the March 30, 2009 wetland habitats provide to SWMP The City's revision maintain water quality in the City's adequately addresses Water Board waterways and groundwater staff's Required Revision 12 Sweeping wThe City added equipment and Cleaning Street seeping is only as good maintenance to the list of activities Activity and as the equipment used to collect included in Table 15 The City also BMP GH2 the waste, as well as identification added an analysis component to (Table 15) of where and when to deploy the street sweeping measureable goals equipment. The City must include to assure street sweeping frequency MGs to assure the street is adequate and street sweeping is sweeping equipment is properly maintained and that staff use deployed in the appropriate areas. information collected during The revision is in Table 15, page 86 sweeping to prioritize the of the March 30, 2009 SWMP The sweeping frequency and areas City's revision adequately addresses requiring more attention (hot Water Board staff's Required spots) Revision 13 Municipal As part of the City's Good The City added two new MGs GH2B Employee Housekeeping (GH) and GH3C to require the Community Training, responsibilities, the City indicates Development Department to review Standard Public Works will develop BMP and revise, as needed, the BMP Operating Guidance Documents (MG GH1A) Guidance Documents and SOP Procedures and a Standard Operating Handbook periodically during the 5- Handbook Procedures (SOP) Handbook (MG year permit cycle (MGs GH1A GH2B) in Year 1 The City does and GH2B not provide a MG to review and The revisions are in Table 16, pages update the BMP Guidance 88-89 of the March 30, 2009 SWMP Documents and SOP Handbook The City's revision adequately based on new information or addresses Water Board staff's experience by City staff The City Required Revision. must revise the MG Implementation Timetables for MGs GH1 A and GH2B to indicate the Public Works department will review and revise, as needed, the BMP Guidance Documents and SOP Handbooks periodically during the 5-year permit cycle. 14 BMP GH3 A) The BMP Intent associated with A) The City modified the BMP Intent Municipal BMP GH3 for Municipal Facilities to read "Prevent or reduce pollutants Facilities incorrectly lists post-construction generated from municipal facilities. BMP Intent management issues The City (Table 16) must revise the BMP Intent to match the Municipal Facilities 93 City of Atascadero - 9 - Attachment 3 November 19, 2009 Item Subject Required Revisions Water Board Staff Responses BMP Details listed in Table 16c 'Wool I B) The City updated the B) The City lists no BMP Implementation Timetable to reflect Implementation Timetable entry the Public Works Department will for Police Station Landscaping inventory the police station Inventory The City must indicate landscaping in Year 5 the year public works staff will inventory the Police Station Landscaping C) The City does not maintain any C) City does not list public public facilities at the Cemetery facilities at the Cemetery or Accordingly, the Cemetery was not Stadium Park. The City must incorporated into GH3 Stadium Park include all facilities for Public was added to the City's list, because Works to inventory improvements to this facility are likely during the permit term The revisions are in Table 16, pages 88-89 of the March 30, 2009 SWMP The City's revision adequately addresses Water Board staff's Required Revision 15 Develop The City indicates the SOP Standard Handbook will be a single document Handbook The MGs and Outcomes listed for that encompasses all types of (MG GH3B the Municipal Facilities BMP municipal operations. It is not facility in Table 16) incorrectly indicate details for specific The City will develop post-construction BMPs (E&SC facility-specific guidance documents and LID) The City must correct that reference elements (BMPs) in the entry to indicate the City will the SOP Handbook. develop a Standard Operations Procedures Handbook for each The revision is in Table 16, page 89 facility inventory of the March 30, 2009 SWMP The City's revision adequately addresses Water Board staff's Required Revision 16 A) The City indicates City A) The establishment of baseline management will conduct conditions for municipal activities are unscheduled inspections of included as part of GH2 The BMP GH1 facilities and municipal operations establishment of baseline conditions Municipal as part of BMP GH1 D The for municipal facilities are included as Employee unscheduled inspections, part of GH3 Training and however, do not have baseline Education information for comparisons or (Tablel6a) recommendations for improvements The City must indicate the City managers will develop baseline conditions before evaluating the facilities or rrr 94 City of Atascadero - 10 - Attachment 3 November 19, 2009 Item Sub'ect Re uired Revisions Water Board Staff Responses operations B) The Municipal Employee B) Added recommended note to the training BMPs do not coordinate notes section of Table 16a. with other BMPs in the SWMP We recommend the City add a Note at the bottom of Table 16a The revision is in Table 16a, page 90 indicating it will provide of the March 30, 2009 SWMP The educational opportunities for City City's revision adequately addresses staff to participate in Public Water Board staff's Required Education and Public Participation BMPs. Revision 17 A) BMP Details listed in Table 16c A) The City revised MG GH3 to do not indicate the type of facilities require City inspectors inventory 13 the City will verify for complete municipal facilities (e g , City Storm Water Pollution Prevention Corporation Yard, public Plans The City must indicate it landscaping, parks, sewer lift will verify industrial facilities and stations, and roadway medians, City construction projects have planters and parkways) and establish compete SWPPPs. baseline conditions at each (MG GH3A) The City also revised MG GH3B to"Develop Facility Water Pollution Control Manual [FPCM] for facilities not covered by Industrial fir+ [Stormwater General Permit] SWPPPs." Additionally, the City created a new MG, GH3C to "review and update [municipal] facility water BMP GH3 pollution control manuals." Municipal These revisions and complimentary Facilities (Table 16c) activities under the City's Illicit Discharge Detection and Elimination program will address potential pollutants of concern from commercial and industrial facilities B) Table 16c Implementation B) The City responded 'SOPs are Details do not match the BMP for activities, not facilities Revised Implementation Timetable in Table terminology in GH3 to clarify that 16 The City must indicate it will SWPPPs will be required for all conduct inventories and develop facilities required to have them, but SOPs in Years 1-5, as shown in other facilities, not subject to Table 16 Additionally, the City SWPPPs will develop Facility should remove or revise the Pollution Control Manuals if the implementation action for Years 2- facility has a significant potential to 5 to "record quantities release pollutants to storm drains addressed/collected," which does The Year 2-5 implementation detail is retained because it is important to 95 City of Atascadero - 11 - Attachment 3 November 19, 2009 Item Subject Required Revisions Water Board Staff Responses not appear pertinent to BMP GH3 collect and assess pollutant potential rrr reduction of activities that take place at each facility in order to evaluate if changes to the facility (such as additional trash cans, incorporation of a spill kit, etc) are necessary" This Staff Response to Item 17 does not address question (B) directly However, Table 16c was revised to indicate Year 1-5 for the Implementation Details as requested (page 92) C) The Assessment Measures C) The City did not address this detailed in Table 16c will confirm question in their reply However, the when the Facility Pollution term, Facility Pollution Control Prevention Plan is developed, but Manual, is standardized in the provides no assurances it will be SWMP Additionally, the City added reviewed or amended based on they will review and revise the facility new information, practices, or water pollution control manuals as experience The City must indicate necessary during Years 3 and 5 as it will review, amend, and record part of the Implementation Details. changes to each Facility Pollution Control Manual based on new The revisions are in Table 16c, page information and experience using 92 of the March 30, 2009 SWMP the manual Note the City uses The City's revision adequately Facility Pollution Control Manual addresses Water Board staff's (FPCM) throughout the SWMP, Required Revision but uses a different term here The City must standardize the use of the FPCM term 18 Miscellaneous We found many typographical, The City revised the date in the grammar, and punctuation errors footers and addressed typographical throughout the SWMP The most errors obvious are detailed here, with our We noted the revisions throughout suggestions noted in bolded, the March 30, 2009 revised SWMP underlined type The City needs to The City's revision adequately carefully review the document to addresses Water Board staff's improve its readability Required Revision The City must revise as follows Page 5, footnote 6, misspelled Alteration. Pages 37-88, use the correct date 96 City of Atascadero - 12 - Attachment 3 November 19, 2009 Item Sub'ect Required Revisions Water Board Staff Responses '`4w in footer Pages 69-78, consistently use re- development spelling, make global changes of "new and redevelopment"to"new development and redevelopment. Acronyms BMP - Best Management Practice City - City of Atascadero E&SC - Erosion and Sedimentation Control FPCM - Facility Pollution Control Manual General Permit - Phase II Small Municipal Separate Storm Sewer Systems General Permit LID - Low Impact Development MG - Measurable Goal MS4 - Municipal Separate Storm Sewer Systems SOP - Standard Operating Procedures manual SWMP - Storm Water Management Program Comments from Debbie Skinner Comment 2. f am writing to express my concern with the CRWQCB's comments to City of Atascadero's storm water management plan dated March 9, 2009 Because I am a resident of beautiful Atascadero, I am especially interested in knowing that the City is taking its stewardship of the creeks and riparian habitats seriously in accordance with federal and state regulations and policies. After reviewing the recommendations made by you, and the city's Table 12d-PC4, I would propose that no new permit applications in watershed areas be considered until the city has had the opportunity to clearly and consistently define the riparian and watershed areas with closer alignment to federal definitions and educate the public regarding the necessity and importance of these areas to our unique community While your recommendations seem to provide a move in the right direction with regard to `tracking" development near riparian and wetland habitats for five years, and educating the public of the important functions that are provided by them, it falls short of actualizing the understanding already known to be necessary for protecting these habitats in a timely manner The current provisions are better than no mention of these needed steps, however they are not acceptable in that they are vague compared with what is needed. Tracking will only allow a window period for development in an area which after further study it might be determined it was critical not to allow After the fact is too late! It will be difficult to evaluate whether or not the city is mitigating damage with self proposed plans on projects that are already in progress with the city Secondly, the city can identify and commit to work with local community groups interested in protecting the local natural resources, tapping into community resources that would be willing to work in partnership with them to provide education about how the watersheds and riparian habitats enhance the community and participates in the larger water process in our county fir✓ 97 City of Atascadero - 13 - Attachment 3 November 19, 2009 The Regional Water Quality Control Board has the ability to encourage and educate the city to protect the riparian area wetland area now and loosen the requirements later just to be safe, rather than putting the city in the position of crying later after further significant damage has occurred, After all, An ounce of prevention is worth a pound of cure " As you know, the city recently intended (2007) to adopt a city ordinance which would have satisfied its commitment to ECOSLO to provide a 35 foot setback on three Atascadero creeks and a 50 foot setback from the Salinas River Unfortunately, this effort was negated by a petition circulated by some special interests who were getting signatures by presenting inaccurate information to local residents about what the setback would mean for local property owners Your leadership and guardianship of our water resources is invaluable to our community I urge you to tighten and shorten the requirements of protecting our riparian habitat. Staff Response 2 Riparian and wetland areas are protected under unique conditions in Atascadero According to Section 3 5, the major named creeks (Atascadero Creek, Graves Creek, and Boulder Creek) "are located within creek reservation parcels established with the original recording of the Atascadero Colony subdivision in 1913 These parcels are designated as open space and no new development can occur within these parcels. There are 60 parcels in total ranging in width from approximately 50-feet to in excess of 250-feet and were sized to capture a majority of the riparian area within the reservation boundaries (Atascadero Draft SWMP pg 17) In addition to the reservation parcels an additional 20-foot setback (measured from the creek reservation boundary), currently protects the Salinas River and other creeks and tributaries within the City A majority of the Salinas River is located within parcels owned and managed by the Atascadero Mutual Water Company, which provides added protection from development. At this time the only permitted exceptions to the current creek 20-foot setback regulations require a Conditional Use Permit and must be approved by the City's Planning Commission To allow any development, the Planning Commission must find that creeks, riparian areas, and site improvements will not be negatively impacted by the exception based on information provided by a qualified biologist and geotechnical engineer In the City's Storm Water Management Program, BMP PC-4 (Table 12d) requires the City to `review [the] effectiveness of existing City standards for consistency with RWQCB required riparian buffer widths" by the end of Year-2. The Water Quality Control Plan for the Central Coastal Basin (Basin Plan)' section V G Erosion and Sedimentation, item 4 states, "A filter strip of appropriate width, and consisting of undisturbed soil and riparian vegetation or its equivalent shall be maintained, wherever possible, between significant land disturbance activities and watercourses, lakes, bays, estuaries, marshes, and other water bodies. For construction activities, [the] minimum width of the filter strip shall be thirty feet wherever possible as measured along the ground surface to the highest anticipated water line (page V 12) The City's current regulations include extensive creek reservation parcels and 20-foot setbacks. We agree with your concerns that the City must tighten their controls on potential development in the riparian corridors. Table of Required Revisions, Item 5, in our SWMP approval letter requires the City to revise MG PC4A to change existing City standards to be consistent with RWQCB riparian protection policies in the first two years Additionally, the City's new MG PC46 requires the City to "track projects located in close proximity to riparian and wetland habitats." ' http://www.waterboards.ca.gov/centralcoast/publications forms/publications/basin plan/bp pdfversion/ch5.pdf 98 City of Atascadero - 14 - Attachment 3 November 1 S, 2009 Comments from San Luis Obispo Coastkeeper, March 30, 2009 ,% Comment 3. Thank you for the opportunity to review and comment on the proposed Stormwater Management Plan of the City of Atascadero Atascadero Coastkeeper, a program of Environment in the Public Interest, is organized for the purpose of ensuring that the public has a voice with agencies and official[s] responsible for enforcing water quality, watershed and coastal planning regulations on the California Central Coast. As such, the SLO COASTKEEPER and our 800 central coast supporters are concerned that the proposed SWMP • is impermissibly vague for some components. • Does not clearly identify the proposed programs and the financial resources available to implement the proposed program • Fails to provide specificity to all types of education and outreach programs, mechanisms to measure effectiveness of BMP, and timeline of when it will be done • Fails to identify what and how many of the proposed measures will demonstrate the protection of water quality in Atascadero Specific comments, included below, outline the SLO Coastkeeper concerns I urge the Regional Board to direct additional modification of the proposal to meet federally mandated MEP standards prior to final approval Staff Response 3 1) The City's SWMP describes in detail how the City will manage stormwater runoff It contains a full suite of BMPs and MGs to reduce pollutant discharges to the maximum extent practicable (MEP) and protect water quality from urban runoff Water Board staff find that the program, with the specified required revisions, provides adequate detail and focus. As expressed in the General Permit, the Water Board staff expects SWMPs to evolve over the permit life and respond to new information and evolving conditions on the ground The annual reports will convey programmatic details and allow the Water Board to determine if additional detail or BMPs are necessary to reduce pollutant discharges to the MEP and protect water quality 2) The General Permit requires the City to submit a SWMP that meets the MEP standard and therefore include BMPs that are technically feasible and are not cost prohibitive The General Permit contains no explicit requirement to demonstrate ability to pay However, General Permit finding 24 requires the City to allocate funds for implementation and enforcement of their BMPs. 3) See Section 2.6 (pg 10) and BMP PP1 The City states they will develop an effectiveness assessment plan to assess effectiveness of individual BMPs The City will document SWMP activities and establish methods to measure how the City's BMPs are raising awareness and changing behavior of the target audiences The City also states they will develop long-term effectiveness assessment strategies throughout their first five-year permit cycle to assess the effectiveness of SWMP implementation on changing awareness and behavior of target audiences, pollutant load reductions, and water quality improvements. Specifically, the City addresses the General Permit requirement to implement a public education program in Section 4 1 Public Education and Outreach (page 34) The program goals are directed to increase knowledge and awareness of specific industries and target audiences (e g , homeowners, commercial, school children, City employees) to water quality related issues, including pollutants of concern Tables 7a through 7g (pages 37-43) provide the City's plans to assess the effectiveness of their BMPs, MGs, and the implementation milestones The City provides 99 City of Atascadero - 15 - Attachment 3 November 19, 2009 similar means to address effectiveness and the scheduling in tables for all other BMPs and MGs associated with Minimum Control Measures 2 through 6 4) Early in our evaluation of the City's SWMP, Water Board staff required the City to develop assessments of program effectiveness where practical In response, the City included Section 2.6 Review and Report on Program Effectiveness committing the City to establishing effectiveness measures for all BMPs where effectiveness assessments are appropriate Based on the results of the effectiveness assessments, the City plans to update their BMPs on an annual basis The City provides their initial measures of effectiveness as "Assessment Measures in each descriptive BMP Table (e g , Tables 7a, 7b, 7c, through Table 16c) MCM #1 PUBLIC EDUCATION AND OUTREACH Comment 4 [Public Education BMPs] 1) The Public Education and Outreach MCM is impermissibly vague 2) It fails to determine effective measures 3) Must be revised to meet all the necessary requirements 4) Must be reoriented toward specific program development and implementation 5) Must be more specific about the audiences and must broaden its education plan to include actions targeted to specific audiences 6) Targeted audiences need to be expanded to include at a minimum, the residential community, the commercial and business sector, the industrial sector, the development community, the construction sector and the government 7) Programs targeted to these specific audiences must be tailored to address specific problems associated with that audience, and can communicate these messages more effectively than programs targeted to the General Public. Staff Response 4 Water Board staff find the City's Public Education and Outreach BMPs achieve the MEP standard BMPs for MCM1 address Homeowners (PE3), Business and Commercial Activities (PE4), School Aged Children (PE2), and City (governmental) employees (PE1) as target audiences Targeting these audiences should suffice for educating the general public The City has committed to implementing the majority of their proposed education programs every year of the 5-year enrollment under the General Permit. In Section 2.6 Review and Report on Program Effectiveness, the City commits to establishing effectiveness measures for all BMPs where effectiveness assessments are appropriate Based on the results of the effectiveness assessments, the City plans to update their BMPs on an annual basis. Comment 5 PE1 Partner with Other Municipalities and Stakeholder Groups. Distribute stormwater pollution prevention public education and outreach information, materials and activities. 1) [The City] must show commitment to the programs listed under the BMP and identify the specific intent of each program 2) [The City] must provide [a] mechanism to adapt its educational program in the future and similar mechanisms facilitating the updating of the educational program 3) [The City] must include a detailed public education and outreach program for years 1-5 Must have a comprehensive approach as to whom their program will reach, and what messages are necessary to meet MEP and protect water quality All information must be explicitly incorporated into the stormwater management program for all five years in order to assure a definitive commitment to implement this program 4) [The City] must specify how the public will be informed about the programs. rrr01 100 City of Atascadero - 16 - Attachment 3 November 19, 2009 5) Each program must indicate what measures it will collect to determine the success of the BMP Staff Response 5 1) The City has detailed their commitments to implementing BMP PE1 in Table 7a. This includes executing the majority of their proposed education programs every year of the 5-year enrollment under the General Permit. 2) In Section 2.6 Review and Report on Program Effectiveness and in Table 7a, the City commits to establishing effectiveness measures for all BMPs where effectiveness assessments are appropriate 3) Please refer to Staff Response 4 4) The City will work with other municipalities in San Luis Obispo County to coordinate additional education and outreach to the public through the Partners for Water Quality and the county-wide technical advisory committee 5) See staff response No 2 above Comment 6 PE2 Public School Outreach 1) [The City] must specify when the presentation will be held and how many times it will occur in a year The scheduling as well as measures all must be reported annually Staff Response 6 1) The City, as well as San Luis Obispo County, has developed extensive education programs to implement during their first 5-year permit cycle However, participation is contingent upon obtaining permission from the schools, which are State agencies. These programs aim to complement existing curricula standards. However, as experienced in Monterey County, schools have significant limitations on time available for outside programs. Depending on school acceptance and success of this program, the program may change and specific timing and frequency is not available until the City and schools work out the details. The City is required to report all activities associated with the BMPs in their approved SWMP Comment 7 PE3 Homeowner Outreach 1) [The City] must be more specific about who the target audience is, must specify who homeowners are 2) [The City] must specify in detail the various types of workshop to be held in regards to stormwater public outreach and education. There should be two workshops per year — first meeting as informational and second as participatory 3) [The City] must be more specific about how the BMP is measured It is unclear of how distributing materials will increase awareness. 4) [The City] must indicate how all the information will be outreached to the general public Staff Response 7 1) In Table 7c, the City identifies homeowners as residents at all City addresses. 2) The SWMP states the City will conduct outreach activities through BMPs listed under MCM 3 Public Involvement/Participation. 3) The assessment measures for BMP PE3 are initially Confirmation and Tabulation The SWMP Development Process Section 2.6 details City's goals and methods to further demonstrate the effectiveness of BMP PE3 and all other BMPs 4) Please refer to Staff Response No 4 Comment 8 PE4 Business Outreach 1) [The City] must be more specific about what type of information will be provided in the distributed materials 2) [The City] must specify who the target audience is. 3) [The City] must specify what is being measured and how it will be evaluated Staff Response 8 1) The City lists common local businesses known to generate contaminants that may contact stormwater These include landscape care, mobile cleaners (pet wash, carpet cleaning, auto detailers, pressure washing, etc), contractors, automobile maintenance, pest 101 City of Atascadero - 17 - Attachment 3 November 19, 2009 control, restaurants, kennels and veterinarians, dry cleaners, and construction sites 2) The City will target the employees and providers of these services 3) Please reference staff response to Comment numbers four through seven for details about the City's requirement to enhance their effectiveness assessment approach to measure the success of their BMPs Comment 9 PE5 Animal Waste 1) [The City] must indicate where and when the public education campaign regarding pet waste will occur 2) How this BMP measure[s] effectiveness is still unclear Staff Response 9 1) BMP PE5 addresses controlling potential contamination of stormwater by fecal coliform indicator bacteria. The BMP provided a means for controlling the sources of bacteria by encouraging proper pet waste disposal and limiting the number of feral animals by working with Woods Humane Society The City will implement outreach BMP PE3 as discussed in staff response 7 2) Please reference staff response to Comment numbers four through seven for details about the City's requirement to enhance their effectiveness assessment approach to measure the success of their BMPs Comment 10 PE6 Establish Resource Library 1) [The City] must implement educational component using all media as maximally practicable to measurably increase the knowledge of the target communities and change the behavior of target communities and thereby reduce pollutant releases to Municipal storm sewers and the environment. 2) All events attended, programs identified and participated, and all distributed resources regarding stormwater management must be reported in the annual report. 3) All evaluation results and measures must be recorded in the annual report and have it available for public to review Staff Response 10 1) BMP PE1 requires the City to `use collaborative regional partnerships to leverage shared resources " The City's plan includes participation with San Luis Obispo County and the San Luis Obispo County Partners for Water Quality BMP PE3 also requires the City to broadcast educational messages over public access television Channel 20 These combined resources provide a broad opportunity to educate and outreach to a wide variety of target audiences Additionally staff response to comments four and five indicates the City's strategy to measure its effectiveness at increasing knowledge and changing behavior 2) The City is required to report all activities associated with the BMP in each annual report. 3) Please reference staff response to Comment number four for details about the City's requirement to enhance their effectiveness assessment approach to measure the success of their BMPs and report on findings and improved BMPs in annual reports MCM#2 PUBLIC INVOLVEMENT/ PARTICIPATION PROGRAM Comment 11 [Public Outreach BMPs] 1) [The City]fail[s] to include any compliance of all state and local public notice requirements Staff Response 11 BMP PP1 states the City will comply with State and local public notice requirements when implementing public involvement activities Water Board staff finds BMP PE1 includes adequate detail for this stage in the SWMP implementation process. Comment 12 PP1 Public Notice and Stakeholder Meetings The objective of the Public Participation and Involvement MCM is to include the public in developing, implementing, and reviewing the stormwater management program *400 102 City of Atascadero - 18 - Attachment 3 November 1 S, 2008 1) The BMP intent must be more specific with program development and implementation to raise public awareness about urban runoff through implementation process This public involvement must provide the opportunity to generate support of the stormwater management plan to protect water quality 2) [The City] must include public workshops and annual report must be posted on the website and in City offices at least one month prior 3) [The City] must provide an opportunity for the public to provide mid-year input on the status of the program and the effectiveness of the BMPs 4) [The City] must include mechanisms for engaging the general public in activities by providing advertising and incentives for the public to increase participation Staff Response 12 Water Board staff finds the City's Public Participation and Involvement BMPs meet the MEP standard Comment 13 PP2 Storm Drain Markings 1) [The City] must indicate how the effectiveness of BMP is measured Staff Response 13 Please reference staff response to Comment numbers four through seven for details about the City's requirement to enhance their effectiveness assessment approach to measure the success of their BMPs Comment 14 PP3 SLO County Creek Day Although listed, Coastkeeper provided no comments Comment 15 PP4 Adopt a Creek/Road Program Although listed, Coastkeeper provided no comments. ,%W Comment 16 PP5 Technical Advisory Committee (TAC) 1) [The City] must include at least two meetings annually 2) [The City] must indicate mechanisms that show commitment. Staff Response 16 Water Board staff finds the City's commitments to develop and participate in the Technical Advisory Committee meets the MEP standard. Comment 17 PP6 Snapshot day 1) [The City] must specify how the public will be aware of such programs and events also provide mechanisms to increase participation in the future 2) [The City] must specify the effective measures and record it on the annual report. 3) [The City] must include how the measures will be recorded and how it determines the success of the BMP and MCM. Staff Response 17 Snapshot Day is organized and financed mainly by the Monterey Bay Sanctuary Citizen Watershed Monitoring Network (Sanctuary) In San Luis Obispo County the south coastal water sampling efforts are organized by the Upper Salinas-Lower Las Tablas Resource Conservation District (US-LT RCD) The Sanctuary is responsible for all measures to analyze, disseminate, and interpret the water sampling results. Water Board staff finds the City s commitments to participate with US-LT RCD in Snapshot Day meets the MEP standard Comment 18 Reserved MCM #3 ILLICIT DISCHARGE DETECTION AND ELIMINATION PROGRAM (IDDE). err► 103 City of Atascadero _ 19 - Attachment 3 November 19, 2009 Comment 19 [IDDE BMPs] 1) MCM [3] lacks in providing how plans or programs will eliminate discharges. It provides that it will detect illicit discharge and who will detect the discharges however lacks to specify how it will be eliminated 2) The objective of this MCM is to adopt and enforce ordinances and to implement a program to detect and eliminate illicit discharge The document includes these objectives but lacks the mechanisms to assure Regional Board of the public that eliminating illicit connection/discharge will result. Staff Response 19 1) The City's BMPs ID2 requires the City to look for, respond to, and follow- up on reports of illicit discharges 2) The City's response to our March 9, 2009 Required Revisions (see Table 1 and Attachment 2) includes a redrafted BMP ID3 that requires the City to adopt an ordinance 'that prohibits non-storm water discharges into the MS4 that are found to be potential contributors of pollutants to the MS4 BMPs and Measurable Goals associated with MCM 3 provide the City authority to eliminate illicit and illegal discharges. Comment 20 ID1 Tracking Records and Databases 1) [The City] must provide the map in year 1 2) [The City] must include an explicit commitment to respond to and eliminate 100% of all illicit discharges and/or connection detected as a result of the complaints 3) [The City] must specify in previous MCM that hot line will be implemented. 4) [The City] must include the requirement that municipalities report on the use of the hotline in their annual report. Staff Response 20 1) BMP ID1 requires the City to provide its GIS-based storm drain and receiving water atlas/database in the Year 1 annual report. The City's BMP exceeds viol requirements to identify only outfalls specified in the General Permit. 2) BMP ID2 commits the City to "investigate and require corrective action when appropriate for 100% of illicit discharges identified, starting in Year 2 3) The City's SWMP provides a note in Table 10b ID2 Education and Training requiring the City to advertise a phone number to receive illicit discharge reports Initially, the calls will be routed to the Atascadero Mutual Water Company The City commits to establishing a separate "hotline if the calls exceed the Water Company's capacity to route and respond to the reports. 4) While Water Board staff is not requiring the City to report all complaints and concerns with their annual report, the City is required to report on every BMP in their annual reports and if appropriate, provide examples of SWMP implementation in the annual report. This includes general reporting on the implementation of the hotline, as well as status of achievement of MGs associated with hotline implementation In addition, the City is always responsible for retaining more detailed evidence of BMP implementation on the site, pursuant to the General Permit and in the event of a Water Board audit. Comment 21 ID2 Education and Training 1) [The City] must specify through tests or quizzes to show effectiveness of training sessions Staff Response 21 The City's BMP ID2 requires training sessions to include results from evaluation forms and pre- and post-training tests (see SWMP Table 10b) Comment 22 ID3 Illicit Discharge Ordinance 1) [The City] must develop a policy outlining what discharges are permitted into the Storm Sewer and what discharges are considered illicit by year 1 There is no reason why the 104 City of Atascadero - 20 - Attachment 3 November 19, 200e ordinance cannot be implemented in year 1 Implementing an ordinance should not take Now three years 2) [The City] must adopt a temporary ordinance to enforce BMP measures while new or revisions are in progress. 3) [The Coastkeeper] urges [the City] to include more specific enforcement and penalty provisions to eliminate illicit discharge 4) [The SWMP is] unclear about how BMP [ID3] will eliminate illicit discharge [The City] must specify education and enforcement mechanisms and show effectiveness Staff Response 22. 1) Water Board staff finds the City's time frame is reasonable since the City has existing municipal code and ordinances that regulate and prohibit inappropriate waste disposal (see response to Item #2 below) The City will need the time in the next two years to update its codes for grading, drainage, erosion control, and interim hydromodification In addition, the City indicates the only permitted discharges to the storm drains are clean stormwater and authorized non-stormwater ( i e , fire fighting flows) In SWMP Table 9, the City also addressed a list of non-significant non-stormwater discharges. The City will not consider these illicit discharges unless the City determines they become significant contributors of pollutants (e g , de-chlorinated water line flushing, air conditioning condensate, foundation drains, springs, and individual residential car washing) 2) Water Board staff believes that a temporary ordinance would be unnecessary and inefficient since the City currently has a number of ordinances prohibiting inappropriate waste disposal, including prohibitions against unpermitted discharge of liquid waste and disposal of solid waste The City's existing authority for avoiding, detecting, and eliminating illicit discharges and illegal connections are contained in a. Title 5 (Public Welfare), Chapter 8 prohibits waterway intrusions such as, "the yam,, accumulation, storing, placement, dumping or disposing of pollutants in the riparian corridor,"and includes penalties, b Title 6 (Health and Sanitation), Chapter 4 regulates solid waste collection, and Chapter 8 establishes cross-connection control and inspections for the public water system, c. Title 7 (Public Works), Chapter 8 identifies prohibited discharges and highlights storm water as a regulated discharge, d Title 9 (City Planning and Zoning Ordinance) implements development review, permitting requirements, and construction measures that pertain to the control of drainage and erosion from development projects, as well as the maintenance of protective devices such as drainage structures, and e Title 10 (Parks and Recreation) regulates activities in the City's parks, and specifically prohibits throwing or discharging any litter, garbage waste, motor oil, or other contaminating or polluting substance into the waters of Atascadero Lake or any stream f The Atascadero Municipal Code also contains enforcement mechanisms in Title 12 and specific penalties in Title 12, Chapter 1 In addition, Title 12, Chapter 2 allows the City to enforce applicable State codes 3 ) The City's existing codes, as mentioned in staff response 22, Item 2f, provide regulations to enforce inappropriate disposal and discharge of liquid and solid wastes. BMP ID3 requires the City review these existing enforcement measures and revise them to be specific to the detection and elimination of deleterious non-stormwater discharges Water Board staff finds the City has adequately addressed enforcement and penalty provisions to strengthen their IDDE ordinances. 4) The IDDE ordinance will eliminate unpermitted discharges by a combination of enforcement and education components The educational components will be bolstered by the collection of 105 City of Atascadero - 21 - Attachment 3 November 19, 2009 data, from evaluation forms and surveys conducted before and after training, to demonstrate BMP effectiveness in raising awareness and behavioral changes Also, refer to the numerous assessment measures listed in Table 10a the City will use to track the effectiveness of the enforcement of its IDDE ordinance Comment 23 ID4 Recycling and Household Hazardous Waste 1) [The Coastkeeper] urges [the City] to provide a stronger educational component regarding Recycling and Household Hazardous Waste for the public. 2) [The City] must specify how reduction of pollutants will be detected and show commitment for the entire permit year Staff Response 23 1) BMP IN states the City will partner with the San Luis Obispo County Integrated Waste Management Authority (IWMA) to offer citizens the opportunity to recycle and dispose of hazardous waste A County ordinance promulgated through the IWMA requires businesses, educational facilities, and households to separate recyclables for curbside pickup The IWMA also provides facilities (e.g , Chicago Grade Landfill in Atascadero) for collection and disposal of hazardous waste Mandatory recycling and diversion of hazardous wastes are on- going programs. IWMA also has an extensive educational program developed to correlate with the California Science Content Standards offered to County and Atascadero schools. 2) The IWMA records the volume of recyclables diverted from landfills. The City's response to our March 9, 2009 Request Revisions (see Table 1 and Attachment 2) expands the requirements for City staff to report and prioritized illegal disposal of wastes. Comment 24. Reserved Comment 25 ID5 Hazardous spill protection and control 1) [The City] must include a requirement for prioritizing those businesses that are known, from observation in the municipality or from other programs, to result in illicit discharges. 2) [The City] must include a program for monitoring the entire municipal storm sewer system 3) [The City] must explicitly provide for follow-up of investigations 4) [The City] must contain commitments of BMP measure 5) [The City] must report annually all the results. Staff Response 25 1) In BMP ID1, the City commits to tracking and responding to 100% of reports of illicit discharges This includes prioritizing and following-up on facilities and locations with poor discharge history 2) Mapping efforts established in BMP ID1 require the City to chart and document the entire storm sewer system in Atascadero 3 and 4) The Assessment Measures detailed in Table 10a required the City to account for [the] number and types of complaints received, method of complaint, investigation, pollutants or activity involved, response time and resolution provided, confirm follow up inspection took place 5) The City is required to report all activities and results associated with the BMPs in their approved SWMP MCM#4 CONSTRUCTION SITE STORMWATER RUNOFF CONTROL PROGRAM Comment 26 [Construction Site BMPs] 1) [The City's] intent must state that it will develop and implement a program to reduce pollutants to MEP and assure compliance with water quality standards through the implementation components 1) ordinance adoption 2) Construction site BMP policies and procedures guidance document 3) site plan review 4) site inspection and enforcement 5) education focused on construction activities 6) pollution prevention 106 City of Atascadero -22 - Attachment 3 November 19, 2009 Staff Response 26 Water Board staff finds the City's Construction Site Runoff Control BMPs meet the MEP standard Comment 27 CON1 Discretionary Review Tools 1) [The City] must modify ordinance within year one or develop a template ordinance 2) [The City] must develop construction site BMP policy and procedure guidance manual within year one 3) All ordinance that needs revision or adoption must be completed within year one of adoption of draft proposal 4) [The City] must specify what type of specific brochures will be made and indicate specific target audience Staff Response 27 1) BMP CONI requires the City's to evaluate their municipal code in Year 1 If necessary the City will adopt new ordinances in the following year 2) Water Board staff finds the City commitments to adopt a BMP manual in Year 2 consistent with first year activities, as well as the need to coordinate the manual with post-construction (MCM 5) elements of the City's SWMP 3) The SWMP requires the City to adopt new code or ordinance in the Year following evaluation of current municipal regulations. 4) The City's response to our March 9, 2009 Request Revisions (see Table 1, Items 3 through 7 and Attachment 2) expands the Notes in Table 11 a to also state, "BMP Reference Manuals and construction site E&SC [Erosion and Sediment Controls] and post-construction practices brochure will be posted on the City's stormwater webpage as part of PE6 "Establish Resource Library " Construction site management brochures will be distributed with grading permit application packages as part of PE4"Business Outreach " Comment 28 CON2 Construction Site Inspection and Enforcement 1) [The City] must specify a stronger development and implementation of a construction site inspection program that meets MEP and assures compliance with water quality standards. 2) [The City] must develop a construction and grading review/approval process of construction plans to ensure that pollutant discharges be reduced to the MEP and assure compliance with water quality standards. 3) The review process must specify ordinances, construction and grading project requirements, and verification of permits and plans 4) [The City] must record all results on annual report. Staff Response 28 1) As described in BMPs CON1 and CON2, City staff will receive construction site training with annual refreshers beginning in Year 1 Additionally, the Municipal Code, once revised in Years 1 and 2 (MG CON1A), will address the long-term operation and maintenance of structural and nonstructural control measures and enforcement for non-compliance 2) As described in BMP CON3, the City will "Require Erosion and Sediment Control Plans be submitted and approved for 100% of projects requiring a grading plan, prior to commencing earth disturbing activities. 3) Please refer to Staff Response to Comment No 27, items 3 and 4) The City is required to report all activities and results associated with the BMPs in their approved SWMP Comment 29 CON3 Erosion and Sediment Control Plans Although listed, Coastkeeper provided no comments. Comment 30 CON4 Construction Site Complaint Mechanism Although listed, Coastkeeper provided no comments. 107 City of Atascadero - 23 - Attachment 3 November 19, 2009 MCM #5 POST-CONSTRUCTION STORMWATER MANAGEMENT FOR NEW AND REDEVELOPMENT PROGRAM Comment 31 We applaud for the inclusion of requirements for Low Impact Development. 1) [The City] fails to provide more information regarding the implementation of LID and hydromodification The projects required to meet hydromodification criteria must be specified Staff Response 31 1) The City's response to our March 9, 2009 Request Revisions (see Table 1 Items 9 and 10 and Attachment 2) revised many of the proposed post-construction BMPs in the Draft SWMP Please review staff responses to the Home Builders Association comments numbers 41 through 49 below Comment 32 PC1 Post Construction Ordinance 1) [The City] must include a temporary ordinance or a set of guidelines that all previous projects prior to the adoption of LID design guidance must comply with LID standards. Staff Response 32 See response to Comment number 31 Comment 33 PC2 Discretionary Review Tools 1) [The City] must require a self-certification 2) [The City] must include site visit/inspections to meet MEP and protect water quality Staff Response 33 1 and 2) The City's response to our March 9, 2009 Request Revisions (see Table 1 and Attachment 2) included a new Measurable Goal PC3F that requires the City to 'Visually inspect private priority post-construction BMPs and private post-construction BMPs who failed to comply with self-certification program requirements. Educate private BMPs owners of proper maintenance techniques. Comment 34 PC3 Post Construction Stormwater Management Site Inspections Although listed, Coastkeeper provided no comments. Comment 35 PC4 Post-Construction Stormwater Management BMP Maintenance 1) [The City] must complete the standard field inspection checklist by year one 2) All inspection must be performed by trained staff and ensure qualification 3) [The City] must provide specific procedures for review of post-construction management in the development review process. 4) [The City] must adopt a plan for review of construction projects to ensure that pollutants and runoff from the development will be reduced to the MEP and will not cause or contribute to exceedance of water quality standards Staff Response 35 1) BMP Details for BMP PC3 listed in Table 12c require the City to establish standard field inspection forms and train City inspection staff in post construction site stormwater maintenance practices. The BMP also requires the City develop a series of post- construction monitoring protocols, enforcement standards, inventories of BMPs and maintenance plans, and opportunities to educate owners on proper maintenance techniques, all by the end of Year 2. Water Board staff feel this is adequate timing in consideration of the City's need to develop interim hydromodification control criteria in Year 1 In the first year, Water Board staff will work with the City to provide construction and post-construction checklists for structural and non-structural BMPs similar to our efforts to assist other MS4s 2) City inspection staff will receive training as part of BMPs PC2 and PC3 3) See response to 108 City of Atascadero - 24 - Attachment 3 November 19, 2009 Comment number 31 4) Please review our staff responses to comment numbers 27 and 28 for BMPs CON1 and CON2, which require the City to consider the construction of post-construction BMPs designed to reduce pollutants as part of the construction elements at project sites Comment 36 PC5 Protect Riparian Areas, Wetlands Buffer Zones 1) [The City] must review existing policies and all revisions must be completed within first year of adoption of draft proposal 2) [The City must] develop an inspection program to monitor all permit issued along creeks to ensure water quality standards Staff Response 36 1) The Implementation Details listed in Table 12d for BMP PC4 (revised from former Table 12e for BMP PC5), requires the City to "Review existing policies and setbacks for appropriateness and to ensure that they meet or exceed RWQCB riparian protection policies " 2) The City's response to our March 9, 2009 Request Revisions (see Table 1, Item 11 and Attachment 2) includes additional Implementation Details in Table 12d to clarify that BMP PC4 will "track projects with improvement[s] located within 30-ft of riparian and wetland habitats in Years 1-5 " The revised Measurable Goals for BMP PC3 include requirements for inspection, training, registering the maintenance status of public and private post-construction BMPs, and procedure and policy reviews. See response to Comment 35, also MCM #6 POLLUTION PREVENTION / GOOD HOUSEKEEPING FOR MUNICIPAL PROGRAM Comment 37 GH1 Municipal Employee Training and Education 1) [The City] must [be] specific how effectiveness of programs will be measured to meet BMP 2) [The BMPs for this] MCM [are]vague and fail to meet the federally mandated MEP standard We urge that specific pollution prevention programs be included and identified that meet the MEP standard 3) [The City] must commit to training specific categories of employees 4) [The City] must identify the categories of employees to be trained and provide mechanisms to commit in training specific categories of employees 5) [The City] must record all activities in the annual report to assure commitment of programs and education of employee training Staff Response 37 1) Please reference staff response to Comment number four for details about the City's requirement to enhance their effectiveness assessment approach to measure the success of their BMPs. 2) and 3) The City's Good Housekeeping and Pollution Prevention for Municipal Operations BMPs provide adequate detail and meet the MEP standard (refer to Table 1, Item 16B) 4) Table 13 lists many of the City facilities and therefore staff covered under BMP GH1 The SWMP lists multiple training opportunities directed specifically for staff as well as additional educational opportunities via Public Education and Public Participation BMPs 5) Please refer to Staff Response to Comment 20 item 4 Comment 38 GH2 Municipal Activities 1) [The City] must include how BMP measures effectiveness in regard to the addition of these programs Staff Response 38 1) In addition to the detailed listing of Assessment Measures provided in Tables 16a through 16c, please refer to Staff Response to Comment 20 item 4 109 City of Atascadero - 25 - Attachment 3 November 19, 2009 Comment 39 GH3 Municipal Facilities Although listed, Coastkeeper provided no comments Comments from Homebuilders Association of the Central Coast March 30, 2009 Comment 40. Commendations for Explaining the City's SWMP Process The Home Builders Association commends the city staff and consultant for an excellent job explaining the city's process developing its storm water plan Staff Response 40. Comment noted Comment 41. Request withdrawal of requiring hydromodification controls for redevelopment/infill/smart growth projects This association raised this issue of the Environmental Protection Agency (EPA) comments in Morro Bay's SWMP, but the Water Board staff did not respond to this point in the February 17, 2009, Notice of Enrollment for Morro Bay and Attachment 3 reply to input from the association and others. Therefore, we continue to address this substantive regional issue Current land planning philosophies being encouraged and mandated on cities and counties promote infill and redevelopment in order to reduce the negative environmental impacts of sprawl The Water Board's failure to exempt most infill and redevelopment from hydromodification, matching pre-development hydrology, replicating natural hydrology, and impervious coverage limitations will result in less smart growth being proposed and accomplished It is our experience that such an approach will make compact urban development (smart growth) fiscally difficult-to-infeasible to achieve Bankers and investors will shy away from such projects which will result in builders not proposing the project. Our smart growth concern is documented in the EPA publication EPA 231-B-05-002 'Using Smart Growth Techniques as Stormwater BMPs A table with the heading "Language Hindering Creation of Joint Smart Growth and Stormwater Policies (emphasis added) lists among those hindrances • "Language specifying that post-development hydrology match the pre-development hydrology", • 'Language requiring that BMPs replicate natural systems or non-structural natural BMPs", and • "Impervious coverage limitations" Additionally, the EPA publication sites the Wisconsin Department of Natural Resources as an example of incorporating infill into Stormwater Regulations. Those regulations state (emphasis added) 1) 'For the infiltration standards, redevelopment sites are exempf' and 2) "The peak discharge standards do not apply to- Sites classified as redevelopment and infill development less that five acres The Water Board, Atascadero, and other cities should not ignore EPA s own publications and recommendations Ignoring such recommendations will make it harder for local governments to create the 'Sustainable Community Strategies" that state Senate Bill 375 requires to reduce green house gas emissions and tackle climate change We recommend hydromodification control requirements not be applied to urban infill and redevelopment projects. Staff Response 41. Water Board staff agrees that these are significant issues, and we have spent considerable time working through these issues with municipalities over the last several 110 City of Atascadero - 26 - Attachment 3 November 19, 2009 months. To address these issues, we modified our approach regarding hydromodification control (relative to our February 2008 letter) in more recently approved SWMPs. The Required Revisions do not dictate specific applicability requirements, and instead provide the opportunity for MS4s to develop applicability criteria that strike an appropriate balance of social, economic, and environmental goals Water Board staff acknowledges that in determining compliance with the MEP standard, we and the municipalities must take into account a range of issues potentially constraining local governments choices about land use development. Water Board staff also recognizes that cities are influenced by State and Federal requirements for affordable housing as well as State mandates and policies affecting, among other things, transportation infrastructure, greenhouse gas emissions, water supply, and public safety Water Board staff understands these requirements affect development patterns. For this reason, the Water Board is now requiring SWMPs to include BMPs to engage municipalities in long-term watershed planning, to provide a context for weighing the multiple objectives affecting development patterns Table 2 at the end of these Staff Responses to comments presents examples of applicability criteria that might achieve this balance These examples include a range of well-defined criteria by which a city could determine applicability of hydromodification control and/or water quality treatment requirements. These examples begin by defining project categories, then identify size thresholds and specific information required to exempt a project from hydromodification and/or water quality treatment requirements Water Board staff does not support exempting all or most infill and redevelopment from hydromodification control but expects municipalities to consider the local conditions and determine when and which conditions apply to the infill area or sites under consideration Also see Staff Response to Comment 49 Water Board staff acknowledges that no stormwater management g g strategy, or suite of approaches, has been identified that can achieve full hydrologic mitigation for the impacts of urbanization While recognizing the challenges of applying LID in certain circumstances, for example in poorly drained soils, staff nonetheless considers LID to represent a more comprehensive effort at mitigating the hydrologic impacts of urbanization At the May 8, 2009 Water Board public hearing, for approval of the City of Grover Beach's SWMP, Water Board staff explained that EPA recognizes the importance of incorporating LID tools and replicating natural systems and the appropriateness of these techniques in urban, high-density settings Water Board staff also explained that EPA finds there should not be a choice between meeting Smart Growth demands and implementing LID principles, and, although the menu of LID tools might be smaller for infill situations, there are still options of providing infiltration and replicating natural systems. The Home Builders Association inappropriately highlights language in EPA s publication, `Using Smart Growth Techniques as Stormwater Best Management Practices, that explains the hindrances LID can pose to infill and redevelopment projects The Home Builders Association has taken this language out of context, and neglected to draw attention to the previous page (page 46) of EPA's publication that outlines the importance of regulatory language that links Smart Growth and stormwater policies Like other development tools, LID may have its challenges when taken to the extreme,therefore, the City must develop appropriate applicability criteria for applying LID and hydromodification control criteria. The above mentioned EPA publication provides other justifications for the benefits of incorporating LID principles in Smart Growth developments. For example, the EPA publication states, "When low impact techniques 111 City of Atascadero - 27 - Attachment 3 November 19, 2009 and creative landscape design accompany a redevelopment project, the water quality performance at the watershed and site level is enhanced (page 19) " In the following passage, EPA emphasizes the importance of controlling hydromodification by using LID techniques for any project that could compromise a watershed "Some lots may not be critical for natural handling of stormwater, but may be in an area with waterways that are already compromised by development-related stormwater runoff In this case, there are an increasing number of green building techniques and LID options for onsite stormwater control Developers and their landscape architects should look at common urban development features, such as courtyards, small water features, and tree planting areas for stormwater control Since these features are likely to already be included in site plans, small design modifications to handle runoff can improve your project's performance The Center for Watershed Protection has developed several documents under its 'Smart Sites initiative, which can be found at www.cwp.org/smartsites.r)df (page 45) Water Board staff subscribes to the following 'Hydrologic Philosophy of Smart Growth," as presented by Richard McCuen 2 As this philosophy and its associated seven principles directly parallel the guiding principle of LID, to mimic the natural hydrograph, Water Board staff finds that LID and hydromodification control are fundamentally consistent with Smart Growth strategies. Hydrologic Philosophy of Smart Growth If society is to control urban sprawl, then guiding principles of smart growth are needed. These principles will form the basis for a philosophy of smart growth. Seven principles related to hydrologic aspects of smart growth include Principle 1 Control Runoff at Microwatershed Level Principle 2 Consider Hydrologic Processes in Microwatershed Layout Principle 3 Maintain First-Order Receiving Streams Principle 4 Maintain Vegetated Buffer Zones Principle 5 Control Spatial Pattern of Hydrologic Storage Principle 6 Control Upland Flow Velocities Principle 7 Control Temporal Characteristics of Runoff The City is still required to develop interim hydromodification control criteria to protect their watershed during the development of long-term hydromodification control criteria. The City has several reasonable options for developing its interim hydromodification control criteria, as described in our February 15, 2008 letter Comment 42. Request that CCRWQCB staff provide the public record with supportive documentation Staff's response to this request in its February 17, 2009, Notice of Enrollment for Morro Bay and Attachment 3 was disappointing On Page 15 of Attachment 3, the staff states that it "believes dissemination of the information requested may support greater understanding of hydromodification requirements However, dissemination of the information would not cause Water Board staff to recommend substantive changes to the City's SWMP z For further explanation refer to Richard H McCuen, Smart Growth. Hydroloqic Perspective Journal of Professional Issues in Engineering, Education and Practice, Vol 129 No 3,July 1 2003 ©ASCE, ISSN 1052 3928/2003/3-151-154 112 City of Atascadero - 28 - Attachment 3 November 19, 2009 Therefore, Water [B]oard staff finds it unnecessary to make available the requested information mow, in the context of approving the City's SWMP " Since the Water Board staff has not complied with this request, we continue to ask that the Central Coast Water Board introduce into the public record for Atascadero s SWMP the economic and technical information and research that the board publicly referenced regarding post-construction stormwater management on Page 3, Item 12, in the Oct. 17, Lompoc Resolution R-3 2008-0071 We assume Atascadero's resolution will substantially resemble Lompoc's, where the Water Board stated that it. 1 " has been evaluating, as demonstrated in the administrative record, the various options for control of water quality conditions affected by post-construction stormwater discharges and has concluded that controlling hydromodification typically associated with urbanization is reasonably achievable 2. considered economics and found that the best information available indicated that controlling hydromodification through, among other approaches, implementation of LID principles, is technically feasible, practicable, and cost-effective , and 3 found that the required revisions would not affect regional housing supply Hydromodification controls have been applied in this and neighboring regions with no demonstrated affect on housing availability " We doubt that the CCRWQCB staff really meant to imply that it has its mind made up and is unwilling to consider changing it if qualified industry experts present new information after examining the public record We believe that upon reconsideration, staff will see that as a tax- supported public agency, it has a legal and public service responsibility to present information in the administrative record to the public when it is requested law We request that the public record include (a) the methodology and standards used to determine what is "reasonably achievable" in item A above, (b) what "best information available" was used to determine what is "technically feasible, practicable and cost-effective" and how it was determined to be the best information available in item B above, and (c) what data and methodology were used to decide that hydromodification controls will not impact housing supply or availability and which communities are referenced "in this and neighboring regions" in item C above Staff Response 42. See the Executive Officer's July 10, 2008 letter (and its Attachment An Example Approach for Including Quantitative Measures of Healthy Watersheds in Stormwater Management Programs), which includes 31 citations addressing the technical basis of hydromodification requirements. A modified version of the July 2008 list, along with additional references that staff uses, is included at the end of these responses to comments. This list is not all-encompassing, but provides a representation of references Water Board staff uses and has used As part of the Porter Cologne Clean Water Act, Section 13241, Water Boards are asked to consider the effect on housing needs when establishing water quality objectives. The Phase II MS4 General Permit does not require Water Boards to consider the effect of enrollment under the General Permit on housing needs, however, to be conservative, Water Board staff did consider these factors when developing expectations for numeric criteria to protect watersheds from the impacts of hydromodification As shown in many of the references provided at the end of this document, incorporating LID principles in site designs should not have an effect on housing supply, because implementing LID principles typically does not substantially increase the costs of development, and thus should not effect housing affordability Also, some of the 113 City of Atascadero - 29 - Attachment 3 November 19, 2009 listed references point to economic advantages of LID In the United States Environmental Protection Agency's (USEPA) paper titled, Reducing Stormwater Costs through LID Strategies and Practices, USEPA provides costs analysis between using LID techniques compared to conventional methods for managing runoff In most cases, USEPA found that implementing well-chosen LID practices saved money for developers and property owners (Reference #38) For the past several years Santa Clara County has required design specifications for implementing LID and has not demonstrated a loss of housing supply Additionally, because each MS4 will develop applicability criteria for imposing LID and hydromodification requirements on redevelopment and infill projects, MS4s can minimize the potential impact of these requirements on these projects to ensure new criteria does not effect housing supply However, in cases where MS4s alleviate requirements for hydromodification control and LID implementation, the MS4 must insure that this will not result in negative impacts to water quality Throughout the City's development of interim and long-term hydromodification control criteria, Water Board staff intends to provide the City with technical information, direction, and support. The Homebuilders Association frequently notes that municipalities are different, and that these differences should be taken into account in the various SWMPs, and that a single approach for all municipalities is not appropriate We agree The State Board's General Permit is designed to allow municipalities to develop locally relevant and effective SWMPs Going further, the Water Board's approach allows municipalities to choose among options that take into account highly local conditions, such as water quality priorities, watershed conditions, economics, degree of build out, future development plans, the interaction of multiple municipalities and other land uses in a watershed, etc. Comment 43. Request for a written, detailed comparison between state and regional stormwater criteria and standards We made this request in the Morro Bay letter and received no Staff Response in Attachment 3 So we are restating the request and referencing the above point -- expecting a public agency to supply the public with information it is officially requesting The association requests a clear, step-by-step description of the differences between the criteria established in the California MS4 General Order, including Attachment 4, and the criteria identified in the February 15, 2008 Water Board letter, and what technical findings support the Water Board differences Staff Response 43. Attachment 4 in the General Permit addresses water quality control or treatment of stormwater pollutant loading to streams, but only briefly addresses the control of stormwater volume to prevent erosion or stream destabilization The General Permit includes vague requirements for providing protection for downstream erosion and stream stability, but also requires Water Board staff to only recommend approval of SWMPs that meet the MEP standard. The Water Board finds that the requirements outlined in the Water Board's February 15, 2008 and July 10, 2008 correspondence (or requirements as effective as those requirements), are necessary for SWMPs to meet the MEP standard Without these hydromodification control requirements, SWMPs would be inadequate to address the priority water quality and watershed impacts of stormwater runoff (pollution reduction and stream erosion and stability impacts) The Water Board s requirements are consistent with the General Permit and with the Code of Federal Regulations. Stormwater regulation nationwide is focusing more on volume control to protect streams from hydromodification impacts. According to the National Academy of Sciences, "Significant changes to the current regulatory program are necessary to provide meaningful regulation of stormwater discharges in the future One idea is to focus the stormwater program less on chemical pollutants in stormwater and more on problems associated with increased volumes of water" (National Research Council 2008, page low 114 City of Atascadero - 30 - Attachment 3 November 19, 2009 2, reference #16) Additionally, studies are showing that the volume-based treatment controls 'Ar► used in conventional stormwater management systems do not necessarily prevent hydromodification impacts A supporting document for the state of Maine s Stormwater Management Program provides the following example of a conventional volume-based treatment metric that does not necessarily suffice for protecting downstream waterbodies 'The current standard for regulating runoff quantity from new developments is the peak flow standard in the Stormwater Management rules (Chapter 500) The peak flow standard offers little to no control of runoff from the smaller, more frequent storms that produce most of the development runoff reaching brooks and streams. It is runoff from these small storms that largely determine how a stream will function and transform in response to changes in land use (Maine Department of Environmental Protection 2003, reference 28, page 1) Comment 44 Request public hearing Because we have not yet received the information we requested or the answers to questions we asked in the November 26, 2008, Morro Bay comment letter, for a thorough understanding and public analysis of the City's proposed SWMP and the points we raise herein, the association believes that there are sufficient issues raised to warrant a public hearing on Atascadero s plan before the Water Board We hereby request a public hearing pursuant to the March 9, 2009 RWQCB letter to the City of Atascadero, with adequate time to present and discuss our positions/comments. Staff Response 44. The Home Builders Association withdrew their request for a hearing for the City's SWMP in a letter dated, April 8, 2009 See Home Builders Associations final Comment number 53 for a copy of the letter Comment 45 Time to develop interim hydromodification control criteria should be two years As we previously wrote to you, hydromodification experts and supporters repeatedly note that it is unrealistic for a small city, facing fiscal difficulties and staffing shortages like Atascadero, to develop proper, technically founded interim hydromodification criteria within 1 year It is obviously critical to protect public safety by insuring that the interim criteria are thoroughly researched before being applied Criteria should not be 'hurried" into practice to meet an artificial deadline at the risk of unintended consequences that could jeopardize public safety or to implement criteria that does not have "technical findings"that demonstrate their feasibility and effectiveness As we have done previously, we are attaching for the public record on Atascadero's plan the June 27, 2008, CASQA letter to the Water Board Executive Officer Roger Briggs. CASQA is an expert on stormwater quality management. It provides consulting services to more than 26 million Californians on stormwater management. CASQA states that it will take more than a year to do the appropriate, scientifically valid research on interim criteria and that larger cities 'have been expending significant effort on the technical challenge of developing appropriate hydromodification criteria for a number of years. Since 2001, the San Francisco Bay Area Phase I permittees have been working to address this issue, yet there is still no accepted common approach The association requests a two-year interim hydromodification control criteria development process. Staff Response 45. The City proposed a process resulting in interim hydromodification control criteria at the end of Year 1 of program implementation in their March 30, 2009 Draft SWMP As we address below in Staff Response to Comment 54, the City needs to refine their NNW 115 City of Atascadero - 31 - Attachment 3 November 19, 2009 applicability criteria for projects exempt from interim hydromodification control criteria, develop interim hydromodification control criteria to align with Water Board expectations, and developv planning application requirements and standards for implementing interim hydromodification, by the end of Year 1 Water Board staff finds this is an acceptable approach to achieving hydromodification controls, since it identifies interim criteria based on a preliminary assessment of conditions unique to the City, and employs these criteria after the first year by adopting them into the City project application requirements and standards. Water Board staff realizes that hydromodification control criteria development is an iterative process. Water Board staff has tasked the City with implementing interim criteria before developing long-term criteria, to allow the City time to work through the hurdles of implementing hydromodification control criteria and set the stage for the long-term criteria. Additionally, if the City postpones adoption of hydromodification control criteria until after conducting watershed analysis and developing long-term hydromodification control criteria, new projects have potential to degrade the City's watershed. Like all areas of scientific research, LID/hydromodification research will never be complete, so waiting for the research to be complete to implement controls would likely result in no control Also, please see Water Board Staff's Response to comment numbers 41 and 42 where Water Board staff cites the references regarding smart growth and balancing the environment, economy, and social values Comment 46 SWMP post-construction application cut-off point should be at Deemed Complete It is our understanding based on the water board staff's Staff Responses on page 18 in the Feb 17, 2009, Notice of Enrollment for Morro Bay and Attachment 3 to the issues the association raised previously on applying new hydromodification requirements adopted after a project meets the legal California requirements for being "deemed complete," the association understands that water board staff and board agree that " ' • The "deemed complete milestone is an appropriate cut-off point in the entitlement process, after which projects would not be subject to new hydromodification requirements, and • This defined cutoff point will be added to all Central Coast SWMPs If our understanding stated herein is incorrect, we request that the Water Board provide us with the necessary clarification Staff Response 46. Water Board staff understands that, as a mid-sized city, Atascadero has relatively few projects that may be potentially affected by the deemed complete" cut-off point proposed by the commenter For these projects, and others for which applications are submitted during the first year of SWMP implementation, the City can voluntarily notify applicants that they should consider LID and address hydromodification in designing their projects. (Central Coast LID Center assistance may also be available to consult applicants on ways to integrate LID into project design ) Water Board staff agrees with the commenter that the "deemed complete" milestone is an appropriate cut-off point in the entitlement process, after which projects would not be subject to new hydromodification requirements BMP PC1 details that projects that must adhere to the interim hydromodification control criteria, and are not yet deemed complete, must comply with the interim criteria starting in Year 2. Water Board staff has included a revision requiring the City to have measures in place in the development review process, by the end of Year 1, to ensure projects, not yet deemed complete and meeting the applicability criteria, are not approved unless they adhere to the City's 116 City of Atascadero - 32 - Attachment 3 November 19, 2009 hydromodification control criteria. The City revised its cut-off point to match the Associations request for a definitive milestone in the most recent SWMP revision The City defined their milestone as deemed complete" as that defined in the Permit Streamlining Act. See also final Table of Required Revisions, Item 3 Comment 47 Incorporating assessments from project geotechnical and soils consultants is imperative Our understanding, based upon CCRWQCB replies to comments on prior SWMPs, is that the CCRWQCB staff agrees with prior HBA comment letters, regarding incorporating geotechnical consultant assessments. If our understanding is incorrect, we request that the Water Board provide us with the necessary clarification. Staff Response 47. Water Board staff expects geotechnical/soils information to continue to inform site design for projects in Atascadero However, Water Board staff does not expect such information to necessarily preclude those sites from using LID BMPs or to necessarily be the basis for exemptions from requirements to mimic the natural hydrograph in post-development runoff events. Water Board staff will review the City's hydromodification controls, stormwater treatment BMPs, and applicability criteria (where and when specific numeric criteria are to be met through post-construction BMPs for new development and significant redevelopment) to determine if the City is achieving water quality protection from these pollution sources Should the City propose to exempt certain developments from infiltration or LID BMPs, the City would need to demonstrate that alternative or conventional BMPs result in the desired conditions of healthy watersheds, including the conditions of rainfall runoff, groundwater recharge, sediment transport and supply, and riparian and aquatic habitat. To achieve the appropriate balance of environmental and societal goals, the City should consider and select BMPs and applicability criteria from a watershed protection perspective Comment 48 Normal maintenance of existing infrastructure by public agencies, project developers, and home owners associations [should?) be exempted from the new standards The association agrees with the Water board staff response to our concern on page 19 in the February 17, 2009, Notice of Enrollment for Morro Bay and Attachment 3 We understand that in the Atascadero and in all stormwater plans, routine maintenance will not be subject to new LID or hydromodification requirements, but `would be subject to education as well as potential enforcement on source control, pollution prevention, and illicit discharges We recommend that this be clearly spelled out in Atascadero s final stormwater plan and future ones Staff Response 48. At this time, the City is states they will start developing new requirements for hydromodification control for new development and significant redevelopment. Maintenance activities for existing public infrastructure are subject to multiple BMPs to reduce their potential contribution to stormwater pollution (see the Pollution Prevention/Good Housekeeping for Municipal Operations) Through other management measures in the SWMP, private developments and homeowners associations would be subject to education as well as potential enforcement on source control, pollution prevention, and illicit discharges, but would not be subject to hydromodification controls for routine maintenance activities. Also, please see Water Board staff's Staff Response to comment numbers 41 and 42 regarding redevelopment/infill/smart growth projects Comment 49 The "pre-development" definition must be "immediate pre-project"• After reading the Water Board staff's Staff Response to this issue on page 20 in the February 17, 2009, Notice of Enrollment for Morro Bay and Attachment 3, the association needs more clarity and remains convinced of the need to receive the public records we requested above regarding 117 City of Atascadero - 33 - Attachment 3 November 19, 2009 material previously introduced into the administrative record In the Morro Bay Staff Response, the [Water Board] staff says it 'views changing the definition of pre-development condition as ,, described in the (HBA [Home Builders Association]) comment as lowering the standard for post- construction runoff control, but also notes that hydrologic performance "should not outweigh other important environmental goals, such as infill, redevelopment priorities, etc. The staff seems to state that cities like Atascadero will build flexibility into the definition of 'pre- development" as they develop interim and permanent hydromodification criteria. Is that a correct interpretation of the staff's Staff Response in the Morro Bay Attachment 3? Defining pre- development as the original natural condition, regardless of current usage, will make many urban infill, smart growth projects fiscally and technically infeasible and is counterproductive to the current sustainability and new urbanism planning concepts intended to reduce sprawl, long- distance commuting, and air pollution In addition, a 'pre-development" standard harkening to when the land was vacant presents a liability issue that will further hamper urban infill by making insurers refuse to support a project because adding more subsurface water to an area than has been the standard for a lengthy time period could undermine nearby buildings constructed to withstand less groundwater Insurers will hesitate to take that risk. Projects will not get built. There will be no redevelopment improvements in storm water management. The EPA publication, referenced in the General Comment Section above, also states regarding the pre-development definition (emphasis added) "When you write your ordinance, however, you may want to avoid confusion by specifying that the pre-development condition refers to the site immediately prior to redevelopment." In Attachment C — Definitions, the San Diego Region California Regional Water Quality Control Board in order No R9-2007-0001 for the incorporated cities of San Diego County, the San Diego Unified Port District, and San Diego County Regional Airport Authority defines "Pre- Project or Pre-Development Runoff Conditions (Discharge Rates, Durations, Etc.) — Runoff conditions that exist onsite immediately before the planned development activities occur This definition is not intended to be interpreted as that period before any human-induce[d] land activities occurred This definition pertains to redevelopment as well as initial development." We recommend that Atascadero define predevelopment as the "immediate pre-project condition just as recommended by EPA, and the San Diego Regional Water Quality Control Board Staff Response 49. Water Board staff views changing the definition of pre-development condition as described in the comment as lowering the standard for post-construction runoff control Water Board staff agrees that hydrologic performance should not necessarily outweigh other important environmental goals such as infill, redevelopment priorities, and regional growth patterns that can also affect watershed health Effective implementation that balances these goals requires well-crafted applicability criteria, which define what types of projects and under what circumstances controls and quantifiable measures apply Water Board staff will consider the City's applicability criteria, including hydrologic baseline conditions, when the City prepares its interim and long-term hydromodification criteria. The options for developing interim hydromodification control criteria, presented in BMP PC1 of the City's SWMP, provide flexibility for defining the hydrologic baseline conditions Specifically, the Water Board Executive Officer has approved the City of Santa Maria's methodology for developing interim hydromodification criteria, including the City's selection of pre-construction 118 City of Atascadero - 34 - Attachment 3 November 19, 2009 conditions as a baseline for hydrologic conditions in significant redevelopment projects [But NOW "pre-construction" is not defined below. What does it mean? 'Pre-project?] Water Board staff has adopted the following definitions to represent both ends of the spectrum for hydrologic baseline conditions Pre-development The native vegetation and soil conditions that existed prior to human influence (e g , urbanization, agriculture, grazing, timber harvest) Pre-project Condition immediately prior to the proposed project. The condition includes, but is not limited to, soil type, vegetation, and amount of impervious surface Water Board staff has added a revision requiring the City update BMP PC1 to reflect the revised terminology The intention of this revision is to provide clarity and uniformity for future correspondence See final Table of Required Revisions, Item 3 Staff is not proposing the City always use the pre-development hydrologic baseline condition when matching runoff patterns from a site The City must evaluate what portions of the City and what types of projects will have what level of impact on the City's waterbodies and in the surrounding watershed When conditioning runoff flow controls for projects, the City must use the appropriate hydrologic baseline (i e , pre-development, pre-project, or a condition between these two baselines) to restore, protect, or prevent further impacts to beneficial uses, dependent upon receiving water body and watershed conditions and as needed to achieve healthy functioning watersheds. The appropriate hydrologic baseline may be different on a project-by- project basis, however, the City must account for the cumulative effects of development in their watershed Comment 50 Economic balance The association remains concerned that the Water Board staff sees stormwater management as the paramount land use issue among the many regulations that various government agencies, all with important and legitimate public benefit goals, impose on municipalities and the building industry We also note that the Water Board's comments on page 21 in the February 17, 2009, Notice of Enrollment for Morro Bay and Attachment 3 state that you will not be "dictating specific applicability requirements, and instead has provided the opportunity for the (small cities) to develop applicability criteria that strike an appropriate balance of social, economic, and environmental goals. We recommend that Atascadero's plan include a clearly worded statement that recognizes that stormwater management improvement must "strike an appropriate balance with such social, economic, and environmental goals as affordable housing, reduced air pollution, market-place economics, municipal economics, and local public acceptance Staff Response 50. See Water Board staff's Staff Response to comment number 41 regarding redevelopment/infill/smart growth projects. Also, the concept of "balancing" competing interests can be easily misunderstood The issue is not whether or not beneficial uses must be protected All municipalities, and other dischargers, must protect all water quality and aquatic habitat beneficial uses from degradation, as defined in the Water Board's Basin Plan Municipalities and other dischargers cannot fail to protect beneficial uses and claim competing interests as justification 'Balance, or reasonableness, in �irr►. 119 Cit} of Atascadero - 35 - Attachment 3 November 19, 2009 consideration of other factors is relative to how beneficial uses will be protected and the schedule for achieving or demonstrating compliance Balance in this context is important, but Water Board staff does not think is it necessary to require the City to add a BMP to achieve this Comment 51 Comments on March 9 Water Board staff comments Item No 5 requires the City to coordinate site inspection information exchanges with SLO Green Build and other stakeholders We recommend that no groups be singled out by name and that the city be required to meet with stakeholders to receive public input on site inspection Staff Response 51. The SWMP mentioned City staff would work with organizations like SLO Green Build when educating stakeholders about the potential pollutants associated with construction sites. Our comments to add a note at the bottom of Table 11 b suggested the City include these organizations when they conduct information exchanges or educational opportunities. Comment 52. Additional specific comments regarding Atascadero s storm water management plan Comment 52a. We suggest formatting adjustments so the document is easier to read. It would help to make more use of numbers or letters instead of bullets It is easier to make specific references to issues and requirements if there are numbers or letters on specific pages to allude to This might seem minor But clarity will help the plan's end users when they want to know what is required or communicate with staff or consultants. Staff Response 52a. Water Board staff agrees and the City enumerated all sections and subsection in their March 30, 2009 revised Draft SWMP Comment 52b. In several instances the SWMP quotes from the Feb 15, 2008, CCRWQCB's Executive Officer's letter but doesn't reflect the exact quote We recommend correcting to the exact language from the letter Staff Response 52b. Water Board staff agrees, and verbatim text for quotes from the Feb 15, 2008 letter is included in the City's Table of Required Revisions Item Number 6 Comment 52c. In several instances the SWMP definition of deemed complete does not agree with the deemed complete definition requested by the association, agreed to by CCRWQCB staff and defined in the Permit Streamlining Act. We recommend utilizing the definition established by the Permit Streamlining Act Staff Response 52c. Please see Water Board staff response to Comment 46 The City's March 30, 2009 defines deemed complete" in accordance with the Permit Streamlining Act. Comment 52d. In instances where the point in time to apply post-construction controls is defined as one year (per RWQCB timing on page 69), we recommend replacing the phrase "by the end of year 1" with the phrase "when the city has adopted interim hydromodification control criteria and a low impact development manual " Post-construction controls cannot be put in place until the interim criteria or the LID manuals are in place Staff Response 52d. The City's revised March 30, 2009 Draft SWMP requires that the timing for post-construction controls will occur after Year 1 and after they develop interim criteria and LID manual 120 City of Atascadero - 36 - Attachment 3 November 19, 200£ HBA did not provide a specific comment identified by "e Comment 52f. The list of "Projects exempted from infiltration requirements" (page 70) should include i normal project and home owner association maintenance work (as noted above), ii projects "deemed complete" before the adoption of interim hydromodification criteria, and iii infill and redevelopment projects (referencing the above EPA recommendation to exempt infill and redevelopment projects from infiltration requirements in order to encourage what is known as smart or strategic growth ) Staff Response 52f. The City agreed to revise BMP PCI D and delete Appendices C and D (see Attachment 2—Table of Required Revisions Item Number 9 in the City of Atascadero's March 30, 2009 letter) The revised BMP will allow City staff time to evaluate and fully vet areas potentially exempted from infiltration requirements and assess interactions with its General Plan As the City develops its interim and long-term control practices it will need to consider these types of exemptions Comment 52q. The bottom of page 70 introduces the concept that if projects are exempted from infiltration they are required to choose from three options that will require the project to provide costly methods to provide what they have been exempted from providing By adding these costly requirements, including an in-lieu fee, the proposal runs directly counter to the previously cited studies and recommendations by the EPA and the Center for Watershed Protection regarding encouraging smart growth Incorporating the options for projects exempted from infiltration will add project costs, increase the likelihood of project infeasibility, and discourage smart growth We request that the section beginning at the bottom of page 70 titled "Projects exempted from infiltration requirements will be required to choose from one of the following three options" be deleted from the SWMP Staff Response 52q. Staff agrees that exemption of certain projects is premature before development of approved interim and long-term of post-construction hydromodification control practices Modification of the City's implementation strategy (i e , Section 4.5.2, Item 4) is included in the City's Table of Required Revisions Item Number 4 Please see Water Board staff response to Comment 52f and Table 1, Item 9 Comment 52h. On Page 74, under Notes, city plans to hold at least one meeting to gather public input on ordinance revisions is inadequate The city should hold several public meetings on different days and different times of day in order to maximize public opportunities for participation Staff Response 52h. The City in PC1 indicates the ordinance will be distributed for public review Based on public demand, the City will hold a minimum of one public meeting for additional public input. As part of the City's Draft SWMP public review process in 2008-2009, the City held several public meetings based on public interest. The City's BMP is also indicative of the potential for multiple meetings Comment 52i. On Pages 76 and 77, under Assessment Measures, the city seems to be proposing only 30 minutes of annual staff training and refresher courses on post-construction low 121 MONSOON City of Atascadero - 37 - Attachment 3 November 19, 2009 storm water management considerations This is perhaps a typo since 30 minutes is a very minimal time period Staff Response 52i. In response to our Table of Revisions for the January 29, 2009 Draft SWMP, the City amended its training requirements under BMP PC3 to train staff on long-term post-construction stormwater management BMP maintenance annually without a time constraint. Comments from Home Builders Association of the Central Coast, April 8, 2009 Comment 53 Withdrawal of Public Hearing Request for the Atascadero City Phase II MS4 Storm Water Management Plans The Home Builders Association of the Central Coast is hereby withdrawing its prior request for a public hearing that we made in a March 30, 2009, letter on the Atascadero City Phase II MS4 Storm Water Management Plan (SWMP) The association is making this request (a) after evaluating the water board staff responses to some of our previous correspondence and (b) comparing the referenced comment letters with the associations Grover Beach SWMP comment letter of Dec 12, 2008 The substantive comments and issues we raised in the Atascadero letter can be addressed in Grover Beach SWMP May 8 public hearing Our request, in this letter, to withdraw our previous request for a public hearing is predicated on the 1 RWQCB holding a public hearing for the Grover Beach SWMP 2. The enrollment of the Atascadero SWMP be deferred until after the Grover Beach public hearing such that any changes that result from it can be applied to the Atascadero SWMP as appropriate. 3 The language in the Atascadero SWMP for 4 5.2 Strategy, Item 4 be changed to "Develop interim hydromodification control plan by the end of year 1 (PC1 D) Develop long-term hydromodification criteria specific to watersheds within the City's jurisdiction by the end of year 5 (PC1 E) " and 4 Addition of language to Atascadero's SWMP to state that "Pre-development refers to soil type, vegetation, and amount of impervious surface existing on the site prior to the development project." (Language from the CC[R]WQCB April 3, 2009 Notice of Enrollment for the City of Watsonville Table of Required Revisions, Item Number 13, Option 2B) The withdrawal of our request for public hearing is based, among other factors, on the Water Board Staff Response to the association's April 6 letter including the language from its May 6 Staff Response to Grover Beach regarding how "pre-development" and 'pre-project" is defined and applied to urban infill/smart growth/redevelopment projects. Please acknowledge receipt of and agreement with this letter to the association by letter or email Staff Response 53. 1) The Water Board held a public hearing for Grover Beach Storm Water Management Plan on May 8, 2009 (see Item 13 at http.//www.waterboards.ca.gov/centralcoast/board info/agendas/2009/may/MAY09agn web.htm 2) The enrollment of Atascadero's SWMP was deferred due to staff prioritization of work, but did benefit from the discussions at the Grover Beach hearing 3) In response to our Table of Revisions for the January 29, 2009 Draft SWMP, the City redrafted language for Section 4.5.2 Strategy, Item 4 to include a new Post-Construction Ordinance BMP The Measurable Goals and Outcomes for BMP PC1 E "Develop long-term 122 City of Atascadero _ 38 - Attachment 3 November 19, 2009 hydromodification criteria specific to watersheds within the City's jurisdiction provide expanded details of the BMP that "require [a] new ordinance to apply to all projects not already considered deemed complete by the agency upon adoption of the post-construction ordinance The majority of this effort for BMP PC1 will occur over the first four years of the City's permit cycle, as follows. In the Year 1, the City is required to ■ Train City development and review staff and develop an interim hydromodification control plan in Year 1 In Year 2, the City is required to ■ Conduct self audit of post construction program ■ Develop in-lieu fee options ■ Revise municipal code to require specific post-construction stormwater management controls and long term maintenance provisions ■ Amend or create ordinances and Standards to implement required revisions to municipal code In Years 2-4, the City is required to ■ Develop long-term hydromodification control plan Additionally, the City drafted new Implementation Details for BMP PC2 Discretionary Review Tools to require in Year 2 ■ LID Design Guidance document adopted or created ■ Revise CEQA initial study checklist. ■ Develop a [Post-Construction Stormwater Management] PCSM plan review checklist. ■ Develop Standard Conditions of Approval Year[s] 2—5 ■ Track and trend reporting data. ■ Require PCSM as a topic in pre-application meeting ■ Train plan reviewers on PCSM plan check requirements. Plus, the City drafted several new BMP Details and Implementation Details for BMP PC3 Long Term Post Construction Stormwater Management BMP Maintenance 4) The City has not used the term "pre-development" in its SWMP Instead, the City defines the pre-construction condition as the area with an assumption of typical vegetation, soil, and stormwater runoff characteristics of open space areas typical of California s central coast unless reasonable historic information is provided that the area was atypical Please see Water Board staff response to Comment 49, also Water Board staff responded to this comment in a letter dated, June 8, 2009 Water Board Staff Response to Home Builders Association withdrawal of request for hearing for the City of Atascadero SWMP We received your May 15, 2009 notification of withdrawal of your hearing request for the City's SWMP As applicable for the City, we will incorporate post-construction BMP issues as resolved through our on-going communication with the Home Builders Association, the City, and other stakeholders when we finalize the City's enrollment under the General Permit. Water Board staff will standardize the terms used to describe the hydrologic condition baselines We will use these terms, and explain their application, in the City's enrollment package 123 TN C: i C C i0 O O CV +. L O C :3 CZ O O 0 O O Cf) N U E a) E cn p— CA3 U Z:; p N cl N aa E +� U O ca a) O N Q..-0 O cin r o T_ > o E t° a d 0 U 0 Q ) a) U) Q cd p E E aj ca Q E > > _O c .: Z r Q a) cQ N O � N O .E C O cf U i N cfj a) >' 1 N CZ C U ` EO O O O > to -O 0 «9 O Q cn E -0 O E C (j O Q cz 'U .> CZ > r +- O T O U -C CJ EZ Q) y cn ° -> a) N p cn z N 0 -0 -0 N � U N cz c Q U C 0 _O O > O O -c� L U N cn a) cn O O V Q c.0 O ca U E Hcn L -0 >' N O N Q Q U co (a O O O Cn x- +. 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E o oo � cC d E O N a) O N U E .O C i Q O Oc !C LO W U) O (aQ 'c E a "O — .O 0 Q -COZ C� > aN a a O O c U UO NO O c U O to Q N O N cz L m Q+- O o C N U ca � N N U cz a) O to o CZ a) f OU L .- E m o a) C (a L N O -0 E ° a) O" 0 W � - E O N O C `- E c '- c Via) LQ—cz = O N N O O cz (a A� O N C E czEcN ° L2 � a) o cQ -0ca .r � o >; .. E Y + C U i . , a' a) C O - UE N CLI " `a ` O ° Eoac - nc O-C\j - O Q O O c ca U Nc "0 W 0 aca O ''La) � OON ° N ° ca 0)� o v iO cn a) 0 O n- ca O o > 0 0 c W C E 0 i U U O O N Qi U y a) 0 +_ O E ca N v o � -0 '0 Q- °) 5D o c .0 ° QczE � O c c � � — E - N � _0 N i p c N -� a� c° � 7- E c .o -r-c CZ c' oar ° cO c °irr0 -0 mcc - N CZ - E a) 0- cz L E O op Q) m -75 16a � M 0 Hn 0-0 - o0aO0 "6oo c � ` ' Q� oCCZ oQNc a c n - ca L 0) cn0 O 8) a) o cn U ° � � � O a� � E L cz n N i O _ (a O O 0 T7 O (n = � 0) co O'_ c c ca � � N E (a r c o cn C N ca � ' O N O E CD- NN " UU Cca U mL >, - ca 0) U O J NQ � O Zn p a a) O in C N � - B ONQ� UNUQ ' � Q O � > E inL N O � 0) O Q to C _ = O ' . ca O_(rQ QOU-aO�O oO O C 0c- O 0oOc° o E —apNN) .oo °x) o > � c oX4cn O 0 c O 0No ° cin 0) (Z � � ; o C 0 d o - = oFz N0U VN OO O = = >CD O - _ 0 _O z O � cn O E L cn _ cca E N U Cj C: c caapO — U - ca OO ca p J-- cn C Oti CZ � E_ > � C aR _ U dUca OO , O LV > Q 0 (aQ 0 U '�11r►' 127 City of Atascadero - 43 - Attachment 3 November 19, 2009 References 1 "Americas Living Oceans Charting a Course for Sea Change The Pews Oceans NNW* Commission. (2 June 2003) 16, 58 <htti)//www r)ewtrusts ora/uploadedFiles/wwwpewtrustsorg/Reports/Protecting ocea n life/env pew oceans final report.pdf> pp 166 2. "California State Constitution " California State Government. (September 8, 1994) Article 10, Sec. 2. <hftp://www.leginfo.ca.gov/.const/.article 10> 3 "Code of Federal Regulations United States of America. Title 40 Sec 122.34 <http.//ecfr.gpoaccess.gov/cai/t/text/text-idx?c=ecfr&tpl=%2Findex.tpl> 4 "Draft NPDES General Permit for Stormwater Discharges Associated Construction and Land Disturbance Activities " California State Water Resources Control Board <htto://www.waterboards.ca.gov/water issues/program s/stormwater/docs/constperm its/draft/draftconst permit 031808.doc> pp.27 5 "Draft Tentative Order Orange County Municipal Separate Storm Sewer System Permit. San Diego Regional Water Quality Control Board. (12 December 2007) 38. <http.//www.waterboards.ca.aov/sandiecio/water issues/program s/stormwater/docs/ oc permit/r92007 0002/2007 0002rev att070607.pdf> pp 34 6 "Draft Tentative Order San Francisco Bay Region Municipal Regional Municipal Regional Stormwater National Pollutant Discharge Elimination System (NPDES) Permit Urban Runoff Quality Mgmt, Provision C 3 " San Francisco Bay Regional Water Quality Control Board. (4 December 2007—Updated 14 December 2007) 21 22.<http.//www.waterboards.ca.gov/sanfranciscobay/water issues/programs/stormw ater/muni/mrp/mrptentativeorder121407updated.pdf> 7 "Draft Tentative Order Ventura County Municipal Separate Storm Sewer System Permit. Los Angeles Regional Water Quality Control Board. <http.//www.waterboards.ca.gov/losancieles/water issues/programs/stormwater/muni cipal/ventura ms4/08 0429/draft Tentative Ventura County MS4 Permit.pdf> pp 115 8 Dynamics of Urban Stream Channel Enlargement. The Practice of Watershed Protection Article 19 (2000) 99-104 9 "Impacts of Impervious Cover on Aquatic Systems, Watershed Protection Research Monograph No 1 Center for Watershed Protection, Ellicott City, Md , March 2003 <hftp://www.cw6.orcl/Resource Library/Center Docs/IC/Impacts IC AQ Syste ms.pdf> pp 158 10 'Impervious Cover Method ENSR International. (October 2005) 11 June 2008 <http.//www.epa.gov/ne/eco/tmdl/assets/pdfs/ensr pilot/Section2.pdf> pp 11 11 'Methods for Evaluating Wetland Condition Developing Metrics and Indexes of Biological Integrity U.S. Environmental Protection Agency. (2002) <http.//www.er)a.gov/waterscience/criteria/wetlands/6Metrics.pdf> pp 45 12. "Recycled Water Policy State Water Resources Control Board. (February 3, 2009) 1, 5, 6 <http.//www.waterboards.ca.gov/water issues/programs/water recycling policy/docs /final policy 021109.pdf> pp 14 13 'State Water Resources Control Board Resolution No 2008-0300 Requiring Sustainable Water Resources Management." State Water Resources Control Board. (May 6, 2008) <hftp.//www.waterboards.ca.gov/board decisions/adopted orders/resolutions/2008/r s2008 0030.pdf> 14 'Stormwater C 3 Guidebook. Contra Costa Clean Water Program Third Edition (2006) <http.//www.cccleanwater.org/new-developmentc3/> pp 147 128 City of Atascadero - 44 - Attachment 3 November 19, 2009 15 'Strategic Plan Update 2008-2012 State Water Resources Control Board. (September 2, 2008) 7, 24, 27 <http.//www.waterboards.ca.aov/water issues/hot topics/strategic plan/docs/final d raft strategic plan update 090208.pdf> pp 45 16 "Urban Stormwater Management in the United States Report in Brief National Research Council. (October 2008) <http.//www.nctcoci.orn/envir/SEEclean/stormwater/nrc stormwaterreport fs.pdf> pp 4 17 "Water Quality Control Plan Central Coast Basin, Region 3" Central Coast Regional Water Quality Control Board. (September 8, 1994) Chap 4 <htto.//www.waterboards.ca.gov/centralcoast/publications forms/publications/basin plan/bp pdfversion/ch4.pdf> 18 Beach, Dana. "Coastal Sprawl The Effects of Urban Design on Aquatic Ecosystems in the United States." The Pews Oceans Commission. (8 April 2002) <http.//www.r)ewtrusts.org/our work report detail.aspx?id=30037> pp 40 19 Booth, Derek, and Rhett Jackson 'Urbanization of Aquatic Systems — Degradation Thresholds, Stormwater Detention, and the Limits of Mitigation " American Water Resources Association. 22.5 (1997) <http.Hkvue.iewatershed.com/kvue/urban hydro boothwrb.pdf> pp 19 20 California State University, Sacramento NPDES Stormwater Cost Survey January 2005 pp 296 21 Central Coast Water Board Phase 4 Project Analysis, Preliminary Project Report, Total Maximum Daily Load for Sediment in Aptos Creek and Valencia Creek, Santa Cruz County, CA. September 2004 <http.//www.waterboards.ca.gov/centralcoast/water issues/program s/tmdl/docs/apto s/preliminay project report.pdf> pp 66 22. Coleman, Derrick, et al "Effect of Increases in Peak Flows and Imperviousness on the Morphology of Southern California Streams " Southern California Coastal Water Research Proiect. Technical Report 450 (2005) <ftp//ftp sccwrp org/pub/download/DOCUMENTS/TechnicalReports/450 peak flow. pdf> pp 70 23 ECONorthwest. The Economics of Low-Impact Development A Literature Review November 2007 http.//www.econw.com/reports/ECONorthwest Low-Impact- Development-Economics-Literature-Review.pdf pp 40 24 Federico, Felicia. "Hydromodification Science, Regulations and Management Strategies." Powerpoint presentation slide handout by Geosyntec Consultants June 15, 2007 pp 19 25 GeoSyntec Consultants for Santa Clara Valley Urban Runoff Pollution Prevention Program 'Hydromodification Management Plan Literature Review September, 2002. 26 Hecht, Barry, and Mark R Woyshner, 1984 Storm Hydrology and Definition of Sand-Hill Recharge Areas, Paiaro Basin In Hecht, B , Esmaili, H , and Johnson N M 1984, Pajaro Basin Groundwater Management Study, prepared by HEA for the Association of Monterey Bay Area Governments pp 34 27 Horner, Richard "Investigation of the Feasibility and Benefits of Low-Impact Site Design Practices (LID) for Ventura County" <http://www.arb.ca.gov/cc/scopinciplan/submittals/other/nrdc low impact develoom ent finalattachment rmercent 20horner percent 20report final.pdf>pp 4 28 Maine Department of Environmental Protection "Runoff Quantity- Progressing beyond Control of Peak Flow Rates."June 25, 2003 129 City of Atascadero - 45 - Attachment 3 November 19 2009 <http//www maine -gov/dep/blwq/docstand/stormwater/group/quantitvdiscussion.pdf 29 Moglen, Glenn, and Sunghee Kim 'Limiting Imperviousness Journal of the American Planning Association 73 3 (2007) 161-171 pp 10 30 National Resources Defense Council Memo Re Revised Tentative Order No r9-2008- 0001, NPDES Order No CAS0108740, To Executive Officer and Members of the Board RWQCB, San Diego January 24, 2008 pp 12 31 Ode, Peter R , Andrew C Rehn, and Jason T May A Quantitative Tool for Assessing the Integrity of Southern Coastal California Streams. Environmental Management. 35 4 (2005) 493-504 <http.//www.ecamp.org/ccamp/documents/SoCaIIBI.Ddf> 32. Prince George s County, Maryland Department of Environmental Resources 'Low- Impact Development Design Strategies An Integrated Design Approach " June, 1999 <http.//www.ei)a.gov/nps/lidnati.pdf> pp 150 33 San Bernadino County Stormwater Program 'Model Water Quality Management Plan Guidance <http.//www.waterboards.ca.gov/santaana/water iss u es/prog ram s/stormwater/docs/ sbpermit/wgmpguide60905.pdf> pp 51 34 Sutherland, R C 'Impervious Area Assumptions Used in Hydrologic Modeling of CWS Watersheds." Pacific Water Resources, Inc. (30 August 2005) 5 June, 2008 <http.//www.cleanwaterservices.orci/content/SW M P/Tech nical%2OMemo%208-30- 05.pdf> pp 9 35 Sutherland, R C 'Methods for Estimating the Effective Impervious Area of Urban Watersheds "The Practice of Watershed Protection Article 32 (2000) 193-195 36 Swanson Hydrology & Geomorphology, 2003 Geomorphology & Sediment Source Assessment Technical Memorandum for the Aptos Creek Watershed Assessment. March <http//www waterboards.ca.gov/centralcoast/water issues/programs/tmdl/docs/apto s/appendix d OOO.pdf> pp 66 37 SWRCB, 2007 Fact Sheet for General Permit for Storm Water Discharges Associated with Construction Activity (General Permit) <http.//www.waterboards.ca.gov/water issues/programs/stormwater/docs/constperm its/factsheet07O3O2.pdf> pp 40 38 USEPA. Reducing Stormwater Costs through Low Impact Development (LID) Strategies and Practices December 2007 <http.//www.ei)a.gov/owow/nps/lid/costsO7/documents/reducincistormwatercosts.pdf> pp 37 S-\Stormwater\Stormwater Facilities\San Luis Obispo Co\Municipal\Atascadero\EO Approval Atas\ATAS SWMP APPROVAL LETTER\Final Approval\attachment3-wb_responsetocomments_atascadero_final.doc 130 'err✓ vftw 1� 1�7 ITEM NUMBER C-3 DATE 12/08/0 9 =g � sols j laza r7 CAD Atascadero City Council Staff Report - Administrative Services Department Allocation of Funds for Zoo Entrance and Gift Shop Project RECOMMENDATIONS Council 1 Authorize the City Manager to execute, if necessary, a Financing Agreement between the Community Redevelopment Agency of Atascadero and the City of Atascadero, and, 2 Authorize the Director of Administrative Services to amend, if necessary, the budget by increasing Transfer from Redevelopment Agency Revenues by $670,660 and appropriating $670,660 of these revenues for the Zoo Entrance and Gift Shop Project. DISCUSSION The Redevelopment Agency Board has indicated in the past that the City's Zoo Entrance and Gift Shop Project was a high priority and one that should be funded with Agency General Funds The Agency began budgeting for this project in fiscal year 2007-2008 and funding for the entire project is currently included in the Agency's budget. Recent legislation has passed and will take effect on January 1, 2010, that limits the Agency's ability to fund this and other projects outside the Redevelopment Project Area unless funds are committed to the project prior to the end of the calendar year Because the Board continues to see this project as a high priority and would like to fund it with Agency funds, the Board has adopted a resolution to that effect earlier tonight. Execution of this agreement commits the City to completing the Zoo Entrance and Gift Shop Project and being reimbursed by the Agency (up to $670,660) for the project. The City will not receive any additional administration funds from the Agency, and there will be no net effect on City finances 1%W The Project The Redevelopment Agency received bids for the Zoo Restroom, Zoo Entrance and Gift Shop projects, and on September 22, 2009 awarded the contract to C3 Construction, 133 Inc , of Paso Robles (C3) The restroom project is underway and on-schedule The Zoo Entrance and Gift Shop portion of the bid was approved by the Agency subject to r.r staff successfully reducing project costs to the budgeted funding level of $1,083,000 for the combined project via a value engineering effort with C3 Since that time, staff has been working with C3 on the requested value engineering to reduce project costs Since the proposed reductions involved sub-contracted construction, C3 had to go back to their sub-contractors to verify cost reductions This process has taken since September 22, 2009 to complete A contract has been developed and is currently being reviewed by C3 The contractor must also acquire the appropriate bonds for the reduced scope of work. It is staff's belief that the contract and bonds will be in place within the next few weeks Based on past experience, there is always the chance the contractor will not be able to finalize the contract and have bonds for review and approval by the Agency, and in place prior to the December 31, 2009 deadline If C3 is unable to successfully negotiate a final contract for the Zoo Entrance and Gift Shop the project would have to be re-bid in accordance with the purchasing policy Rebidding alone could not be used to avoid losing funding for the project; therefore staff is recommending a contingency plan be approved in case the project must be re-bid The Charles Paddock Zoo has long been considered a key tourism attraction and source of community pride for the City as well as a valuable educational resource for youth of the County The completion of this project is expected to improve the beauty and alleviate the blighted condition of this resource, enhance visitors' experiences, and generate additional tourism throughout the City Additionally, the project will provide residents of the City an enhanced and more aesthetically pleasing recreational opportunity No Other Method of Financing With the condition of the local, state, and national economy, the City has reduced the general fund budget. All but the highest Council priorities have been cancelled or postponed The City has indicated to the Agency that sufficient funding is not otherwise available It is not practical to arrange for an assessment district or other funding mechanism for the project at this time FISCAL IMPACT The City will receive $670,660 from the Redevelopment Agency and will expend $670,660 on completion of the City's Zoo Entrance and Gift Shop Project. ATTACHMENT Draft Financing Agreement -- Zoo Entrance and Gift Shop Project 134 FINANCING AGREEMENT ZOO ENTRANCE and GIFT SHOP PROJECT THIS FINANCING AGREEMENT ("Agreement") is made and entered into this 31st day of December 2009 by and between the CITY OF ATASCADERO, a general law city and municipal corporation ("City") and the COMMUNITY REDEVELOPMENT AGENCY OF ATASCADERO a public body, corporate and politic ("Agency") Hereinafter, City and Agency shall be referred to collectively as the "Parties" and singularly as the "Party " RECITALS WHEREAS, the City Council previously adopted a Redevelopment Plan (the "Redevelopment Plan") for a redevelopment project area (the "Project Area"), and WHEREAS, the Agency is vested with responsibility pursuant to the Community Redevelopment Law (Part 1 of Division 24 of Health and Safety Code of the State of California) (the "Law") to implement the Redevelopment Plan both within and without the Project Area, and WHEREAS, the City has commenced planning for the construction of Zoo Entrance and Gift Shop Project (the "Project") at Atascadero Lake Park within the City, which public facilities upon their completion will be owned and operated by the City; and WHEREAS, the City lacks sufficient capital or general funds available which could be used to fully fund the Project and bring it to completion and it is not practical to arrange for assessment district or similar financing for the Project; and WHEREAS, the City has represented to the Agency that final planning and public bidding required before construction on the Project may commence and may take up to 12 months to be completed, and WHEREAS, the Project will address the goals and objectives of the Redevelopment Plan for the Project Area and will be of benefit to the Project Area in that the Project will attract additional tourists, assist with improving physical aesthetics, and alleviate blighting conditions in the area serving as the gateway to the Project Area, and WHEREAS, the Project is consistent with and will promote the Agency's Implementation Plan, and WHEREAS, the Agency intends to provide funding ("the Agency Funds") to assist the City with the cost of the Project because the Project will directly benefit the Project Area, and WHEREAS, pursuant to Health and Safety Code Section 33445, the Agency may, with the consent of the City Council, pay part or all of the cost of the construction of the Project if the Board and the City make certain specified findings, and WHEREAS, a noticed public hearing was held on December 8, 2009 wherein the Agency adopted Resolution No making all required findings for the use of Agency funds for the Project pursuant to Section 33445 135 NOW THEREFORE, the Parties hereto state and agree as follows 1 The purpose of this Agreement is to set forth the understanding and agreement of the Parties with respect to the Agency's commitment to fund of the Project. The contents of this Agreement are intended to be as comprehensive as possible with respect to the Agency's commitment of funds to the Project yet not exhaustive with respect to additional issues that may arise relative to the development of the Project. In the event that issues occur that are not identified in this Agreement, the Parties agree to work together in good faith to resolve each matter 2. The Parties understand that the City will be required to complete final planning and public bidding required before construction on the Project may commence Those final plans and the public bidding are prerequisites for the City's construction of the Project, including the improvements that will be of benefit to the Project Area. 3 The Parties further understand that the City expects that undertaking final planning activities, putting the Project out to bid, receiving bids, selecting a contractor and negotiating a contract with the selected contractor will take at least 6 months and could take as long as 12 months 4 The estimated total cost of the Project is $670,660 ("Total Cost") The Agency anticipates that the Project will address the goals and objectives of the Redevelopment Plan for the Project Area and will be of benefit to the Project Area by attracting additional tourists, enhancing the visitors' experience, assisting with improving physical aesthetics, and alleviating blighting conditions in the area serving as the gateway to the Project Area. The Agency has agreed to commit a total sum of six hundred seventy thousand, six hundred sixty dollars and no cents ($670,660 00) ("Agency Funds") to the Project to pay for the direct benefit to the Project Area. 5 The Parties agree that the Agency shall use the Agency Funds to the extent such funds have not been previously committed and are available in the Agency General Fund 220 to pay for and/or reimburse City for costs and expenses associated in any way with the construction of the Project including, but not limited to, services and costs for construction, installation, landscaping, project management, outside construction support, CEQA costs and necessary permits 6 Within thirty (30) business days of the Parties executing this Agreement, Agency shall segregated the sum of six hundred seventy thousand, six hundred sixty dollars and no cents ($670,660 00) within the Agency's accounts to be held in a separate account ("Escrow Account") to pay the Agency's share of the Project costs The Agency Funds shall be held in the Escrow Account until 2 months from the later of the date the project is completed or the date of the final invoice The City shall request reimbursement from the Agency for Project costs actually incurred and the Agency shall reimburse the City from the Agency Funds in the Escrow Account. It is understood and agreed between the Parties that any funds remaining in the Escrow Account at the expiration of the 2 month period following the later of the date of the project completion or the date of the last invoice shall revert to the full control and discretion of the Agency 136 7 The City understands and agrees that the sources of the Agency Funds may be the proceeds of tax exempt bonds secured by the tax increment revenue the Agency receives pursuant to California Health and Safety Code Section 33670 (the `Bonds") If bonds are used as a funding source, the City covenants and agrees with respect to the Project to comply with all applicable requirements of the federal Internal Revenue Code necessary to preserve the tax- exempt status of the interest on the Bonds and specifically covenants, without limiting the generality of the foregoing, as follows (a) Private Activity The City will take no action or refrain from taking any action or make any use of the proceeds of the Bonds or of any other monies or property which would cause the Bonds to be "private activity bonds" within the meaning of Section 141 of the Internal Revenue Code of 1986, as amended, and (b) Arbitrage. The City will make no use of the proceeds of the Bonds or of any other amounts or property, regardless of the source, or take any action or refrain from taking any action which will cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and (c) Federal Guaranty The City will make no use of the proceeds of the Bonds or take or omit to take any action that would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Internal Revenue Code of 1986, as amended, and (d) Information Reporting. The City will cooperate with the Agency in providing information that the Agency needs to comply with the informational reporting requirement of Section 149(e) of the Internal Revenue Code of 1986, as amended, and (e) Hedge Bonds. The City will make no use of the proceeds of the Bonds or any other amounts or property, regardless of the source, or take any action or refrain from taking any action that would cause the Bonds to be considered "hedge bonds" within the meaning of Section 149(g) of the of the Internal Revenue Code of 1986, as amended, unless the City takes all necessary action to assure compliance with the requirements of Section 149(g) of the of the Internal Revenue Code of 1986, as amended, to maintain the tax exempt status of interest on the Bonds for federal income tax purposes and such action has been approved by the Agency 8 In contemplation of the provisions of Section 895.2 of the California Government Code imposing certain tort liability jointly upon public entities solely by reason of such entities being Parties to an agreement as defined in Section 895 of said code, the Parties hereto, as between themselves pursuant to the authorization contained in Sections 895.2 and 895 6 of said code, will each assume the full liability imposed upon it or any of its officers, agents or employees by law for personal injury, property damage or loss to third Parties caused by a negligent or wrongful act or omission of that party occurring in the performance of the Agreement. To achieve the above stated purpose, each party indemnifies and holds harmless the other party for any damage, loss, cost or expense arising out of its own negligent or wrongful acts or omissions. 137 9 This Agreement shall be governed by the laws of California and together with the attached exhibits represents the entire agreement of the Parties as to the subject matter of this Agreement. IN WITNESS WHEREOF, the City and Agency have approved the foregoing FINANCING AGREEMENT and caused the same to be executed by their duly authorized officers as set forth below CITY By- City Manager APPROVED AS TO FORM By- City Attorney AGENCY By- Executive Director APPROVED AS TO FORM By- Agency General Counsel Iftop 138 ITEM NUMBER C-4 DATE. 12/08/09 ieis 19� Atascadero City Council Staff Report - Administrative Services Department Allocation of Funds for Lake Park Sign and Frontage Improvements Project RECOMMENDATIONS Council 1 Authorize the City Manager to execute a Financing Agreement between the Community Redevelopment Agency of Atascadero and the City of Atascadero, and, 2 Authorize the Director of Administrative Services to amend the budget by increasing Transfer from Redevelopment Agency Revenues by $430,180 and appropriating $430,180 of these revenues for the Lake Park Sign and Frontage Improvements Project. DISCUSSION The Redevelopment Agency Board has indicated in the past that the City's Lake Park Sign and Frontage Improvements Project was a high priority and one that should be funded with Agency General Funds. The Agency began budgeting for this project in fiscal year 2007-2008 and funding for the entire project is currently included in the Agency's budget. Recent legislation has passed and will take effect on January 1, 2010 that limits the Agency's ability to fund this and other projects outside the Redevelopment Project Area unless funds are committed to the project prior to the end of the calendar year Because the Board continues to see this project as a high priority and would like to fund it with Agency funds, the Board has adopted a resolution to that effect earlier tonight. Execution of this agreement commits the City to completing the Lake Park Sign and Frontage Project and being reimbursed by the Agency (up to $430,180) for the project The City will not receive any additional administration funds from the Agency, and there will be no net effect on City finances 139 The Project Staff has commenced planning and design for the construction of the Lake Park Sign and Frontage Improvements Project. This project provides for landscaping and other improvements along Highway 41 from the Lake Park driveway to the Veteran's Memorial It will include signage for the Lake Park, and ornamental fencing along the pedestrian path The project will enhance the beauty of the park and the Highway 41 corridor, provide safety for pedestrians, and alleviate the blighted conditions The location of the Lake Park is considered to be the western gateway to the City The completion of this project is expected to improve the beauty and alleviate the blighted condition of this gateway area, enhance visitors' experiences, and generate additional tourism throughout the City and the Redevelopment Project Area. Additionally, the project will provide residents of the City an enhanced and more aesthetically pleasing recreational opportunity No Other Method of Financing With the condition of the local, state, and national economy, the City has reduced the general fund budget. All but the highest Council priorities have been cancelled or postponed The City has indicated to the Agency that sufficient funding is not otherwise available It is not practical to arrange for an assessment district or other funding mechanism for the project at this time FISCAL IMPACT The City will receive $430,180 from the Redevelopment Agency and will expend $430,180 on completion of the City's Lake Park Sign and Frontage Improvements Project. ATTACHMENT 1 Draft Financing Agreement -- Lake Park Sign and Frontage Improvements 140 FINANCING AGREEMENT LAKE PARK SIGN AND FRONTAGE IMPROVEMENTS PROJECT THIS FINANCING AGREEMENT ("Agreement") is made and entered into this 8"' day of December, 2009 by and between the CITY OF ATASCADERO, a general law city and municipal corporation ("City") and the COMMUNITY REDEVELOPMENT AGENCY OF ATASCADERO, a public body, corporate and politic ("Agency") Hereinafter, Crty and Agency shall be referred to collectively as the "Parties" and singularly as the "Party " RECITALS WHEREAS, the City Council previously adopted a Redevelopment Plan (the "Redevelopment Plan") for a redevelopment project area(the "Project Area"), and WHEREAS, the Agency is vested with responsibility pursuant to the Community Redevelopment Law (Part 1 of Division 24 of Health and Safety Code of the State of California) (the "Law") to implement the Redevelopment Plan both within and without the Project Area, and WHEREAS, the City has commenced planning for the construction of Lake Park Sign and Frontage Improvements Project (the "Project") at Atascadero Lake Park within the City, which public facilities upon their completion will be owned and operated by the City; and WHEREAS, the City lacks sufficient capital or general funds available which could be used to fully fund the Project and bring it to completion and it is not practical to arrange for assessment district or similar financing for the Project; and vow WHEREAS, the City has represented to the Agency that final planning and public bidding required before construction on the Project may commence and may take up to 24 months to be completed, and WHEREAS, the Project will address the goals and objectives of the Redevelopment Plan for the Project Area and will be of benefit to the Project Area in that the Project will improve the public safety, attract additional tourists, assist with improving physical aesthetics, and alleviate blighting conditions in the area serving as the gateway to the Project Area, and WHEREAS, the Project is consistent with and will promote the Agency's Implementation Plan, and WHEREAS, the Agency intends to provide funding ("the Agency Funds") to assist the City with the cost of the Project because the Project will directly benefit the Project Area, and WHEREAS, pursuant to Health and Safety Code Section 33445, the Agency may, with the consent of the City Council, pay part or all of the cost of the construction of the Project if the Board and the City make certain specified findings, and WHEREAS a noticed public hearing was held on December 8, 2009 wherein the Agency adopted Resolution No making all required findings for the use of Agency funds for the Project pursuant to Section 33445 141 NOW THEREFORE, the Parties hereto state and agree as follows 1 The purpose of this Agreement is to set forth the understanding and agreement of the Parties with respect to the Agency's commitment to fund of the Project. The contents of this Agreement are intended to be as comprehensive as possible with respect to the Agency's commitment of funds to the Project yet not exhaustive with respect to additional issues that may arse relative to the development of the Project. In the event that issues occur that are not identified in this Agreement, the Parties agree to work together in good faith to resolve each matter 2. The Parties understand that the City will be required to complete final planning and public bidding required before construction on the Project may commence Those final plans and the public bidding are prerequisites for the City's construction of the Project, including the improvements that will be of benefit to the Project Area. 3 The Parties further understand that the City expects that undertaking final planning activities, putting the Project out to bid, receiving bids, selecting a contractor and negotiating a contract with the selected contractor will take at least 6 months and could take as long as 24 months. 4 The estimated total cost of the Project is $450,000 00 ("Total Cost") The Agency anticipates that the Project will address the goals and objectives of the Redevelopment Plan for the Project Area and will be of benefit to the Project Area by improving public safety, attracting additional tourists, enhancing the visitors' experience, assisting with improving physical aesthetics, and alleviating blighting conditions in the area serving as the gateway to the Project Area. The Agency has agreed to commit a total sum of four hundred thirty thousand, one hundred eighty dollars and no cents ($430,180 00) ("Agency Funds") to the Project to pay for the direct benefit to the Project Area. 5 The Parties agree that the Agency shall use the Agency Funds to the extent such funds have not been previously committed and are available in the Agency General Fund 220 to pay for and/or reimburse City for costs and expenses associated in any way with the design and construction of the Project including, but not limited to, services and costs for design, construction, installation, landscaping, project management, outside construction support, CEQA costs, necessary permits, temporary construction easements, and access agreements. 6 Within thirty (30) business days of the Parties executing this Agreement, Agency shall segregated the sum of four hundred thirty thousand, one hundred eighty dollars and no cents ($430,180 00) within the Agency's accounts to be held in a separate account ("Escrow Account") to pay the Agency's share of the Project costs. The Agency Funds shall be held in the Escrow Account until 2 months from the later of the date the project is completed or the date of the final invoice The City shall request reimbursement from the Agency for Project costs actually incurred and the Agency shall reimburse the City from the Agency Funds in the Escrow Account. It is understood and agreed between the Parties that any funds remaining in the Escrow Account at the expiration of the 2 month period following the later of the date of the project completion or the date of the last invoice shall revert to the full control and discretion of the Agency 1400 142 7 The City understands and agrees that the sources of the Agency Funds may be the 'err proceeds of tax exempt bonds secured by the tax increment revenue the Agency receives pursuant to California Health and Safety Code Section 33670 (the "Bonds") If bonds are used as a funding source, the City covenants and agrees with respect to the Project to comply with all applicable requirements of the federal Internal Revenue Code necessary to preserve the tax- exempt status of the interest on the Bonds and specifically covenants, without limiting the generality of the foregoing, as follows (a) Private Activity The City will take no action or refrain from taking any action or make any use of the proceeds of the Bonds or of any other monies or property which would cause the Bonds to be "private activity bonds" within the meaning of Section 141 of the Internal Revenue Code of 1986, as amended, and (b) Arbitrage The City will make no use of the proceeds of the Bonds or of any other amounts or property, regardless of the source, or take any action or refrain from taking any action which will cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and (c) Federal Guaranty The City will make no use of the proceeds of the Bonds or take or omit to take any action that would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Internal Revenue Code of 1986 as amended, and (d) Information Reporting. The City will cooperate with the Agency in providing information that the Agency needs to comply with the informational reporting requirement of Section 149(e) of the Internal Revenue Code of 1986, as amended, and (e) Hedge Bonds The City will make no use of the proceeds of the Bonds or any other amounts or property, regardless of the source, or take any action or refrain from taking any action that would cause the Bonds to be considered "hedge bonds" within the meaning of Section 149(g) of the of the Internal Revenue Code of 1986, as amended, unless the City takes all necessary action to assure compliance with the requirements of Section 149(g) of the of the Internal Revenue Code of 1986, as amended, to maintain the tax exempt status of interest on the Bonds for federal income tax purposes and such action has been approved by the Agency 8 In contemplation of the provisions of Section 895.2 of the California Government Code imposing certain tort liability jointly upon public entities solely by reason of such entities being Parties to an agreement as defined in Section 895 of said code, the Parties hereto, as between themselves pursuant to the authorization contained in Sections 895.2 and 895 6 of said code, will each assume the full liability imposed upon it or any of its officers, agents or employees by law for personal injury, property damage or loss to third Parties caused by a negligent or wrongful act or omission of that party occurring in the performance of the Agreement. To achieve the above stated purpose, each party indemnifies and holds harmless the other party for any damage, loss, cost or expense arising out of its own negligent or wrongful acts or omissions. 143 9 This Agreement shall be governed by the laws of California and together with the attached exhibits represents the entire agreement of the Parties as to the subject matter of this Agreement. IN WITNESS WHEREOF, the City and Agency have approved the foregoing FINANCING AGREEMENT and caused the same to be executed by their duly authorized officers as set forth below CITY By- City y• City Manager APPROVED AS TO FORM By- City y.City Attorney AGENCY By- Executive yExecutive Director APPROVED AS TO FORM By Agency General Counsel 144 ITEM NUMBER C-5 DATE 12/08/09 f ry'A mI�r� A Q1 I CAD ER4 Atascadero City Council Staff Report - Administrative Services Department Allocation of Funds for Zoo Wall Improvement Project RECOMMENDATIONS Council 1 Authorize the City Manager to execute a Financing Agreement between the Community Redevelopment Agency of Atascadero and the City of Atascadero, and, 2 Authorize the Director of Administrative Services to amend the budget by increasing Transfer from Redevelopment Agency Revenues by $240,000 and appropriating $240,000 of these revenues for the Zoo Wall Improvement Project. DISCUSSION The Redevelopment Agency Board has indicated in the past that the Zoo Wall Improvement Project was a high priority and one that should be funded with Agency General Funds The Agency began budgeting for this project in fiscal year 2007-2008 and funding for the entire project was included as part of the Lake Park Sign, Frontage and Zoo Wall Improvement Project in the budget adopted by the Agency board on June 9, 2009 On September 22, 2009, the Agency Board moved all funds ($240,000) slated for Zoo Wall improvements to the Zoo Restroom and Entrance Project. At the same time, the Agency Board voted to delay (but not eliminate) the zoo wall improvements and reminded staff that the Zoo Wall Improvement Project remains a high priority of the Redevelopment Agency This means that the Zoo Wall Improvement Project does not currently have funding, but there was a strong desire expressed by the Board to find funding Recent legislation has passed and will take effect on January 1, 2010, that limits the Agency's ability to fund this and other projects outside the Redevelopment Project Area unless funds are committed to the project prior to the end of the calendar year Because the Board continues to see this project as a high priority and would like to fund it with Agency funds, the Board has adopted a resolution to that effect earlier tonight. *411'"` Execution of this agreement commits the City to completing the Zoo Wall Improvement Project and being reimbursed by the Agency (up to $240,000) for the project. The City 145 will not receive any additional administrative funds from the Agency, and there will be no net effect on City finances The Project Staff has commenced planning for the construction of the Zoo Wall Improvement Project. This Project would install a ten-foot high masonry wall for the length of the City's Charles Paddock Zoo, along Highway 41 The wall will enhance the beauty of the corridor along Highway 41 and the Zoo, serve as a decorative sound barrier between the Zoo and the vehicular and pedestrian traffic, and provide safety and security for pedestrians, exhibits, and animals The location of the Zoo is considered to be the western gateway to the City The completion of this project is expected to improve the beauty and alleviate the blighted condition of this gateway area, enhance the visitors' experiences, and generate additional tourism throughout the City and the Redevelopment Project Area. Additionally, the project will provide residents of the City an enhanced and more aesthetically pleasing recreational opportunity No Other Method of Financing With the condition of the local, state, and national economy, the City has reduced the general fund budget All but the highest Council priorities have been cancelled or postponed The City has indicated to the Agency that sufficient funding is not otherwise available It is not practical to arrange for an assessment district or other funding mechanism for the project at this time FISCAL IMPACT The City will receive $240,000 from the Redevelopment Agency and will expend $240,000 on completion of the Zoo Wall Improvement Project. ATTACHMENT 1 Draft Financing Agreement -- Zoo Wall Improvement Project 146 FINANCING AGREEMENT ZOO WALL IMPROVEMENT PROJECT THIS FINANCING AGREEMENT ("Agreement") is made and entered into this 8`h day of December, 2009 by and between the CITY OF ATASCADERO, a general law city and municipal corporation ("City") and the COMMUNITY REDEVELOPMENT AGENCY OF ATASCADERO, a public body, corporate and politic ("Agency") Hereinafter, City and Agency shall be referred to collectively as the "Parties" and singularly as the "Party " RECITALS WHEREAS, the City Council previously adopted a Redevelopment Plan (the "Redevelopment Plan") for a redevelopment project area(the "Project Area"), and WHEREAS, the Agency is vested with responsibility pursuant to the Community Redevelopment Law (Part 1 of Division 24 of Health and Safety Code of the State of California) (the "Law") to implement the Redevelopment Plan both within and without the Project Area, and WHEREAS, the City has commenced planning for the construction of Zoo Wall Improvement Project (the "Project") at Charles Paddock Zoo within the City, which public facilities upon their completion will be owned and operated by the City; and WHEREAS, the City lacks sufficient capital or general funds available which could be used to fully fund the Project and bring it to completion and it is not practical to arrange for err assessment district or similar financing for the Project; and WHEREAS, the City has represented to the Agency that final planning and public bidding required before construction on the Project may commence and may take up to 60 months to be completed, and WHEREAS, the Project will address the goals and objectives of the Redevelopment Plan for the Project Area and will be of benefit to the Project Area in that the Project will improve public safety, attract additional visitors, assist with improving physical aesthetics, and alleviate blighting conditions in the area serving as the gateway to the Project Area, and WHEREAS, the Project is consistent with and will promote the Agency's Implementation Plan, and WHEREAS, the Agency intends to provide funding ("the Agency Funds") to assist the City with the cost of the Project because the Project will directly benefit the Project Area, and WHEREAS, pursuant to Health and Safety Code Section 33445, the Agency may with the consent of the City Council, pay part or all of the cost of the construction of the Project if the Board and the City make certain specified findings, and WHEREAS, a noticed public hearing was held on December 8, 2009 wherein the Agency adopted Resolution No making all required findings for the use of Agency funds for the Project pursuant to Section 33445 fir► 147 NOW, THEREFORE, the Parties hereto state and agree as follows 1 The purpose of this Agreement is to set forth the understanding and agreement of %NO, the Parties with respect to the Agency's commitment to fund of the Project. The contents of this Agreement are intended to be as comprehensive as possible with respect to the Agency's commitment of funds to the Project yet not exhaustive with respect to additional issues that may anse relative to the development of the Project. In the event that issues occur that are not identified in this Agreement, the Parties agree to work together in good faith to resolve each matter 2. The Parties understand that the City will be required to complete final planning and public bidding required before construction on the Project may commence Those final plans and the public bidding are prerequisites for the City s construction of the Project, including the improvements that will be of benefit to the Project Area. 3 The Parties further understand that the City expects that undertaking final planning activities, putting the Project out to bid, receiving bids, selecting a contractor and negotiating a contract with the selected contractor will take at least 24 months and could take as long as 60 months 4 The estimated total cost of the Project is $258,000 00 ("Total Cost") The Agency anticipates that the Project will address the goals and objectives of the Redevelopment Plan for the Project Area and will be of benefit to the Project Area by improving public safety, attracting additional visitors, enhancing the visitors' experiences, assisting with improving physical aesthetics, and alleviating blighting conditions in the area serving as the gateway to the Project Area. The Agency has agreed to commit a total sum of two hundred forty thousand dollars and no cents ($240,000 00) ("Agency Funds") to the Project to pay for the direct benefit to the Project Area. 5 The Parties agree that the Agency shall use currently available Agency Funds to the extent such funds have not been previously committed. If funds are not currently available, Agency agrees to dedicate uncommitted tax increment revenue received in the next fiscal year(s) until the total commitment of Agency Funds is reached. These funds are hereby dedicated to pay for and/or reimburse City for costs and expenses associated in any way with the design and construction of the Project including, but not limited to, services and costs for design, construction, installation, landscaping, project management, outside construction support, CEQA costs, necessary permits, temporary construction easements, and access agreements. 6 No later than thirty (30) business days of the date the City puts the contract out to bid, Agency shall segregated the sum of two hundred forty thousand dollars and no cents ($240,000 00) within the Agency's accounts to be held in a separate account ("Escrow Account") to pay the Agency's share of the Project costs The Agency Funds shall be held in the Escrow Account until 2 months from the later of the date the project is completed or the date of the final invoice The City shall request reimbursement from the Agency for Project costs actually incurred and the Agency shall reimburse the City from the Agency Funds in the Escrow Account. It is understood and agreed between the Parties that any funds remaining in the Escrow Account at the expiration of the 2 month period following the later of the date of the project 148 completion or the date of the last invoice shall revert to the full control and discretion of the Agency 7 The City understands and agrees that the sources of the Agency Funds may be the proceeds of tax exempt bonds secured by the tax increment revenue the Agency receives pursuant to California Health and Safety Code Section 33670 (the "Bonds") If bonds are used as a funding source, the City covenants and agrees with respect to the Project to comply with all applicable requirements of the federal Internal Revenue Code necessary to preserve the tax- exempt status of the interest on the Bonds and specifically covenants, without limiting the generality of the foregoing, as follows (a) Pnvate Activity The City will take no action or refrain from taking any action or make any use of the proceeds of the Bonds or of any other monies or property which would cause the Bonds to be "pnvate activity bonds" within the meaning of Section 141 of the Internal Revenue Code of 1986, as amended, and (b) Arbitrage The City will make no use of the proceeds of the Bonds or of any other amounts or property, regardless of the source, or take any action or refrain from taking any action which will cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and (c) Federal Guaranty The City will make no use of the proceeds of the Bonds or take or omit to take any action that would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Internal Revenue Code of 1986, as amended, and `fir✓ (d) Information Reporting. The City will cooperate with the Agency in providing information that the Agency needs to comply with the informational reporting requirement of Section 149(e) of the Internal Revenue Code of 1986, as amended, and (e) Hedge Bonds. The City will make no use of the proceeds of the Bonds or any other amounts or property, regardless of the source, or take any action or refrain from taking any action that would cause the Bonds to be considered "hedge bonds" within the meaning of Section 149(g) of the of the Internal Revenue Code of 1986, as amended, unless the City takes all necessary action to assure compliance with the requirements of Section 149(g) of the of the Internal Revenue Code of 1986, as amended, to maintain the tax exempt status of interest on the Bonds for federal income tax purposes and such action has been approved by the Agency 8 In contemplation of the provisions of Section 895.2 of the California Government Code imposing certain tort liability jointly upon public entities solely by reason of such entities being Parties to an agreement as defined in Section 895 of said code, the Parties hereto, as between themselves pursuant to the authonzation contained in Sections 895 2 and 895 6 of said code, will each assume the full liability imposed upon it or any of its officers, agents or employees by law for personal injury, property damage or loss to third Parties caused by a negligent or wrongful act or omission of that party occurring in the performance of the Agreement. To achieve the above stated purpose, each party indemnifies and holds harmless the other party for any damage, loss, cost or expense arising out of its own negligent or wrongful acts or omissions. 149 9 This Agreement shall be governed by the laws of Calitorma and together with the attached exhibits represents the entire agreement of the Parties as to the subject matter of this Agreement. IN WITNESS WHEREOF, the City and Agency have approved the foregoing FINANCING AGREEMENT and caused the same to be executed by their duly authorized officers as set forth below CITY By- City y. City Manager APPROVED AS TO FORM By- City y•City Attorney AGENCY By- Executive Director APPROVED AS TO FORM By- Agency General Counsel 150 ITEM NUMBER D-6 DATE 12/08/08 r'r^ r 7 CW ''N Atascadero City Council Staff Report - Administrative Services Department Strategic Planning 2010 Phase I1 — Financial Information RECOMMENDATIONS Council 1 Review and discuss staff's budget update, and, 2 Affirm staff's analysis of the City's risk areas, and, 3 Accept the updated seven-year projection REPORT-IN-BRIEF During the past eighteen months, Council has spent many hours working with staff to ensure the viability of the City's finances In an effort to keep Council apprised of the most current economic developments, staff has recently examined the City's five main risk areas Property Tax revenues, Sales Tax revenues, labor/PERS costs, the State budget, and reserves The results of a new seven-year projection indicate that there will be a long, slow climb out of the current economic downturn through 2014-2015, and that revenues will again begin to exceed expenses in 2015-2016 By working together the City will weather this fiscal storm DISCUSSION The City of Atascadero has worked hard to maintain fiscal stability in these times of economic flux. The effects of the local, state, national, and worldwide financial environments have been felt by virtually all governmental agencies, companies, and individuals The severity of the effects is often times directly related to the planning and preparation that was done in advance Fortunately, through Atascadero's visionary leadership, appropriate policies and strategies have been put in place and continue to be used to help navigate the City as this time of fiscal challenge persists The tough decisions and sacrifices are working to keep the organization strong and resilient 151 ITEM NUMBER C-6 DATE 12/08/09 Council and Staff have worked as a powerful team to maintain the organization as , fiscally nimble as possible Critical indicators and influences are continuously monitored and analyzed so adjustments and modifications can be made as new information is available Detailed below are highlights of some of the key actions in the last year and one-half that have been accomplished to help the City get through this economic downturn May 13, 2008- Mid-Year and Mid-Cycle Budget Revisions As a part of the Mid-Year and Mid-Cycle Budget review, staff prepared and analyzed a five-year projection to facilitate long-term planning Council endorsed staff budget actions taken such as the reduction in operating expenses, emphasis on economic development, hiring chills, and operations monitoring Additionally, Council adopted budget policies that have enhanced the City's fiscal position such as budget adjustments, no new or expanded programs, and pursuit of new and/or improved revenue sources November 22, 2008—Special Public Workshop on Economic Development Council hosted a special public workshop to receive the report from Applied Development Economics The report identified the City's strengths and weakness, and proposed ideas for improvement. January 13, 2009—Budget Workgroup Initiated& Weekly Budget Update Memo A workgroup was initiated in January to discuss budget strategies and come up with new ideas for cost reductions and revenue enhancements The group met weekly and was comprised of staff from the different departments and representatives from all of the employee associations Concurrent with meetings, weekly budget newsletters were distributed to Council and all City employees to provide information discussed at the budget workgroup meetings and on progress with the two-year budget, pertinent State legislative actions, and to generate new ideas for cost reductions or revenue enhancements Staff received positive feedback on the newsletters and good ideas were brought forth January 13, 2009- Fiscal Year 2007-2008 Audit Council reviewed and accepted the audited financial statements for fiscal year 2007- 2008 The report included information on the effects the economic downturn had on the 2007-2008 fiscal year Also included were the projected effects the downturn would have on future years. January 28th and 29th 2009 — Council Strategic Planning Council met for annual strategic planning to discuss key issues and prioritize goals This process is fundamental to budget development and the success of ongoing operations I-Ow 152 ITEM NUMBER C-6 DATE. 12/08/09 March 24, 2009 - Budget Plan 2009-2011 Council received a budget update report which identified the $3 5 million gap that needed to be closed for the 2009-2011 budget. In an effort to close the gap, Staff evaluated and/or implemented solutions including a hiring chill, a policy of no new or expanded programs, a critical analysis of budgets and operations, weekly staff budget meetings, Council/employee budget newsletters, employee cost cutting/revenue generating idea program, voluntary furlough and early retirement incentive programs, and a review of each department for services that could be reduced or eliminated April 14, 2009 - Budget Plan 2009-2011 Council received staff report on budget progress and current information Data relating to key revenues, expenditure reductions, and reserves were presented and staff indicated that the budget gap was reduced to $700,000 Staff was working to close the gap completely but believed that wasn't possible without the consideration of layoffs April 28, 2009 -2009-2011 Budget Update Council received a budget update and authorized the City Manager to proceed with staff layoffs The update included an analysis of critical revenue sources affirming that they were still projected to come in low, a review of reserves, and descriptions of expenditure cuts and layoffs proposed to close the budget gap May 26, 2009—Special Budget Meeting Council was provided a review of the preliminary budget and an opportunity to ask questions and voice concerns Additional details and information was given by staff to address these concerns June 9, 2009- Operating and Capital Budget Message for Fiscal Years 2009-2011 Council adopted the budget for fiscal years 2009-2011 Included in the budget were one-time special and capital project deferrals or eliminations, ongoing operational cost reductions, staff layoffs, hiring chills, and suspension of specific reserve funding among other gap-closing solutions The budget was designed to implement the Council's top priorities of growing the City's economy and pursuing economic development, enhancement of public safety, and the continued stabilization of the City's finances June 23, 2009—Business Stimulus Package Adoption Council approved the Business Stimulus Plan in June of 2009 The goals of this plan were to increase revenue through economic development and to stimulate the City's economy This package included a comprehensive marketing plan, fee relief, plans for improved relationships with local commercial brokers, support of buying local, promotion of shopping locally, streamlining of the permitting process, a new business website, and strategic downtown initiatives 153 ITEM NUMBER C-6 DATE 12/08/09 August 11, 2009 - Budget Amendment and Update Council amended the 2008-2009 fiscal year budget in response to the State's intentions to raid City funds Expecting that this would likely come to fruition, the organization was prepared and pre-determined responses were identified including legal action against the State, expenditure reductions, borrowing, and shifting of funds were possible October 27, 2009-Authorization to Participate in Proposition 1A Securitization Council adopted a resolution and authorized the participation in the Proposition 1A Securitization Program that would effectively negate the State borrowing of $645,000 in property tax revenues, freeing up necessary liquid reserves These actions are but a small sampling of the work that has been done, and continues to be done, to successfully position the City to respond to the ebbs and flows of the uncertain economy In addition, the Office of Economic Development has been established to encourage economic development throughout the City Atascadero has also had a positive influence on the State legislation as it relates to the City's financial stability There are lights on the horizon with the expected movie/lifestyle center, new businesses, and expansion of current businesses In preparation of the two-year budget process, staff prepared a five-year projection to more fully understand the long-term impacts of the two-year budget. The five-year projection is an excellent planning tool to get a broader perspective of how the organization will fare and to ensure that the level of reserves currently available will last "Mo' through the downturn Similar to the five-year planning horizon for Strategic Planning purposes, the five-year view is generally believed to be a reasonable time frame for projecting the future However, indicators suggest that the return to an average growth period may be exceptionally long and slow due to the nature of the current downturn Therefore, staff has updated the five-year budget projection's key revenues and expenses and extended them out to seven years, when the economy is finally expected to recover A nine-year history and a seven-year forecast are displayed below 154 ITEM NUMBER C-6 DATE 12/08/09 CMV' N N 0 0 0 W r m r M O W CO W IO N m V' N m W LO O N W M V' N W o W N N m M r m r r O 0, m I- W N m O r r I-- W LO W V LO W co O W M V W a �.;; m LA W O W r V' LO C C M m Il M W m M Cl *- N N W C r t{ O r M r M co LO W m tD m M W M N r N r V' O r +- O M m N M m N N N r t` co N N W V' N O M N LO CO O t0 CO W m M d- N M O O '7 N N 0 N co m .- r N r (h O M r r N N W cD 0000 co r CO r rl- r Lri cdof ao F» r r � m to 0) m W N r r m LO V' CO M CO N O O O V' m co r O V O N N i� O m Ch O M N I� m N r 0 LO M co c0 O r M co O V' m Ch O 00 W M W N CO m c0 m W m 0 cD LO V' I� M r C W r r r C r r O V V N M V co W r C - 1� V r co I� L() Ln M m N V a0 m m N O I, r M V' CD m N CV C`M m r 7 I� LA V p�. r m V' LO O W r N N W m co M N N W V' r m co N N c0 W W V' CO V' co co Q O co LO m V' N N N c0 r aD r N r N r e/ O N M M LO r Cl) V r O W N co D (� LO m v m 69 69 (D co M N co V r co r N CO m (O Ln V' N m r O co O N V N W N W m LO m M N CO O M m CD M CO m O C W O V' W W LO M co LO V' LO N N Co Cl) m 'ct co V' 'O N I� m r LA W O M W m �i V' V' W N r r N M m M N In r r N V' N V r c1 j m Ln N..: N V' N LO CO O m m Ln N M V' M Cl) rl V m N CD CO ; I, N N N CO .- N Lo co N W LO P- N LO m LO W V LO O t. 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(D N V C 2 � y O U �- G g co d a N U N ~ N 3 LL >• N _O pOj _C O N (� C 7 O aL 0 a 0 y O (C m (a N p oIS .0 O C L p y U 3' U E 'S N N y C L N O O "C (C (n Z co 0 m a1 N Q'C is d d -o Ca (C $ m o IZ O (n LL H O € _m (a � co cr d a_ � a> r c c m a� c Z c H CL C a (n LL C O _ D O F W O Cn LL U 0 Z LL LL LL 155 ITEM NUMBER C-6 DATE. 12/08/09 0 0 0 0 0 0 0 0 o o o o o o o 0 o o 0 0 0 0 0 0 0 00 0 o m co 0 (h LO � m O O Ln m N CD O h h O t m LO O N O O «) (D CO co m N m N r 0 LO LO O '7 m cl N r CO ccr N Clh O V (D O N O a1n N cl CO O r m N CD E CONL L17 m h O O Cl oo O N ClO m V CO N h LO (o W Q) ('7 CO N Cl) N co LO O m V co h N C to O w r N CO (O O O O N N N Ln O N a0 CO LO (D Ln M M O N N ��y7j p h V ccN to N V N N c0 co N r M r r "It Cl) h m r N M 00 P.J... 61) r 69 O O O O O O 0 00 0S O O 0000 O O CID O O O co c0 r: LO h S S co M h (D co Cl) S t m h 0 S S S m Cl) 7 S O h co h m 0 00 c0 q O V och LO r m C 00 r C' h r at h 0 co n V ClN O O r (D m N S In V M O O O to O CO M V• CO In V CO h C 1 00 v Cn O m N Cl) (My N O c0 00 c0 (D V N h CO Cn O CO CD to C) N 1� m N In to m h m Cl) N N v (n N r I M (C *- V' N M CV N co h N .- M r r ('7 co h (C O co Cri Cv) N h Cl) .- r W T Lf) Cb V 6s r EA 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O O O O O 00 00 O O co m 0 N c0 co O N m 0 M m V co CM O M h V 0 O O CD O N m O O V a h LO IQ h 0 n O N C7 ccCl r � m Lb C C'7 h r O O poc V (C V N CD O (C''7 r- f� m co O) O CD O O m V .-- W m CO 00 In r Co (D Cl) CC) h Cl) (O :t 't r le LO N N N S N N O V N CO h V O m (D (D CD m to (D (O 00 N n (O N N co N ,- V' N m r N 00 Co r r N r r Cl M O CC) W Ln v t` C7 N r` CO r r a0 V a0 V V 6q r tO O O O O O () O O 0 0 0 0 0 0 0 0 0 0 (D O O � O S c00 S S N N � cO V V V' V co h LO (D h h co -q N co (D v Ln m O N Lf) LO c0 r O co m v_ C O N h n O W LO CO aD V (O O m ch O r E_' a C7 V ,-- O O N h O O m V V N LO Cl) V h n c0 00.- N V' a0 N O m O r O N ('7 00 V V V h T (D (D m (O � LO c0 N T N (n c) N Ch O M N m n LO co r„ O (o N r V C\, N N 0 (O N M ch N m O (O V• n cm h Cl) r r r� Cl) V c0 Ln v EA r (A z c0•) O LO N O LLf N O O N (OD CD'7 0 N 0 0 M 0 LOO N O 0 N 0 0 O O O 0 co co 0 d perp' n r .C--) LQ S W v N tO N .-- h lO O 0 CD '7 W N (D S 0o h .-- m y N S cc n n O W a N 0)CO h O CO h (O Cl) V M LO (A N M N LO n 0)C) c0 V Oi m LO N O h 00 (O f� c) N O co N co co 0 LO (D Cl) W V• e! to (D N Lb h N LO 00 m c0 h N h (O LO pp m M co r N N r N 00 V) r r N r .- N N CD 00 to CD O u') V' O p� N N r ,- O N V h v (D LO d S r r � N �, _O O O O O O 0 0 0 F 0 0 0 0 0 0 0 0 0 O Q O O O O O O O O 00 c0 0 f n Lm() o 0n) III c m rl -- Cr!Nu r 00 (D rOr a00 OBD � (5 000 M co ( COO (m0 C\1 (�D M rLO N N r aD CV O C)r ri(O C) CA M 0) (D It (V O (O Ln m co c0 N co O O (0 r` O (O Ln h Z .0 E a,; 000 Cl) n 0 It N N N N 000 LO 00 v v v N m N N LO V �d CSD (�D h N W V LO Ch E u R' (o c�i r r r r r r v h n co Luo' r r ❑ Z r O _O O Q O O O C d p 0 0 0 6 0 0 0 Q 0 O O Q O O 0 0 O O O Q O 'O r Cl) O tC b h (O �'t Q Cb N IT N O 0 0 CO Ln LO O O N V to b co � O t.,, h cq z O y p ^7 h r b O) M In O'> tO =- m tO W N CO *- N OJ — Q cc C� m m co (D m O h h .0�, x C2 m _O O +: cJ ZO aJ m m 0') N �vt ((yV O (D Lo C'•) ('7 o0 N LO co O (D N V V' N LL :..0:: V• tri O N (0 Lt) b m't � (D rt N d r Lo rt N Ln N d �t h c+) —I co 0... co O) r 7 N N .- N CO Lo t- v- N ,-- N V m N (C? 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O c O y LL id w .2 a) U (a m ro U? z (0 - Ly �C U c3 N CD "C7 coSM O N d y C O L C E a d fU N W � Z CL (5 U) LL € a) (� � (n � ❑ ¢ ¢ aars cl) r (o LL a50U) u- 50 w0 co U ❑ z LL LLL LL 156 ITEM NUMBER C- 6 DATE. 12/08/09 Now,, Obviously, there are a lot of numbers and a huge amount of data on the charts It is true that there are thousands of minute details to consider and monitor, but when it all boils down, there are really five key risk areas 1 Property Tax Revenue, 2 Sales Tax Revenue, 3 Personnel and Labor; 4 State Impacts, and 5 Reserves Following is an in-depth discussion of the five key risk areas and what the staff has done, or is proposing to do, to continue to keep the organization fiscally sustainable PROPERTY TAX REVENUE The City of Atascadero currently receives 40% - 45% of its general fund revenues from property tax revenues WHAT ARE PROPERTY TAX REVENUES? Property tax revenues are taxes imposed on real property (land and permanently attached improvements) and tangible personal property (movable property) The tax is based on the value of the property rather than on a fixed amount or benefit to the property or person Proposition 13 (Article XIIIA of the State Constitution) limits the real property tax rate to 1% of a property's assessed value, plus rates approved by the voters The amount of the tax is based on an annually determined assessed valuation The property tax is paid to the county tax collector and allocated to local taxing agencies pursuant to a statutory allocation formula. The property tax is guaranteed by placing a lien on the real property The City of Atascadero participates in the Teeter Plan This means that the City of Atascadero receives its entire amount of the property tax levy regardless of whether or not the tax has been paid to the County In exchange, the County is entitled to all future penalties and interest collected on the levy In order to understand property taxes, it is important to understand assessed value Proposition 13 calls for a base year assessed value to be established when the property undergoes a change of ownership (typically a sale) or when new construction occurs 157 ITEM NUMBER C-6 DATE 12/08/09 After the base year value is established, the value is factored annually for inflation, which is the lesser of the change in cost of living or 2% The assessed value may also be adjusted by a Proposition 8 factor Proposition 8 requires the Assessor to value the property at the lesser of the base year value indexed by inflation or the fair market value This means in housing market downturns like the one we are currently experiencing, the assessed value will drop to the fair market value When the housing market recovers, the assessed value is adjusted to the lower of the new fair market value or the original base value adjusted annually for inflation The table below illustrates how assessed value would be calculated for a fictional property EXAMPLE OFASSESSED VALUE FOR FICTIONAL HOME Date Description of Changes in CCPI Inflation Base Fair Market Assessed Percent Assesssed Value Factor Factor Value' Value(FMV) Value Chan e2 1/1/X1 Market Value when Purchased N/A N/A $300,000 $ 300,000 $ 300,000 N/A 1/1/X2 Annual 2%inflation applied 2.46% 2.00% 306,000 335,000 306,000 2.00% 1/1/X3 CCPI inflation rate applied 1.85% 1 2.00% 311,670 375,000 311 670 1 1.85% 1/1/X4 Declining Real Estate Market 2.10% 2.00% 317,904 290,000 290 000 -6.95% 1/1/X5 Slight Improvement in RE Market 437% 2.00% 324,262 300,000 300,000 3.45% 1/1/X6 Drastic Improvement in RE Market 2.08% 2.00% 330,747 350,000 330,747 10.25% 1/1/X7 Annual 2%inflation applied 2.08% 2.00% 337,362 360,000 337,362 2.00% 1/1/X7 Home addition adds$50,000 N/A N/A 380,747 410,000 380,747 12.86% to base value 1/1/X8 CCPI inflation rate applied 101% 2.00% 384,592 437 000 384,592 101% 1/1/X9 Annual 2%inflation applied 2.76% 2.00% 392,284 450 000 392,284 2.00% ' Base Value is calculated on lessor of CCPI or Inflation Factor 2 Amount of Change from prior year assessment The City receives various forms of property tax revenues each with its own distinct issues and trends as follows Current Year Secured - Current secured revenues make up 73% of the City's property tax revenues and are what most people think of when discussing property taxes Assessed values are established as of January 1 of each year and taxes are paid to the Assessor in two installments, due on December 10 and April 10 As the Assessor receives the funds, they are then allocated and distributed to the various agencies, including the City Amounts levied but not collected by the County are distributed to the City under the Teeter Plan at the end of the fiscal year Redevelopment Agency Pass-Through - The Redevelopment Agency receives 100% of the tax increment over and above its base value This net negative revenue reflects the amount the City would've received if the RDA did not exist. Property Tax in Lieu of Vehicle License Fees - This revenue source grew out of a state- local budget agreement as part of the State 2004 budget package Under this 158 ITEM NUMBER C-6 DATE. 12/08/09 N40„ arrangement, the Vehicle License Fee (VLF) was reduced to Californians and the reduction in city and county revenues was replaced with a like amount of property taxes Subsequent to the fiscal year 2004-2005 base year, the property tax in lieu of VLF fluctuates in proportion to the gross assessed valuation in the City Current Year Unsecured- Unsecured property tax is collected on items such as mobile homes that are not on a permanent foundation, machinery and equipment owned by businesses, and personal property such as airplanes and watercraft. Unsecured roll taxes are due on August 31 Current Year Supplemental- This property tax is an extra assessment that occurs when new construction is completed on real property or when a property changes ownership The assessed value of the property is then increased to the current market value as of the date of the title transfer or completion of construction Supplemental property tax is the amount due on the difference between the pre-event assessed value and the new market value of the property Because there is a time lag between the change of ownership or completion of construction and the actual change of assessed value to the tax roll, supplemental property taxes are generally collected six months to a year or more after the event. WHAT IS THE CURRENT STATUS OF PROPERTY TAXES? As stated above, property taxes are a function of assessed value and assessed value is a function of the base year adjusted for inflation and/or the fair market value As of January 1, 2009, the fair market value of many properties in the City of Atascadero had decreased below the base value adjusted by the inflation index. In other words, people's homes had decreased in value below their 2008 assessed value Based on median home prices, the County Assessor determined that they would look at all homes purchased since 2003 (Homes purchased prior to 2003 were likely to have an assessed value which was still less than the fair market value ) Each home was examined individually to determine if the market value of the home as of January 1, 2009 was less than the prior 2009/2010 Change in Assessed Value year assessed value adjusted 21% 7% for inflation As a result of this 4% examination, the assessed values of many properties s% Y within the Cit were written ..= down This in effect brought 6% the assessed value of all homes within the City to the 54% sales value on January 1, 2009 or less A comparison of an assessed Decrease>25% Decrease of 10% 25% Decrease<10% value database for 2008 versus Increase of 0% z% ■ Increase of z% ■ Increase>2% the same database for 2009, 159 ITEM NUMBER C-6 DATE 12/08/09 shows that properties representing approximately 36% of 2008 assessed value were written down to some degree and another 4% had an increase less than the inflation factor Analysis of the database also shows 54% were adjusted by the inflation factor and the remaining properties were increased due to change in ownership or new construction Overall the net effect to the City's assessed value was a decrease of 326% This is the first decrease the City has seen since the implementation of Proposition 13 While the City planned for the decrease, it appears that the City was hit slightly harder than expected and estimated property tax revenues have been adjusted downwards by about $130,000 As of October, the median home price in the County was less than the median Atascadero Median Home Prices home price as of January 1, 2009 This is Seo Watch corn important because if the median home price as of January 1, 2010 is lower than Atascadero Median the County median home price as of Date Range Home Price January 1, 2009, this will trigger a re- Jan - Mar 2009 $ 340,000 examination of property values Apr-Jun 2009 345,000 The median home price is the median Jul - Sep 2009 374,000 price of homes being sold and is therefore Jan - Mar 2008 437,500 a function of both the value of real estate Apr-Jun 2008 368,781 and number of high end versus low end Jul - Sep 2008 410,000 properties being sold In discussing the Oct- Dec 2008 359,900 1400 real estate trends with local professionals, Jan - Mar 2007 510,000 the consensus seems to be that values Apr-Jun 2007 571,000 are remaining somewhat consistent; Jul - Sep 2007 503,750 however sales seem to be more in the Oct- Dec 2007 450,000 low-end homes rather than the high-end 2006 515,000 homes If the Assessor finds that the 2005 520,000 1/1/10 prices are consistent with the 2004 419,900 1/1/09, then the Proposition 8 2003 359,000 adjustments would not affect the 2002 320,000 2010/2011 assessed values Attachment A has been provided by the County Assessor's Office This schedule lists total assessed value by base year for the City As stated before, assessed values are also a function of the inflation factor A notice from the State Board of Equalization dated September 2, 2009 stated that: "In the more than 30 years since the passage of Proposition 13, the annual adjustment factor has never resulted in a reduction to base year values. However, if current trends continue, the announced factor could result in reductions to base year values The final factor will depend on price level changes between now and October" 160 ITEM NUMBER C-6 DATE. 12/08/09 *4 Discussions with the County Assessor's Office indicated that the final adjustment factor has not yet been released to them, but that it is currently estimated at -0.24% or negative '/4 of 1 percent. WHAT ARE PROPERTY TAX REVENUES EXPECTED TO BE FOR THE NEXT 7 YEARS? When projecting out future property taxes revenues, staff tried to consider the factors that go into assessed value How will foreclosures affect assessed values and the real estate market? What will annual inflation factors look like? How much new construction can we expect? What will the real estate market look like? Foreclosures have been severe across the nation Fortunately, Atascadero has not been as hard hit as many other communities Taken individually, foreclosures may or may not have much of an effect on assessed values, depending on the overall market. A sampling of 14 foreclosed properties that were on the market on 10/20/09 showed that 9 properties were listing for more than their assessed value and 6 properties were listed for less than their assessed value While this certainly is not a statistical sample, it does illustrate the fact that foreclosures on their face do not necessarily translate into a decrease in property taxes Taken as a whole, however, foreclosures have the potential to affect market values For example if banks wanted to get the foreclosed properties off their books and dumped a large number of properties on the market at a much reduced value, this has the potential to affect the price of other homes The banks that staff talked to did not have a lot of foreclosure properties and it is not necessarily in the banks best interest to flood the market. This may act as somewhat of a deterrent. Several economists have predicted that commercial properties will be on the next round of foreclosures These properties were spared from the first round during the residential market crunch Local professionals have indicated that they believe the current commercial market will hold fairly steady Atascadero's commercial real estate values have historically been low While this certainly has not helped the City's long-term finances, Atascadero continues to remain a bargain The inflation factor is set by the State Board of Equalization each year and is consistent for all counties in the state Staff looked to the LAO for statewide predictions on CPI and adjusted those figures to fit with the Council's conservative fiscal policies Projected Consumer Price Index As Projected by the State LAO on 11/18/09 Estimateci,i Forecasted Forecasted Forecasted: 'Forecasted Forecasted Forecasted' 2009 2010 2011 2012 2013 2014 2015; -04 1 7 2.2 2.1 1 9 2.0 1 9 161 ITEM NUMBER C-6 DATE 12/08/09 In projecting the volume of new construction, staff met with various developers, real estate professionals, the Community Development Department, and the Office of Economic Development. There seems to be consensus that there will be a long, slow climb out of the recession Permit revenues are only modest, and activity on new housing and remodels has effectively stopped The economists' view that people are holding on to their money more carefully really seems to ring true Additionally, the finance market continues to be more selective when approving loans for new projects Among all of this, however, there seems to be some bit of optimism on the horizon Council's emphasis on economic development has spurred activity including the new Colony Square downtown, Rite Aid renovations, Tractor Supply, development at Del Rio, Downtown Streetscape Improvements, the Business Stimulus Package, and in various other businesses and programs Again, in projecting what the real estate market may hold, staff consulted with the experts, real estate professionals, mortgage banks, economists, and the Community Development Department. The real estate market seems to be near the bottom of the recessions, and projections are that the market is flattening It certainly isn't and won't be the robust market that was familiar several years ago, but at the very least, there should be an easing up on the large declines that have been experienced in the recent past. Assumptions that went into the projected property tax revenues were as follows • 2009/2010- Assumed that Current Secured, Redevelopment Agency Pass- Through, and Property Tax in Lieu of Vehicle License Fees are equal to the amounts estimated by the County Auditor's Office in their letter dated September 1, 2009 Current Year Supplemental and Current Unsecured revenues are expected to come in at budgeted levels • 2010/2011- Assessed values for properties purchased prior to 2002 are assumed to be adjusted downward by a negative 0 25% inflation factor Properties purchased from 2002 to 2009 are assumed to receive a negative 5% Proposition 8 adjustment to their assessed value Assume a 10% decrease to Current Year Supplemental revenue and unsecured rolls are assumed to remain flat. • 2011/2012- Assumes that real estate prices are completely flat and that a positive inflation factor of 1% is applied to all properties Also assumes that there is minimal new construction that will offset any lingering AB8 adjustments Other property taxes will remain relatively flat. • 2012/2013- Conservatively assumes that real estate prices remain flat and that a positive inflation factor of 1% is applied to all properties Assumes that some new commercial construction begins to hit the tax rolls Supplemental rolls will begin to improve, but not significantly 162 ITEM NUMBER C-6 DATE. 12/08/09 2013/2014- Assumes a 2% inflation factor, and a very small assessed value adjustment upward for those properties with A138 adjustments in 2009/2010 Stronger growth in supplemental rolls, but still well below 2008/2009 levels 2014/2015- Assumes a 2% inflation factor with another bump up for properties written down due to Prop 8 adjustments Assumes small amount of growth due to new construction Current secured rolls are increased by 3% and supplemental rolls recover to the $250,000 annual revenue level 2015/2016- Assumes a 2% inflation factor with a much stronger adjustment for increases in fair market value of homes with remaining Prop 8 adjustments New construction recovers to levels seen in the late 1990's and overall assessed values increase by 4 3% As homes move, supplemental rolls continue to increase PROJECTED PROPERTY TAX REVENUES As of November 23,2009 Actual Estimated; Estimated, Estimated, ,Estimated Estimated Estimated Estimated 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 :2015/2016 Current Secured, RDA&VLF $7,275,963 $7,001,140 $6,861,110 $6,929,730 $7,033,680 $7,209,520 $7,425,810 $7,745,130 Other Property Taxes 378,524 1 330,830 308,110 1 308,110 314,440 340,780 384,850 459,050 Total $7,654,487 $7,331,970 1 $7,169,220 $7,237,840 1 $7,348,120 1 $7,550,300 t$7,810,660 $8,204,180 Property Taxes $7000,000- $6,000,000 7000,000$6,000,000 $5,000,000 ' $4000,000- $3,000,000 7 "y 4000,000$3,000,000fir' $2,000,000 $1,000 000ma $ fw,•. r` oo rn o N m v Ln uc oo rn o ,i N m v Ln o r' W M 0 N m 00 00 W rn rn rn rn rn rn rn rn M 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 m rn rn rn rn rn rn rn o, rn rn o, 0 0 0 0 0 0 0 0 0 0 0 0 ...� r{ r-I -1 .-i a--1 N N N N N N N N N N N NN N lD r, W M O .-1 N m V Ln lD t\ 00 Ql O r-1 N m 't Ln l0 r\ W M O O0 pp p� p� p� Q1 Q1 Q1 Ql Q� at O O O O O O O O O 0 r-4 r-1 r-4 p� p� Ql 01 Ol 01 Q1 O O O O O O O O O O O O O 163 ITEM NUMBER C-6 DATE. 12/08/09 SALES TAX REVENUE v..ri The City of Atascadero currently receives 15% - 20% of its general fund revenues from sales and use tax based revenues WHAT ARE SALES AND USE TAXES? Under the California Sales and Use Tax Law, the sale of tangible personal property is subject to sales or use tax unless exempt or otherwise excluded Sales tax is imposed on all retailers for the privilege of selling tangible personal property and is measured by the retailer's gross receipts Use tax is imposed on the purchaser of tangible personal property from any retailer for storage, use or other consumption in California. The base sales tax rate in California is 8 25% and is made up of the following Rate Jurisdiction Purpose Authority 4 75% State Goes to State's General Fund R&T 6051,6201 0.25% State Goes to State's General Fund R&T 6051.3, 6201.3(Inoperative 1/1/01 — 12/31/01 1.00% State Goes to State's General Fund R &T 6051 7 6201 7(Operative 4/1/09- 6/30/11) 0.25% State Goes Towards State's Fiscal Recovery Fund, R&T 6051.5, 6201.5(Operative 7/1/04) to pay off Economic Recovery Bonds (2004) ("Triple Flip") 0.50% State Goes to Local Public Safety Fund to support Section 35,Article XIII, State Constitution local criminal justice activities 1993 0.50% State Goes to Local Revenue Fund to support local R&T 6051.2, 6201.2 health and social services programs (1991 Realignment) 1.00% Local 0.25%Goes to county transportation funds R&T 7203.1 0.75%Goes to city and county operations R&T 7203.1 (Reduced from 1.00%to 0.75%on 7/1/04 as part of 'Triple Flip") 8.25%1 State/Local Total Statewide Base Sales and Use Tax Rate Local jurisdictions may adopt an additional use tax such as the 0 5% sales tax recently passed by the cities of San Luis Obispo and Grover Beach These funds go directly to the city and are not shared with the State The City of Atascadero does not have any of these additional use taxes and customers within the City pay the State base tax rate of 8.25% Sales and Use Tax revenues for the City are made up of two separate and distinct components Sales Tax and Sales Tax in Lieu As the chart above shows, the City receives 0 75% in sales tax on each taxable transaction that occurs in the City of Atascadero (This is the Sales Tax component.) Prior to July 1, 2004, the City received 1 00% in sales tax, however in 2004, the State Legislature adopted the "Triple Flip" legislation which in essence reduced the City's sales tax revenue by 0 25% and gave a Sales Tax in Lieu component. Sales Tax in Lieu funds are taken from the County's ERAF funds (property taxes) and distributed to the City Although these funds are property taxes, the amount is based on sales tax figures and State accounting guidelines require the City to report them under sales and use taxes 164 ITEM NUMBER C-6 DATE 12/08/09 Sales Tax is SALES TAX DISTRIBUTION CALENDER distributed to April -June 2009 Sales the City by the Date AmountReceipt Description State in 06/26/09 $ 161 300.00 30% of the estimated sales tax for April-June monthly 07/15/09 $ 161 30000 30% of the estimated sales tax for April-June installments 08/19/09 $ 191,200 00 40% of the estimated sales tax April June which lag 09/25/09 $ 16,688.18 Positive or negative adjustment for the significantly difference between the actual sales tax for behind the April-June and the amounts distributed in period in which June -August the sales $ 530 488.18 ITotal Sales Tax April -June occur This chart illustrates payments that the City received for the second calendar quarter of 2009 (April — June) The monthly payments are beneficial to cash flow, but until the end of payment period (in this case late September), the payments are a reflection of statewide formulas and not necessarily a reflection of the City's actual sales Sales Tax In Lieu Funds are distributed twice annually and lag even further behind, since they are based entirely on state estimates until the following fiscal year Each year the State estimates the SALES TAX IN LIEU DISTRIBUTION CALENDER amount Of Fiscal Year 2008/2009 taxable sales in the City for the "`Date Amount " Receipt Description upcoming year 01/10/09 $ 458,886.00 50% of the estimated sales tax for April 2008 March 2009 and multiplies 05/10/09 $ 458,886.00 50% of the estimated sales tax for April 2008 that figure by March 2009 0 o The 01/10/10 $ (61,987 19) 50% of the positive or negative adjustment amount is then amount for the difference between actual sales forwarded to 05/10/10 $ (61,987 19) and the amount prevously distributed the County for distribution in 2 $ 793,797 62 ITotal Sales Tax in Lieu Fiscal Year 2008/2009 equal payments in January and May The following year, the State compares the amount of Sales Tax in Lieu distributed to the city to the 0.25% of actual taxable sales within the City The following year's distribution is adjusted upward or downward accordingly by the difference WHAT IS THE CURRENT STATUS OF SALES TAX REVENUES? Representatives from the City's sales tax consulting firm, The HDL Companies, visited the City in early November to go over sales tax information for the April - June quarter (Attachment #B is a copy of the quarterly report for that sales period ) Overall, the state experienced a decline of 19 7% in sales tax revenues on an adjusted basis compared to the same quarter in 2008 HDL commented 165 walk ITEM NUMBER C -6 DATE 12/08/09 `All categories and regions were down with receipts from fuel, automobiles, business supplies, and construction materials exhibiting the largest reductions. This is the eighth consecutive quarter of statewide declines but subsequent reductions should become increasingly moderate as the economy bottoms out and future quarters are compared to previous record lows " The City's sales tax revenues were down 20.5% or $166,000 compared to the same quarter of the prior year This large decline was expected as the City experienced its 3rd quarter of significantly reduced gasoline prices, the final quarter of the close out of the Ford Outlet, and a continued malaise in the Building and Construction sector Over all, reduced gasoline prices contributed the most significant amount to the decline, coming in at $97,000 or 40 1% less than the same quarter in 2008 As the graph below shows, it is epected that the City will experuence one more quarter of large clecre s in the fuel and service station I sector before flattening out. This expected $70,000 decrease for r , ,n the third ^ n 'u 5e quarter fuel and service stations is t w included in � the 2009/2010 n projections, along with smaller '}Regular Midgrade —Premium declines through the end of the fiscal year The autos and _transportation sector is expected to continue to decline for most of the State, with recovery not expected until late 2010 Unfortunately for the City, this once significant sector of sales tax revenue has dwindled with the closure of the Atascadero Ford Outlet in June of 2008 and the loss of the Jeep dealership The City has budgeted for continued declines in car, boat, RV and motorcycle sales However, because of the already significant losses in this sector, it is expected that future fluctuations in this sector will not have material affects on sales tax revenues Iftow 166 ITEM NUMBER C-6 DATE 12/08/09 *Ar,,- Building and construction continues to be the City's largest sales tax sector Statewide, HDL is not predicting a modest recovery in this sector until after next summer Decreases in this sector will be compounded by the opening of Lowes in Paso Robles Although the City had budgeted for this expected $100,000 annual loss, this loss was not expected until the first or second quarter of 2010, which will cause a shortfall in budgeted revenues General consumer goods, food and drugs, and restaurants and hotels continue to remain mostly flat. HDL is predicting that these sectors will remain flat through 2010 WHAT ARE SALES TAX REVENUES EXPECTED TO BE FOR THE NEXT 7 YEARS? Sales tax is arguably the most volatile of the major revenues and is therefore the hardest to project in the seven-year revenue projection When looked at as a whole, sales tax is closely tied to state and national indicators such as consumer confidence, availability of money, savings rates and other trend projections It can be assumed that a portion of the City's sales tax may follow State projected trends. The Legislative Analyst Office's California Fiscal Outlook: The 2010-11 Budget states "The weakness in housing and vehicle sales in 2009 plays a major role in our estimated 16 percent decline in taxable sales for the year In 2010, we expect the recovery to spur 6 8 percent growth in taxable sales Housing California State Taxable Sales Growth as and new car sales will increase discussed in the Legislative Analyst Office's significantly in 2010, but will California Fiscal Outlook.The 2010-11 Budget remain far below the levels 10.0% experienced in 2007 Baseline 5.0% taxable sales under our forecast Six in 2011 and 2012 increase at 0.0% about 8 5% as the state economy enters a more robust stage of the S'0� recovery Sales in the final years 1o.oio of our forecast (2013, 2014, 2015) grow at about 6 percent 1s.or annually as growth levels off zo.o%o somewhat over the remainder of the forecast period " If the City of Atascadero had the same mix of business, the State projections could simply be used The City of Atascadero, however, is unique and does not have the wide tax base that the State of California has as a whole Based on the quote above, the State is expecting housing and new car sales to increase significantly in 2010 Because Atascadero has lost its Ford dealership and its Jeep dealership, car sales are only a small part of the tax base and it can assumed that sales increases will not be as robust as the State's 167 ITEM NUMBER C-6 DATE. 12/08/09 SALES TAX HISTORICAL The past may be looked at to see how far sales , INFORMATION tax may fall, when will it start to recover and how %Increase/ quickly will it recover Unfortunately, there is one Sales Tax* (Decrease) thing that most economists agree on and that is 1986/87 1,249 744 that this downturn in the economy is unlike any 1987/88 1 390,245 11% other, and looking to past downturns to predict 1988/89 1525,468 10% what this economy may do is not going to work. 1989/90 1 802,531 18% That doesn't mean however that there is not value 1990/91 1 781 580 1991/92 1 735,019 3%/ in looking at past sales tax figures to understand %0 1992/93 1 838,041 6% what it is that the City has experienced in the last 1993/94 1 790118 3% several years For example, the chart at the left 1994/95 1 911 413 7% indicates that sales tax has dropped over 28% 1995/96 2,152,371 13% since fiscal year 2005/2006 and that current sales 1996/97 2,107 947 2% 1997/98 2,354,859 12% tax levels are at the 2000/2001 levels 1998/99 2,364 647 0% 1999/00 2,721805 15% The most critical component of the projections 2000/01 3,020,604 11% must be what is the unique business mix here in 2001/02 3,441 717 14% 2002/03 3,682,751 7% Atascadero and the Central Coast? Which 2003/04 3,501198 5% businesses are building? Which are closing? 2004/05 3,502,730 0% Which sectors are strong in Atascadero? Where 2005/06 404-3,937 15% are competitors opening? What are local 2006/07 3,894 407 -4% 2007/08 3,438,518 -12% businesses expecting? What are the trends in 2008/09 2,895,549 16% businesses here in Atascadero? In order to update the sales tax projections for the `For consistency with figures prior to the next few years, staff met with HDL sales tax triple flip, the adjustment for safes tax in lieu is reported in the fiscal year in experts, looked at projections from the LAOS which the underlying sale took place. Office, met with selected business owners in town, discussed building trends, and looked at the expected effects of Council's current economic development policies and strategies Assumptions that went into the projected sales tax revenues were as follows • 2009/2010- Overall, a more conservative estimate than HDL and the State A general decrease in base sales tax revenues of 2%, with adjustments for large declines in fuel sales particularly in the 3rd calendar quarter of 2009, loss of approximately $100,000 due to the opening of Lowes in Paso Robles, and increased revenue due to the opening of Big Lots! 2010/2011- Statewide projections show an 8 5% increase, however staff believes these are overly optimistic Assumptions include a flat overall projection with adjustments for 2 quarters of Tractor Supply The effect of Lowes and decreasing autos and transportations are projected to have worked their way through the system by the end of FY 09/10 • 2011/2012- More conservative than State estimate Flat overall projection, but with positive adjustments for 2 quarters of Tractor Supply and expected results of 168 ITEM NUMBER C-6 DATE 12/08/09 the City's aggressive economic development policy (Colony Square, Rite Aid, etc ) • 2012/2013- Projected overall growth of 2% with an added positive adjustment for an expected Wal-Mart by the Christmas season of 2012, and the final quarters of current economic development projects • 2013/2014- Continued expectation to be below expected statewide increase of 6% Projected overall growth of 3 5% with an additional positive adjustment for Wal-Mart. • 2014/2015- Expected to start approaching respectable growth for the City due to aggressive economic development policies and positioning of City Still below LAO optimistic projections, but at a reasonable 4 5% • 2015/2016- Continued sales tax growth at 5% due to expected recovery of the economy and City policies As with all projections, these assumptions are based on the information, policies and actions that are in place today Changes in Council or State policies and/or additional information could and should adjust these projections. Staff will continue to monitor and update projections as things evolve PROJECTED SALES TAX REVENUES ''fir' As of No\ember 23, 2009 Actual Estimated- Estimated Estimated Estimated Estimatetl, Estimated '-Estimated 2008/2009. 12009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 Sales Tax $2,209,700 $2,050,030 $2,073,200 $2,122,150 $2,454,540 $2,637,450 $2,755,100 $2,892,860 Sales Tax In Lieu 809,822 584,420 698,500 715,000 827,000 888,630 928,270 974,680 Total $3,019,522 $2,634,450 1 $2,771,700 $2,837,150 $3,281,540 $3,526,080 $3,683,370 $3,867,540 Sales Tax Projections $4,500,000^ � .. ._.,.. ,..�....,,..._, ...._._..,___._._ ......__._... $4,000,000 .._,........._.,.,.�._....,-._.._. .___-..,..,.,... ....._...,.... ..__._..,._.._...._,...,_..�..._....._._,., $3,500,000 �..�..>_.... .......,....__.....�.._�. ..,...,_,. .,...._,.........�.... $3,000,000 ' $2,500,000 "-..-"__..__._._._._.._._.......___......___. .._...._......__._._____......_._._._..___.. $2,000,000 ..-'............__.._._.._...___._..____.........____.._...__.__._._. $1,500,000- ...... $1,000,000 $500,000' 1.\C��-%\,P I`C;, a01.\4' �\1^ `C1 ti�1§ \o t� 5 4k\o Ib 169 ITEM NUMBER C-6 DATE 12/08/09 PERSONNEL AND LABOR COSTS WHAT ARE LABOR COSTS? Because the City is a se Expenditures is dedicated to the cost of employee Average Expenditures by Category services In fact 74% of 2009-2011 general fund expenditures Cp 26%rations Capital and Special go directly toward the cost Projects of employee services and _ 4 another 3/0 of expenditures %,R 'K reported as operations go toward the cost of employee services in other funds '' This means that over 3/4 of Employee Services 74 General Fund expenditures are for labor costs It is critical that the significance of this component to the budget is well understood (The third phase of this Strategic Planning cycle will focus entirely on labor and labor relations, so for the purposes of this report, those items to be covered later will only briefly be touched on ) Employees are grouped into 6 different categories or bargaining units (Atascadero Police Association, Atascadero Firefighters Bargaining Unit, Local 620 Service Employees International Union, Mid Management / Professional Employees, Non- Represented Professional and Management Workers and Confidential Employees, Non-Represented Part-time employees ) Salaries and benefits for each of the four represented bargaining units are set forth in Memorandums of Understanding (MOUs) Pay and benefits for Management and Confidential employees are governed by a resolution of the Council and pay for part-time employees are governed by administrative policy The following are the general categories of labor cost that are found in the City's budget: • Salaries- This base pay figure for full-time City employees represents 58% of the City's total labor costs • Wages- This is the pay for part-time or hourly employees such as scorekeepers, lifeguards and fire reserves (4%) • Overtime- This represents the amount paid in overtime to both full-time and part- time personnel (6%) • Other Pay- This category includes amounts paid to employees for items other than base pay Items charged to this category include stand-by pay, holiday pay- 170 ITEM NUMBER C - 6 DATE. 12/08/09 off, uniform allowance, pay-off of vacation upon leaving the City and other similar pay types (2%) • Benefits, Taxes and Insurance- This category is made up of the following o Health Benefits- Each full-time employee receives health benefits upon employment. The City contributes varying amounts towards medical insurance, dental insurance, vision insurance and life insurance The amounts vary between bargaining units and whether coverage is for the employee only, the employee plus one dependent or for the employee and his/her family Employees who were hired prior to September 1, 2000 are entitled to a "medical payback" stipend if they elect employee only coverage The stipends range from $240 56 - $319 53 per month Current MOUs require the City to pick up 100% of the increased health benefits cost for the employee and 50% of the increased cost for dependents annually (9%) o Retirement- The City and City employees do not contribute to social security and are therefore required to participate in another retirement program For part-time employees who work less than 1000 hours per year, the City contributes 5% to a FICA Substitute / Defined Contribution plan For full-time employees and part- Now employees who PERS Contribution Rates work more than 1000 Fiscal Year 2009/2010 hours a year, the City Employee. City participates in Contribution Contribution CaIPERS Sworn Full Time safety personnel Sworn Personnel 33872% 0000% have the 3% at 50 Full Time plan and non-sworn Non-Sworn Personnel 18714% 2.150% PartTime personnel participate Non-Sworn Personnel 12.864% 8.000% in a 2 5% at 55 plan This is a defined benefit plan which means that the City is guaranteeing the benefit that the employee will receive upon retirement (in the case of sworn personnel 3% of the highest year's salary for each year of service the employee has upon retirement at age 50 or older ) Contribution rates for this benefit change annually based on actuarial studies performed by PERS (16%) o Medicare- The City contributes 1 45% of pay to Medicare o Workers Compensation- The City participates in CJPIA for workers compensation coverage Cost of workers' compensation coverage is a formula based on payroll, the City's loss experience and the overall loss experience of CJPIA. (2%) 171 ITEM NUMBER C-6 DATE. 12/08/09 o Unemployment- the City is self-insured for unemployment through the Employment Development Department. The EDD bills the City quarterly for actual unemployment benefits paid to former employees Due to layoffs and the economic climate, the City significantly increased its annual budget for unemployment (1%) o Other Benefits- There are other minor benefits afforded to employees such as the education reimbursement program and long-term disability (1%) Payroll is not just a function of salary and benefit amounts, but is also a function of the number of employees The current budget includes funding for 122 full-time employees, however since July 1, 2009 the City has chilled 5 positions bringing the total to 117 full- time employees With a few exceptions, part-time employees are budgeted with a lump sum dollar amount, rather than the number of employees In fiscal year 2008/2009, 82 part-time employees worked over 48,000 hours or the equivalent of 23 full-time employees WHAT IS THE CURRENT STATUS OF LABOR? Because of the severity of the economic crisis, the City continues to be aggressive in chilling vacant positions as they arise As stated above, the City has chilled 5 positions since adoption of the budget, causing significant projected savings in labor costs In addition to the savings from chilled positions, the City's health insurance broker was very aggressive in marketing the City's health insurance policies to both Blue Cross (the current carrier) and Blue Shield After bringing back proposals from both carriers, the City employees voted to go with the less expensive Blue Shield coverage effective January 1 , 2010 This effort on health insurance is expected to result in both current and future savings for both the employees and the City Overall, labor costs are expected to come in approximately $550,000 below budgeted costs Staffing continues to be a problem in most departments Reductions of workloads have not kept pace with the elimination of positions through layoffs and hiring chills This leaves many departments with minimum staffing and frustrations as coverage becomes an issue Although other cities are experiencing similar difficulties and cutbacks, the City of Atascadero continues to lag behind other local jurisdictions when it comes to staffing level metrics 172 ITEM NUMBER C-6 DATE 12/08/09 'A►' Police Officers per Thousand Residents * �� a M k Firefighters per Thousand Residents k k, 0.20 040 060 080 1 00 1 20 Because of the severe economic times, the City was able to execute 1 year agreements with three of the bargaining units (SEIU, Police, and Mid-Management) last year These agreements called for a 0% salary increase for fiscal year 2009/2010 and they all expire on June 30, 2010 Although the MOUs expire on June 30, 2010 the City's adopted budget for 2010/2011 assumes no change to the current contracts The MOU currently in place for Fire covered the period of July 1, 2007 through June 30, 2010 The MOU calls for a 3% COLA increase and a 1% inequity adjustment for fire personnel in fiscal year 2009/2010 Because of the extreme economic conditions facing the City, the Firefighters Bargaining Unit agreed to defer the 4% increase This means that the 4% increase will be back in effect on July 1, 2010 The 2010/2011 Budget does not include funding for this 4% and is funded at a no change contract Council adopted a two year resolution for Management/Confidential that called for a temporary 3% reduction in Executive Management's salaries and a 0% salary change for other covered employees The resolution expires on June 30, 2011 Issues surrounding the cost of living increases, MOUs, salary agreements and the laborforce are complex and critical to the ongoing health of the organization These issues will be discussed thoroughly in Phase III of the Council's Strategic Planning 173 ITEM NUMBER C-6 DATE 12/08/09 While CalPERS assumes that it will earn 7 75% on its investments, in the fall of this year the retirement fund announced a negative 24% return on its investments for fiscal year 2008/2009 This unprecedented -31 75% swing caused the CalPERS board to 25-4. 20-4. 79.5% 79.0°F. 15%4 15.7-A. 153% 16.G% 14.5% 2.3% 2.5% 2.5% 109,11 7% lo. w 6.5% 51:f. 37% 2.09. 88 69 89-90 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98199 99-00 -01 07-0 02-03 03-04 04-05 05-06 06-07 O -OB 08 09 59G -6 7% -5 t .2 O.A. 15",G -20% 25%.. 24.010% -30 adjust their funding methodology The board decided to separate out this year's loss and amortize this loss separately over the 30 years beginning in 2011/2012 The significant increases in PERS rates paid by the City will be phased in through 2014/2015 Rates are expected to increase by an estimated 5 6% of salary for non- sworn employees and an estimated 12.2% of salary for sworn employees This is a significant increase that will need to be absorbed by the City, however, these rate increases are already reflected in the budget adopted for fiscal years 2009-2011 WHAT ARE LABOR COSTS EXPECTED TO BE FOR THE NEXT 7 YEARS? In order to project labor costs, a spreadsheet was developed which details salary and benefits for each employee Every employee's expected labor costs were developed for each of the 7 years Step increases and other expected pay changes as an employee moves through his/her career were built into the projections The projections do not however include a cost of living salary increase in any of the fiscal years Annual Cost of 1% Salary Increase As the chart on the right shows, a Fiscal Year 2010/2011 one percent cost of living salary increase for the current employees would amount to over $100,000 of Cost of 1% additional ongoing costs annually Police $ 26,000 This is not to say that staff is Fire 36,300 recommending a policy of no salary SEIU 15,500 increases for the next 7 years Mid Management 3,400 Instead, these projections are Management and Confidential 25,300 intended to illustrate that labor costs will continue to need to be a function Total $ 106,500 of available funding and the market. 174 ITEM NUMBER C-6 DATE 12/08/09 More will be discussed on this during Phase III of the Strategic Planning Process Assumptions that went into the projected labor costs were as follows • 2009/2010- Assumes that the current 5 chilled positions remain chilled throughout the remainder of the fiscal year and in fact throughout the projection period Benefit rates are projected at actual percentages • 2010/2011- Assumes that current employees remain in place, step increases are given to eligible employees, and there are no cost of living salary increases Assumes medical insurance costs increase by 4%, workers compensation and unemployment remain flat, PERS rates for non-sworn employees increase by 0 38% and PERS rates for sworn safety employees increase by 0 035% • 2011/2012- Assumes that current employees remain in place, step increases are given to eligible employees, and there are no cost of living salary increases Assumes medical insurance costs increase by 5%, workers compensation remains flat, unemployment rates begin to decrease, PERS rates for non-sworn employees increase by 1 358% and PERS rates for sworn safety employees increase by 2 493% 2012/2013- Assumes that current employees remain in place, step increases are given to eligible employees, and there are no cost of living salary increases Assumes medical insurance costs increase by 6%, workers compensation remains flat, unemployment rates continue to decrease, PERS rates for non- sworn employees increase by 2 050% and PERS rates for sworn safety employees increase by 4 500% • 2013/2014- Assumes that current employees remain in place, step increases are given to eligible employees, and there are no cost of living salary increases Assumes medical insurance costs increase by 6%, workers compensation remains flat, unemployment rates continue to decrease slightly, PERS rates for non-sworn employees increase by 2 050% and PERS rates for sworn safety employees increase by 4 600% • 2014/2015- Assumes that current employees remain in place, step increases are given to eligible employees, and there are no cost of living salary increases Assumes medical insurance costs increase by 6%, workers compensation remains flat, unemployment rates remain, PERS rates for non-sworn employees increase by 0 2% and PERS rates for sworn safety employees increase by 0 6% as the phase in of the 2008/2009 investment loss is complete 2015/2016- Assumes that current employees remain in place, step increases are given to eligible employees, and there are no cost of living salary increases Assumes medical insurance costs increase by 6%, workers compensation remains flat, unemployment rates remain, PERS rates stabilize and remain flat. 1 175 ITEM NUMBER C-6 DATE 12/08/09 PROJECTED LABOR COSTS As of November 23,2009 E$13,169,188 tual Estimated 1 Estimated Estimated'- Estimated Estimated Estimated Estimated;, /2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 Employee Services $12,442,560 $12,650,530 $12,899,900 $13,234,890 $13,572,450 $13,674,330 $13,755,260 STATE BUDGET CHALLENGE WHAT IS THE STATE BUDGET CHALLENGE? City revenues come from a variety of sources, not the least of which come through the State The City receives directly or indirectly through the State finance office the City's property tax, sales tax, vehicle license fees, gas tax revenue, mandated cost reimbursements, P O S T police training funding, and a variety of grants, among other revenues The concern comes in as the State threatens to withhold, borrow, or take local funds Historically, whenever the State has found itself in dire economic straits, it has used local government as its unwilling bankers Beginning with ERAF I back in the early 1990's, the State has been shameless with its desire to balance the State budget on the backs of local government. r.11r+► Politics plays a big role in this, of course State legislators often find it is easier to use a little of the money intended for cities than to cut programs critical to their constituents, or to raise additional taxes For over a decade, this proved to be an effective strategy from the perspective of the State, and one that wasn't met with all too much opposition Cities, counties and special districts finally became wise to the State's tactics and formed coalitions to lobby against such actions Community members agreed with their local governments, and in 2004, approved Proposition 1 A by an overwhelming 83% Proposition 1A is the locals' response to reverse some of the loss of control over their own revenues It constitutionally ensures that various revenues, including local property tax and sales tax, remain with local government. The measure protects against a reduction or diversion of property tax, sales tax and vehicle license fees and strengthens the State's obligation to reimburse local agencies for State-mandated programs However, as we have seen recently, Proposition 1A can be and was suspended That has allowed the State to borrow local government funds The Proposition does, at least, require that the State repay the funding within three years' time, a benefit that wasn't ever available prior to the passage of the Proposition Fortunately this time, the Proposition 1A Securitization Program will insulate the City against the full effect of the State's borrowing action As indicated above, the majority of the City's key revenues fall under Proposition 1A, what then is left at risk? City revenues that could be at risk of action by the State 176 ITEM NUMBER C-6 DATE 12/08/09 Iftw Legislature could include Gas Tax funds, grants like the Police SLESF grant, and other capital project grants The City has budgeted about $430,000 in Gas Tax for the current fiscal year These revenues are used for the daily operations costs of the Streets Department, and although Gas Tax revenues do not come directly into the General Fund, they provide funding where the General Fund otherwise would The League of California Cities and other analysts believe that any State grab of gas tax funds would be unconstitutional, however the legislature has shown a willingness to take these funds regardless of the possible outcome of a legal action If the State does eventually decide to try to take it, the probability of getting it back is quite high The SLESF annual grant is used by the Police Department to purchase frontline police supplies Because of fears of State takeaways, the City has consistently been conservative with use of these State funds. This funding is generally not used for ongoing operations, but primarily for supplies replenishment and various equipment replacements Funding for this program is provided through a portion of the additional vehicle license fee In May of 2009, the extension of the additional vehicle license fee was voted down, causing the fee to expire on June 30, 2011 The legislation that allows the formation of Redevelopment Agencies (RDA) is different from legislation that protects the City The City's RDA is not protected by the provisions of Proposition 1A The State tried to take RDA revenues with the budget package that passed in September of 2008 In April of 2009, the California Redevelopment Agency (CRA) won a lawsuit against the State on the premise that the funds to be used by the State were not specific to redevelopment areas, and therefore, unlawful WHAT IS THE CURRENT STATUS OF THE STATE BUDGET CHALLENGE? As part of the State's adopted 2009/2010 adopted budget, California will borrow $1 9 billion in local property taxes, and plans to take (and not pay back) $2 05 billion from Redevelopment Agencies These statewide figures amount to $645,000 in property tax borrowing and about $1 6 million in RDA grabs for Atascadero On October 27, 2009, the Council adopted a resolution to participate in the Proposition 1A Securitization program that will providing funding to the City concurrent with the State's property tax borrowings In effect, this borrowing should be virtually invisible to the City's financial status The CRA has already filed a second suit against the State contending that the second RDA grab is illegal by the same standards of the first grab The CRA is hopeful that a victorious legal opinion is forthcoming In the event that the CRA does not win, the City has alternate plans to withstand the raid The State Legislative Analyst's Office recently released a forecast of California's General Fund revenues and expenditures This report shows that by the end of 2010/2011, the State will have to address a General Fund budget problem of $20 7 177 ITEM NUMBER C-6 DATE. 12/08/09 billion Last summer, the State Legislature passed a budget for 2009-10 that included *Ago 1 $0 5 billion in reserves Since then, the situation has deteriorated to the point that Mac Taylor, the State Legislative Analyst (LAO), predicts that the fiscal year will end with a $6 3 billion State budget deficit. In addition, the LAO is projecting a $14 4 billion State spending gap in 2010-11 , which means that the State needs to find nearly $21 billion in solutions by the end of 2010-11 How did the State end up in this situation? $14 4 billion of this deficit is due to the fact that the State's 2010-11 budget will have the underlying problem of one-time solutions included in the 2009-10 budget. Some of these short-term fixes include accelerated revenues, borrowing from local governments, and temporary tax increases, all of which either reduce spending or raise money in 2009-10, but won't be there in 2010-11 The LAO asserts that among these solutions were $1 4 billion in savings in the Department of Corrections and another $900 million in Medi-Cal savings, neither of which will be achieved Similar to the City's long-term forecast, the LAO has projected revenues and expenses through 2014-2015, and has indicated that shortfalls of approximately $20 billion will continue throughout the forecast period The silver lining in this gray cloud of State budget problems is the economy The State Legislative Analyst states in his report that the economic situation in California and the underlying State General Fund revenues haven't changed much from his last forecast in May 2009 The latest economic evidence suggests that, although only modest growth is being forecast in the coming years, the state and national economies are in recovery WHAT IS EXPECTED OF THE STATE IN THE NEXT SEVERAL YEARS? The Analyst indicates that there are six keys to consider when trying to balance the budget. Those keys are • Take action early • Focus on long-lasting solutions • Make hard decisions on priorities • Include revenue options • Aggressively seek new Federal Assistance • Consider the ballot again The LAO indicates that it is important that the Legislature take early action, and that the key will be for the focus to be on long-lasting solutions Although there will always be one-time and short-term solutions adopted as a way to close the spending gap, the State needs to adopt many more permanent or long-lasting solutions to solve the long- term operating shortfall Mr Taylor indicates that the Legislature will have to make some decisions on priorities for spending and on revenue structure He even suggests that the State may have to ask voters to change some measures that they have approved in the past, in order to provide flexibility to the Legislature 178 ITEM NUMBER C-6 DATE 12/08/09 fir►, The LAO's estimate of an ongoing $20 billion budget gap through fiscal year 2015 is quite daunting Fortunately, however, the City does feel a level of revenue protection through Proposition 1A. Is the Proposition impossible to reverse? The answer to that is probably, "no", but reversal would be very difficult. Over 80% of the voters in Californian spoke volumes with the passage of Proposition 1A. keep local funds local Proposition 1A provides safety for approximately 65% of the City's General Fund At this time, it is expected that the SLESF grant will no longer be available to the City after the 2010/2011 fiscal year There have been rumors in the past about the State borrowing or deferring payment on Gas Tax and Traffic Congestion Relief funds, but at this time, there are no indications that either of these will be used by the State It is impossible to predict to what lengths the Legislature might go to close the State's $20 7 billion gap Many illegal plans, gimmicks, and shell games have been played over the years in efforts to avoid the tough decisions It is obvious with the size and length of the State's projected deficits, hard decisions and long-lasting solutions should be part of the plan The best way for the City to prepare for this unknown future is to focus on Council goals of economic development and fiscal stability As the organization continues to follow the Council's strategic plan of running lean operations and using calculated reserves, Atascadero will continue to maintain itself in a healthy fiscal position, and will have the ability to anticipate and react to the information that comes forward As new developments occur at the State level, staff will continue to keep Council informed and ready to make decisions that are in the best interests of the community RESERVES WHAT ARE RESERVES? The term reserves is used quite universally in governmental finance There are different types of reserves, different purposes, and different legal restrictions on them Essentially, they are the collective amount of revenues in excess of expenses, or similar what a company might term retained earnings. Typically, the General Fund reserves are the most carefully monitored as these are the most flexible and discretionary of all the funds in a pinch, however, there are reserves in other City funds that could legally be tapped into if the City found it necessary General Fund reserves are often thought to be one indicator of the fiscal stability of an organization In the early 1990's, the City of Atascadero had a negative General Fund balance, forcing layoffs and service reductions in order to weather the storm In fiscal year 1995, the collapse of the Orange County Investment Pool hit the City and the General Fund reserves fell to an all time low of $-790,360 At that time, the City's audit carried a going concern in other words, the City's finances were so bad that there was a serious question of ongoing solvency Around 1998, as the economy was starting to turn around, Council adopted a fiscally conservative reserve policy and began to aggressively go about building reserves in order to avoid history repeating itself 179 ITEM NUMBER C-6 DATE 12/08/09 The General Fund Reserves are broken down into different components, each with separate ramifications and costs Undesignated Reserves - These are funds that have not been earmarked for any specific purpose and are available for Council discretionary spending The costs for using these reserves are limited to the loss of interest income, and the need to replenish them prior to the next downturn Economic Uncertainty - The City also had an additional reserves set aside just for uncertainty in the economy or downturns such as the one the City is facing The costs for using these reserves are limited to the loss of interest income, and the need to replenish them prior to the next downturn Designated for Due from Other Funds -This component represents amounts that the General Fund had loaned to other funds and therefore isn't available for general expenditures Typically, the loan arises because the other fund has a large capital project that is grant funded This means that the City must expend the funds and request reimbursement once the funds are expended In general, the amount in the Reserve for Due to Other Funds varies greatly from year to year based on the number of large grant programs that the City has going Theoretically, the City could use these funds and have another fund, such as the Wastewater Fund, loan these amounts However, there is an opportunity cost when this causes the new loaning fund (the Wastewater Fund in this case) to reduce its own reserve balance w►` Reserved for Advances to Other Funds - This is the amount that the General Fund has loaned to the Redevelopment Agency on a long term basis In a financial crisis, the City could use the reserves to fund City operations This would mean that the General Fund would lose a lucrative source of interest revenue and the Redevelopment Agency could potentially have to cut projects in order to pay off this debt. In addition to this, the Redevelopment Agency would have to find another source for its revolving debt of approximately $500,000 It is equally as important to understand which other accounts there might be within the City that are legally accessible to the General Fund in order to meet its operational needs There are two other sources of potential funds that could be considered The first is the CCCSIF workers compensation fund balance and the other is the internal service account replacement funds CCCSIF Workers Compensation Fund - There is currently an estimated surplus of $744,000 in the City's CCCSIF workers compensation fund Once a year, the City may be either required to make a deposit to the fund if the City's balance is negative, or may be given the opportunity to request a refund if the balance is positive Historically, the practice of not requesting a refund of the balance has had the effect of smoothing out the City's workers compensation costs As these workers compensation claims age, the potential for large swings in the balance of this fund diminishes 180 ITEM NUMBER C-6 DATE 12/08/09 Internal Service Account Replacement Funds - The City also has amounts set aside for replacement of vehicles, equipment, buildings and technology The City has the legal right to transfer these funds back to the General Fund, however, it is not necessarily prudent to do so Historically, the City has put away amounts annually so that as vehicles, computers, software and buildings become old and no longer function, the City has funds to replace them These funds are legally available to transfer back to the General Fund, however, it does not change the time frame that roofs will have to be replaced or software will no longer be supportable WHAT IS THE CURRENT STATUS OF RESERVES? The City first adopted a Financial Strategy in 1998 and the results of having such a plan are clear Financial Strategy Over the years, the overall strategy has consistently been to maintain a conservative outlook by puttingy aside reserves in good times and then using those reserves during down periods to achieve stable ; operations By employing this cautious strategy in the past, the City is now weathering the current Years " valley in revenue fluctuations, with the ablility to Expenses Revenues maintain services and ensure the City's long-term financial viability As of June 30, 2009, the General Fund reserve balance was just over $8.2 million During the 2009-2011 budget process, Council was supportive of budgeting $1 million in reserves annually to close the gap between projected revenues and expenses Also, in order to balance the City's budget and use as little reserves as possible, the City did not fund the replacement of buildings and some vehicles and equipment. As soon as the economy recovers, the plan is to reinstate the funding of these replacement reserves WHAT ARE RESERVES EXPECTED TO BE FOR THE NEXT 7 YEARS? PROJECTED GENERAL FUND RESERVES As of November 23, 2009 Actual Estimated I Estimated Estimated Estimated Estimated Estimated Estimated 2008/2009 2009/2010 2010/2011 1 2011/201 2012/2013 2013/2014 2014/2015 2015/2016: Totall $8,233,348 $7,426,368 1 $6,515,728 1 $5,457,028 1 $4 780,718 1 $4,352,978 1 $4,323,298 1 $4,827,618 Staff has historically used the figure of about $4 million of General Fund reserves as a mark of a fiscal health based on current expenditure and revenue patterns As part of the seven-year projection, staff conservatively estimates that reserves will drop to a low of about $4 1 million in 2014-15 before beginning to grow again in 2015-2016 This means that the Council's strategic plan is working quite effectively, as the City uses reserves in these periods of recession Estimates with today's information indicate that the City will need to continue to use reserves to bridge the gap between revenues and 181 ITEM NUMBER C- 6 DATE. 12/08/09 expenses for the next six years During the seventh year, the economy is expected to recovery substantially enough to have a positive net balance of revenues over expenses At that point, the City will have made it through the current crisis and can begin restoring reserves for the next one $12,000,000 $11,000,000 $10,000,000 $9,000,000 $8,000,000 $7000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 0CO�(�1 ti0 ti0O) yodoti�oti d011)yo�yohyHOy � y �y �y � 4 � o o o o o o o oO ,oo ,oootiyotiti ytiti yo� yoti�ytih dti °?� "C "C � �� �� �w o0 os, oa, 03 0°` oh o� on ow o0 do titi titi b ti°` tih ti°I ti� of ,yo do do ,yo do ,yo do do ,yo do ,yo do ,yo 4" do ,yo The graph above demonstrates how the reserve level ebbs and flows with the ups and downs of the economy Consistent with the Council Strategic Policy, the reserve level was built up over the last 12 years, but was particularly robust during the period 2004- 2007 Staff is comfortable with the current level of reserve usage, and based on data currently available, believes that the City will continue to be in good fiscal health through the end of this downturn Staff will continue to keep Council apprised of any substantial changes affecting the City's fiscal condition REDEVELOPMENT As indicated earlier in the report, the State's adopted 2009-2010 budget includes an RDA revenue grab of about $1 3 million in 2009-2010, and about $275,000 in 2010- 2011 The CRA has filed a lawsuit in superior court asserting that the grab is illegal in that the funds will not be used exclusively in the State's redevelopment areas The CRA won a similar suit earlier this year in April, so they are hopeful that the outcome of the second suit will be as successful as the first. However, if the results of the lawsuit are not favorable to the RDA, approximately $1 6 million in one-time funds will be paid to the State 182 ITEMS NUMBER C-6 DATE 12/08/09 It is important to note that this grab is for a specific amount in each of the two fiscal years This is not an ongoing take-away However, in the event that the State wins the lawsuit and is desperate to close their budget gap, there may be a temptation to tap into the RDA revenue stream on a regular basis The purpose of the redevelopment revenues are to improve blighted conditions and enhance economic development. These are keys to getting the economy back in shape The State should therefore temper the potential desire to tap into RDA funds with the knowledge that they would effectively be pulling out by the roots the stalk of tomorrow's crops Again, there are hopes that the City will prevail in the lawsuit, but if not, there is a plan that will continue to maintain the RDA. Because the activities of the RDA have an influence on the City, it is appropriate to examine the impact of future years of the RDA in context with planning and forecasting of City finances Similar to the work done on the City budget, staff has prepared a five year forecast of the Redevelopment Agency's General Fund It is anticipated that the RDA will hold its own through this challenging time and with its work on key projects, will continue to have a positive influence on the City *ftw VftW 183 ITEM NUMBER C-6 DATE 12/08/09 14000, REDEVELOPMENT AGENCY FIVE YEAR PROJECTION As of November 23, 2009 Actual Estimated Estimated Estimated Estimated Estimated 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 Revenues Tax Increment $ 1 604 156 $ 173,580 $ 1,237730 $ 1 531 340 $ 1 563,360 $ 1 623,200 Rent Income 373,596 373,600 373,600 373,600 60,000 Interest 251 821 106 730 22,510 15,250 21 750 35,750 Other Revenue 143,478 Total Revenue 2,373,051 653,910 1,633,840 1 920,190 1,645,110 1,658,950 Expenses Operations & Main Street (631 085) (703,360) (718,750) (739 630) (759 620) (779 830) Interest Expense (117 852) (121 500) (122,000) (122,000) (122,000) (122,000) Sunken Gardens Holiday Lights (5 000) (5,000) (6 000) (6,000) (6,000 Economic Development (76,600) (25 000) (25 000) (35 000) (35,000) (35 000) Fagade Improvement (40,000) (40,000) (45,000) (45 000) (50 000) Site Design Assistance (10 000 (10 000) (10 000) (10 000) (10 000) Downtown Stimulus (Fee Waivers) (25,000) Design Assistance Guidelines (20,000) Downtown Business Promotion (17 340) Colony Square (4 430) (13,330) Downtown Emergency Assistance (3,850) Printery - (32,010) Creek Improvements (5,057) (25,000) (25 000) (25 000 (25,000) (25,000) Zoo Restroom & Entrance (89 132) (987 170) Lake Park Sign & Frontage (16 820) (430 180) Alvord Field (198,969) Lake Park Great Lawn (34 973) Chamber Building Purchase (10 430) Parking Improvements Streetscape III (79 500) Historic City Hall (19,164) (1,769,940) (2,886,220) (2,426,280) (1,372,050) Total Expenses (1,225,702 (4,286,990) (3,831,970) (3,408,910) (2,374,670) (1,027,830) Net Income 1 147,349 (3,633,080) (2,198,130) (1,488,720) (729,560) 631,120 Available Fund Balance Beginning of Year 7 841 427 7 171 650 2,348 740 115,610 126,890 597 330 Other Sources /(Uses) (Loans To)/ Repayment From Historic City Hall Fund (1 817 126) (485,000) (310 000) 1,200 000 800 000 Colony Square Loan Guarantee (1 500 000) 1 500 000 Loan From / (Repayment To) Affordable Housing Fund 795,170 275,000 (1,334,000) $7,171,650 $2,348,740 $ 115,610 $ 126,890 $ 597,330 $ 694,450 184 ITEM NUMBER C-6 DATE 12/08/09 *AW FISCAL IMPACT No fiscal impact ATTACHMENTS Attachment A- Table of Assessed Value by Base Year Attachment B- HDL Sales Tax Update, Quarter 2 2009 Attachment C- May 13, 2008 Staff Report, Mid-Year and Mid-Cycle Budget Revisions Attachment D- April 28, 2009 Staff Report, 2009-2011 Budget Update Attachment E- 2009-2011 Budget, selected revenue pages Attachment F- August 11, 2009 Staff Report, Budget Amendment and Update Iftw 185 Attachment A Table of Assessed Value by Base Year Provided by the SLO County Assessor's Office BASE PARCEL TOTAL 14004 YEAR COUNT LAND IMP ASSESSED VALUE 1975 961 19 451 672 66,542,195 85,993 867 1976 98 2,332,270 8,821,535 11 153 805 1977 178 4 554 828 14 462,357 19,017 185 1978 186 6,293,008 21019,771 27,312,779 1979 120 5,379 413 13,945,494 19,324 907 1980 147 7 657 445 18,319 653 25 977 098 1981 111 7180,329 15,359,850 22,540179 1982 141 8,715,456 19 789 127 28 504,583 1983 84 5,384,864 11,849,065 17,233,929 1984 199 12,908,028 26,542,925 39 450,953 1985 179 16,462,307 53,495,210 69,957 517 1986 213 15,398,564 30193,040 45,591,604 1987 185 14 713,706 27,882,467 42,596,173 1988 206 16 375,967 26,533,423 42,909,390 1989 258 24,284,974 39 734,899 64 019,873 1990 235 33,668,390 40,276,695 73 945,085 1991 149 23,426,243 25,982,785 49 409 028 1992 138 18,631,246 19,973,247 38,604 493 1993 142 17 343,930 24 482,776 41 826 706 1994 164 19 380 191 26,023,826 45 404 017 1995 217 29141056 38,054,686 67195,742 1996 172 16,305 945 26,777,381 43,083 326 1997 211 20 376,164 31,368,660 51 744,824 1998 259 26,072,306 45,503,549 71 575 855 1999 375 38,356 398 59 160,103 97,516,501 2000 385 41651,848 61,846,725 103,498,573 2001 413 53,306,258 91 608,601 144 914 859 2002 524 61 683,241 87 779 137 149 462,378 t2003 407 67 874 727 88,430,329 156 305 056 2004 504 82.927 082 96 025 173 178 952,255 2005 478 97 686 265 102,384.576 200 070 841 2006 844 150 562,630 108,360,370 258 923.000 2007 521 137 330 372 92,397 998 229 728 370 2008 480 88 330 316 96,890 013 185,220 329 2009 619 94885,275 85;598.930 180 484 205 10,503 1,286,032,714 1,643,416,571 2,929,449,285 = Base Years Reviewed for Decline in Value =Additional Base Years that will be Reviewed in 2010 for Decline in Value 186 �tIi�CC Atascaderc In Brief The allocation for Atascadero's April j through June sales was 22.8% low- er than the same quarter one year ago. Actual sales were down 20.5% a,at after accounting anomalies were ex- cluded, Double-up payments that boosted year-ago returns overstated the im- pact of lower fuel prices on service stations. Recent business closures ontributed to declines from the au- r ltransportation group. Business/ _industry group losses were exag- gerated xag gerated by receipt of a onetime use tax allocation in last year's compark son period. Outlets serving the con- struction trades.home improvement sector and some categories of gen- eral consumer goods reported lower sales. Top 25 PR, 6D'UcERS Losses were partially offset by ;,Jn A1phaW cal rder,, gains from auto repair shops and • - • a recent addition to the general ' ••' • ' ` • consumer goods group, Payment anomalies temporarily lifted results • • • • . from grocery-liquor, specialty retail • and restaurants without alcoholic = • • beverages. • • • Adjusted for onetime accounting events, taxable sales for all of San ,.. . Luis Obispo County dipped 10.5% �•• '�-•. over the same period;the state as a whole was down 18.4%. • ••- • • r it Bill Statewide Trends for nein- stock have retailers Planning ulate costs of tht states envirotimen- ldjusted for accounting aberrations, Ican invcntoncs for 11-1c holuia% season tall%, tnWILik summer blend, but over the local poroon of (,ahtornia s sales v-hick is projected to he flat-,%7th on1v all rccetprs are. expected to stabiluc. and use tax for transactions occurring modest gains tliroug?h 20111 after next quarter s coniparison with r� April through June were 18.4° , lover Transportatlort Cash-for-cltunkexs the previous%ear's record price spike. than last year's comparable quarter. stimulated new car sales but largely Grocers & Restaurants - Intense All categories and regions were down borrowed from the next two quarters. price compention has kept receipts v,nth receipts from fuel automobiles, Significant recovery is not expected Exam grocers' taxable goods down business supphes, and construction until the.2011 models arrnvc. RV,boat, while higher-end restaurants contin- materials exhibiting die largest reduc and motorcycle sales may Languish un- ue: to experience reduced patronage.. tions. "1'hts is the eighth consecutive til the return of frill employment. Revenues are expected to retrain Hat quarter of statewide declines but sub- Business & Industry - Sales to for the next five to six quarters. seque:nt reductions should become health providers and manufacturers of increasingly moderate as the economy food products, energy, and mforma- SALES PER CAPITA bottoms out and future quarters are tion technology remain stable. I nvest- catnpared to previous record lo\vs. ment in equipment and supplies as a whole however,generally drops in and The Climb Back tap out of a recession tour to six quarters $4000 Stausncally most economists agree that after consumer goods. Continued de- the nauonal recession bottomed out clines are expected through 2010 $3,000 � somewhere around doe end of July Building& Construction Benefit-: Minor recovery is expected in the last from die stimulus package will be off $2,000 half of the year as companies restock set by state cutbacks. Projections are depleted inventories, federal stimulus for weak office and commercial con- programs filter through the system, struction. Modest recovery in overall $0 and investor confidence returns. spending is not expected until after Qs s, However, restoration of California s next summer. o2 on previous sales tax levels will lag Lin- Fuel & Service Stations I ark of Atascadora County California employment is projected to increase competition allows refiners to manij,>- I I:hrouglt rite first quarter of 2010 and remain weak for several quarters atter IM 0 1 R172 MIR Incomes ire fiat,household wealth has Atascadero County HdL State been exhausted,inflation ism declitic, Business Type Q2'09 Change Change Change acid the drops in property values are. Service Stations $100,655 -46.3% 36.9% 36.80% not over. Lenders are less risk tolerant LumberiBuilding Materials 91 981 16.2% 18.4% 211% and previously- excessive borrowers Grocery Stores Liquor 48:926 10.8% 0.9% -2.7% have become disciplined savers. Restaurants No Alcohol 43.438 119% 18.6% 2.9% The California Budget Project recently Discount Dept Stores -CONFIDENTIAL- -4.3 -4.7% concluded that it took six years for the Restaurants Beer And Wine 26 264 -6.5% 0,4%n 12.7% average household to fully, rebound Auto Repair Shops 23,607 22.0% 1.2% 13.8% from the jobless recovery following Drug Stores -CONFIDENTIAL- -2.8% 0.2% the recession of 2001 New consumer Hardware Stores 20.613 -275% -235.5% -2,214% frugality tight cxctlit,and moderate lob Automotive Supply Stores 19,291 3.2% -4.6% 5.6°x, growth may result in an equally slow Petroleum Prod/Equipment ---CONFIDENTIAL- 144.5% -47.2%n recover-from this recession. Boats/Motorcycles 15,420 33.5% 38.8% 42.2% Prognostications for kev segments: ElectronicslAppliance Stores 15,168 4,31� 12.8";0 14.2% General Consumer Goods - Sales Contractors 14825 -9.2% -244% 31.1% of personal electronics remain solid Specialty Stores 14.39r 13.1% 103% 12.3% but consumers are focusing on price Total All Accounts $649,855 •22.4% 12.8'!0 •21.2°fo and necessities when it, comes to ap- County&State Pool Allocation 67.831 -26.4% pard and other- merchandise \\ieak Gross Receipts $717686 -22.8% 188 back to-school sales and limited credit 1 Attachment C ITEM NUMBER. C-1 DATE 5/13/09 XM CAD Atascadero City Council Staff Report- Administrative Services Department Mid-Year and Mid-Cycle Budget Revisions RECOMMENDATIONS Council 1 Adopt Draft Resolution A amending the 2007-2008 and 2008-2009 fiscal year budgets 2 Adopt Draft Resolution B approving a Proposition 1B Local Streets and Roads Funding Proposal and accepting Proposition 1 B funding from the State of California Department of Finance to be used on eligible transportation projects within the City of Atascadero 3 Approve staff budget actions taken and adopt the fiscal policies as described in this staff report. REPORT-IN-BRIEF Economists are all in agreement that the state is in a period of economic downturn The predictions of how deep and how long this fiscal dip will last vary widely Staff believes, based on well respected research and key economic indicators that the City may continue to experience a troublesome economy for the next several years at least. Analysts indicate that the State economy will slowly begin to regain strength toward the end of the next year, and Atascadero, with its location and unique economy of its own, tends to lag slightly behind current trends The Council's effective foresight in adopting sound policy has enabled the City to maintain stability through these difficult times For the last ten years, the Council has held tight to the fiscal strategic plan that provides for downswings in revenues by putting money aside in good times and then using some of that money during cyclical periods of economic slowdowns This policy allows for stable operations and continuity in service to the community, and ensures long- term financial sustainability to the organization Atascadero has been able to maintain status quo while the State and some neighboring cities are immediately facing severe cuts As agencies experience these periodic cutbacks, the importance of rainy-day policies becomes more evident. Similar polices have been adopted in cities across the State and Governor Schwarzenegger has recently recommended such a policy at the State level to help solve some of California's budget concerns During the current fiscal year, the City's expenses were budgeted in excess of the City's revenues, so some of the money saved up from previous boom years has been used to supplement operations This is known as deficit spending, and it is a planned and integral part of the City's fiscal policy Ups and downs in the economy have consistently appeared 189 throughout the City's history, and deficit spending of the reserves is meant to be an effective short-term tool for sustainability in the tight years and is done in conjunction with a long-term financial plan However, deficit spending is akin to withdrawing money from a personal savings account. Although the City has done a good job in funding the reserve account, if used excessively, that account will eventually run out. As of this moment, the City is in a good financial position The General Fund essentially has $11 million in the bank, well more than needed to cover the budget deficit for this year and next. Although budgets are tight and there isn't enough money to complete all of the projects the community desires, overall services are being provided, road repair progress is being made, and City fiscal obligations are being fulfilled Unfortunately, the City won't be in a positive financial position indefinitely The combination of the economic downturn and other financial trends will cause the City to be on a negative fiscal trajectory Staff currently projects that cash flow reserves will have to be tapped in the second year of the next two-year budget cycle, or 2010-2011 and that General Fund Reserves will completely run dry two years after that. Just as you wouldn't wait to apply for a personal loan until your bank account ran to zero, the City should not wait to make positive changes until its account runs to zero Positive changes to the bottom line don't necessarily have to be drastic. They often come in the form of day-to-day policy decisions that can have lasting effects, whether it is about not implementing new programs or approving economic development of some sort. The daily decisions that are made on Tuesday nights form, to a great degree, the basis of the City's bottom line DISCUSSION In the face of any economic downturn and negative financial trajectory, there are a number of questions that need to be asked and answered "What is the current status of revenues and expenses?" "How much is there in reserves?" 'How long can the City last?" 'is this downturn cyclical or permanent?" General Fund Revenues 'What has been done?" 'What can Council do now?" It is important that everyone understand the answers to these questions, to make both the policy decisions and the day to day decisions that affect our financial future What is the Current Status of Revenuesi� " and Expenses? a:R Revenues ' Recent changes at the State have shifted revenues from State sources to property taxes + Forty percent, or $7 6 million, of General Fund revenues now come from property related taxes, leaving the City heavily reliant on the law 190 ups and downs of property tax revenues Sales tax was projected to come in at 21%, or almost `fir" $4 million of the $19 million General Fund pie, while development should bring $1 7 million or 10% Positive I (Negative) News has not been favorable for these key Variance from General Fund revenues Preliminary estimates of Budget General Fund revenues predict a shortfall Supplemental&Property Transfer Tax $ (200,000) compared to budgeted figures of$970,000, or 5% Sales Tax (450 000) of budgeted revenues The variance is not simply a reduction across the board, but is due to FEMA Administration 5so,000 multiple concurrent economic issues Staff has Development Revenues (750,000) analyzed each of these in great depth to fully Mutual Aid (300,000) understand the complexities and to more Interest Revenues 170,000 effectively project the future revenues and trends. Total Projected Revenue Shortfall $ (970,000) Property Tax Revenues ($200,000) net decrease in revenues for fiscal year 2007-2008 ($450,000) net decrease in revenues for fiscal year 2008-2009 The State, in efforts to balance their own budget, swapped out Motor Vehicle in Lieu (MVLF) revenues for Property Tax revenues. Although this was a dollar for dollar swap decreasing MVLF and increasing Property Tax revenues, the swap has had lasting effects on General Fund *OW revenues The swapped revenues now move up and down with the trends in Property Tax revenues, rather than with the more stable MVLF revenues Additionally, Property Taxes now represent a greater percentage of the total General Fund revenues, causing the City to be all the more reliant on Property Taxes This also enlarges the cash flow gap as a greater portion of revenue is received into the City twice annually, once in December and once in April, rather than monthly with the MVLF receipts The good news is the real estate boom of recent years gave a boost to the City's Property Taxes by Age of Purchase property tax base Property Tax revenues are earned on the base assessed value of properties Property tax can increase only zoos \ a small percentage each year, so 3 a „r Now properties that were purchased many � a years ago have undervalued assessments , � \ As these properties change ownership, zoo1� 2006 their values can be reset to current market ; rates, increasing the City's tax base Analysis of the City's base shows that 75% }. of the City's properties are potentially ` undervalued because they were purchased 4 F prior to the big price inflations of 2005 Essentially, this means that 75% of the }� " Property Tax base is stable and likely to yl " increase and the other 25% of the base is NOW 191 possibly overinflated and has the potential to decrease Even with aggressive reassessments to lower values history has shown that because so much of the pie is subject only to potential increase, that an overall decrease in the property tax base is unlikely Instead, staff expects to continue to see a slowing of the growth in this large revenue source Although Current Secured and MVLF revenues totaling $7 7 are coming in as projected for fiscal year 2007-2008, there is a small component of property taxes that is more volatile Supplemental Taxes and Property Transfer Taxes are directly related to the transfer of property and are thus highly sensitive to changes in the real estate market. A slow real estate market translates to significantly fewer sales and substantially less Supplemental Tax Revenues and Property Transfer Tax. Supplemental taxes are predicted to be down 58% from the previous year causing a $142,000 shortfall from budgeted revenues, and Property Transfer Taxes are down 31%from the previous year, adding an additional $50 000 to the shortfall Sales Tax Revenues ($450,000) net decrease in revenues for fiscal year 2007-2008 ($850,000) net decrease in revenues for fiscal year 2008-2009 Sales Tax Revenues which are roughly one-fifth of the General Fund Revenues, are down across the State, but Atascadero was particularly hard hit because its Sales Tax Base is not broad In other words, a large portion of Sales Tax Revenue comes from a few retailers in sectors that have been hit hard Since calendar year 2001, the City's top two sales tax revenue producing industries have been Building/Construction and Autos/Transportation Lack of consumer confidence, the soft housing market, and ever increasing fuel and energy rates have caused reductions in these two sectors Fourth quarter 2007 adjusted Sales Tax Revenues were down 9 3% The deflation in the real estate industry has influenced the Building and Construction industry It is one of the hardest hit sectors of the economy, dropping 11 6% from 4th quarter 2006 to 4th uarter 2007 Uncertain of future values, consumers are reluctant to invest much toward 30.00% building and construction projects -Autos&Transportation 25.00% Additionally, the sub- - i Building&Construction p mortgage rime mort a e crisis^► ''' `" ti.. �, ,� i20.00% has affected the -.... - Business&Industry market for home 15.00% . _ Food&Dequity loans and rugs refinancing loans, 10.00% ,.,,.,,. :-t+-- ---•Fuel&Service Stations further reducing the potential for home 5.00% ` General Consumer renovation projects Goods Restoredrowth in Restaurants&Hotels g � 0.00% —, this industry is 2000 2001 2002 2003 2004 2005 2006 2007 expected to come i—_ slowly The Energy Information Administration said on March 31, 2008, the average U S retail price for gasoline set a new record of $3.29 a gallon, up 3% from the prior week level and a 58% rise from a year ago These high fuel prices have led consumers to seek more-fuel efficient autos, leading to weakening sales in SUVs and trucks. Ford Motor Company nationwide truck and SUV sales dropped 16 percent during March 2008 versus March 2007, and Ford's nationwide 192 sales on all products fell 12% during 2007 Our community is unfortunately not immune to this rrr decline in sales activity Atascadero Ford recently announced that it will be closing its doors. From its high point, this is a loss of$320,000 in Sales Tax Revenues annually This will have a significant effect on the City's already lagging Sales Tax Revenues. The combination of the downturn in Building & Construction sales revenues, along with the closure of the Ford dealership have forced us to revise our sales tax projections downward by $450,000 in 07-08 and $851,800 in 08-09 Development Revenues ($750,000) net decrease in revenues for fiscal year 2007-2008 ($380,000) net decrease in revenues for fiscal year 2008-2009 Development Revenues have decreased significantly during this fiscal year and last. Development Revenues are a mirror that reflects the current real estate market. While staff expected the drop in activity, it came in much sharper than anticipated There are significant projects in process that staff anticipated would be completed by the end of the year; however only 16 single family residence (SFR) permits have been paid and issued in the current fiscal year, compared to 267 in fiscal year 2005-2006 Although, only 16 SFR permits have been pulled this year, there is in fact, a large number of permits that have been through the plan check process and are ready to be paid and picked up With the economy like it is, developers and home owners are reluctant to pick them up The length of time the housing market takes to rebound varies from cycle to cycle, and is highly dependent on the financial health of the developers Based on estimates from a variety of sources, staff anticipates that development will again begin to pick up in 2010 Development Revenues 2,500,000 2,000,000 -- Del Rio EIR&One- 1,500,000 Time Plan Check Extension 1,000,000 a w 500,000 -- — 2001 2002 2002 2003 2003-2004 2004 2005 2005-2006 2006-2007 2007 2008 2008-2009 Estimated Estimated In the near term, it is expected that Development Revenues will come in $765,000 lower than anticipated for fiscal year 2007-2008, however in 2008-2009, the graph above appears to show that Development Revenues will bounce back to 2006-2007 levels This is somewhat misleading, as a significant portion of the Development Revenues predicted to come are from two one-time sources Staff is projecting that the Del Rio EIR fees will be received in 2008- 2009 Unfortunately, this large revenue will be mostly offset by a large EIR consultant fee and associated legal fees In addition to the EIR revenue, staff is projecting that the City will receive 193 approximately $150,000 in Plan Check Fee Revenues These Revenues are related to permits for which the City has already expended the funds to plan check the permit, however because "AO the developer has not pulled the permit, the City has not been paid Although still in the preliminary stage, staff is looking at a plan where permits that are expired or about to expire may be extended It is anticipated that as part of the proposal to Council there will be some component whereby developers would have to reimburse the City for the outstanding plan check fees prior to receiving an extension Mutual Aid ($300,000) decrease in revenues for fiscal year 2007-2008 $150,000 decrease to expenditures for fiscal year 2007-2008 The Atascadero Fire Department (AFD) has a contract with the Forestry Service that is the source of most of the revenues in this category Because of an unusual fire season in this area of the State, the Fire Department was not able to provide the expected level of service to the Forestry Service, causing a shortfall of projected revenues of $300,000 and an offsetting expenditure savings of $150,000 Since the 2007 Fire season was atypical, a similar event is not expected to occur again in fiscal year 2008-2009 The $900,000 of revenues and the $509,890 in expenses budgeted for fiscal year 2008-2009 is expected to be fully realized Historic City Hall FEMA and OES Administration Revenues $560,000 net increase in revenues for fiscal year 2007-2008 The City received Administrative funding related to the Project Worksheet (PW) authorized by the Federal Emergency Management Agency (FEMA)on the Historic City Hall project. On large projects such as City Hall, FEMA grants 2% to the applicant agency, and the Office of Emergency Services (OES) grants 10% to the applicant agency, for administration of the grant funds These funds are issued soon after FEMA's approval of the PW Expenditures With some minor exceptions, General Fund expenditures are coming in as expected The City is a service organization In the current fiscal year (2007-2008), 67% of the General Fund budget is dedicated to employee costs, while 30% is dedicated to operating expense The remaining 3% is dedicated to special projects, capital purchases and debt service The City has entered into Memorandums of Understanding (MOUs) to establish employee benefits with the Fire Union through fiscal year 2009-2010 and all other unions through fiscal year 2008-2009 After fiscal year 2009 for most unions, and fiscal year 2010 for the Fire Union, labor cost negotiations reopen There will be constant pressure to keep salaries and benefits competitive with market rates in the local area Keeping up with these costs will be a challenge in the upcoming years in light of the information available today Operating costs, which are expected to come in at about $5 7 million, consist of all the ongoing day to day costs other than employee costs. They include items from postage to contract services, water bills to recruitment costs, and insurance to vehicle replacement costs. While the City staff has control over some line items such as office expenses, other costs are subject to contract, the weather, or other elements that City staff has little control over Historically, these costs increase by about 3%, or a little less than $200,000, a year When staff realized that the economic downturn was steeper and more severe than originally expected, budget savings measures were implemented throughout the City Staff projects that employee services will end the year $200,000 below the adjusted budget. The combination of 194 selectively not filling vacant positions in the short-term and the judicious use of overtime saved $115,000 of the amount, and lower than expected mutual aid labor costs saved the remaining $85,000 Staff also expects operating expenses to come in $500,000 under the adjusted budget. Some of the savings in this category are closely linked to drops in activity levels and include $135,000 reduction in the Community Development budget and $45,000 reduction in the Mutual Aid and Code Enforcement budget. Other operational savings will come from the Colony Park Community Center ($80,000) and from the City Manager's office ($130,000) The remainder is being realized from a general tightening of the belt throughout the City There are expenses that have arisen that were not included in the original adopted budget but will require additional appropriations. Included are such costs as legal fees, labor contracts, police overtime, and city clerk activity Thankfully, the costs of these expenses will be offset by the above described savings The savings total approximately $700,000, and the changes requested add up to only $508,000 This leaves the City's expenses with a positive variance of $200 000 as compared to the originally adopted expenditure amount. How Much Is There in Reserves? In its foresight, Council prudently adopted the financial policy to put away enough money in the good times to carry the City through the bad times The question is how much was actually put away and how were the funds to be used? At the beginning of the fiscal year, the City General Fund Reserves had $2.2 million of undesignated reserves which are funds that have not been earmarked for any specific purpose and are General Fund undesignated $ 2,170,183 available for Council discretionary spending Designated for economic uncertainties 1,500,000 The City also had an additional $1 5 million Designated for road projects 445,000 set aside just for downturns such as the one Designated for due from other funds 960,279 the City is facing These two reserve accounts were intended to be used first in an Designated for cash flow 4,500,000 economic downturn There are really little Reserved for advances to other funds 1,375,175 adverse consequences to using these Reserved for encumbrances&prepaids 31,225 reserves other than the need to replenish Designated for library 52,650 them in time for the next downturn $ 11,034,512 Prior to the implementation of the Road Program, the City also put away $0 4 million to go toward future road programs It has been left on the books with the intent that this would be opportunity money If an opportunity came up that needed a match or money from the City, this money could be used In the face of an economic downturn, staff would recommend using these funds after the Undesignated and Designated for Economic Uncertainties had been depleted The cost of using these funds is that they would be unavailable if an opportunity arose where the City could leverage them The City had $1 0 million set aside in an account called Designated for Due from Other Funds This represents amounts that the General Fund had loaned to other funds and therefore wasn't available for general expenditures Typically, the loan arises because the other fund has a large capital project that is grant funded This means that the City must expend the funds and 195 request reimbursement once the funds are expended There is usually a several month lag between when the City must pay out the funds and when the City receives the funds The General Fund steps in during this lag and loans funds to keep the project moving In general, the amount in the Reserve for Due to Other Funds varies greatly from year to year based on the number of large grant programs that the City has going In an economic downturn the City could use these funds, by having another fund such as the Wastewater Fund loan these amounts. However, there is an opportunity cost if the new loaning fund (the Wastewater Fund in this case) no longer has enough funds to do its own projects or operations The City has $4 5 million set aside for cash flows This is the amount of cash flow the City needs to get from the beginning of the fiscal year in July through December when the City finally receives its first Property Tax payment of the year In a severe economic downturn, the City can use these reserves Once the City uses these reserves to cover operations, the City would have to borrow funds in the spring of each year and pay them back once it receives its property tax in the winter The City does have options for borrowing these funds such as participating in a TRAN (Tax Revenue Anticipation Note) or borrowing from other funds within the City There is, however, a cost to borrowing funds interest expense, issuance costs and lost opportunity costs are costs that the City will incur with borrowing these funds Reserved for Advances to Other Funds makes up $1 4 million of the available General Fund Reserves This is the amount that the General Fund has loaned to the Redevelopment Agency on a long term basis. In a financial crisis, the City could use the reserves to fund City operations. This would mean that the General Fund would lose a lucrative source of interest revenue and the Redevelopment Agency could potentially have to cut projects in order to pay off this debt. In addition to this, the Redevelopment Agency would have to find another source for its revolving debt of approximately $500,000 As important as it is to understand the General Fund Reserves and the ramifications and costs of dipping into each of the reserve accounts, it is just as important to understand which other accounts there might be within the City that are legally accessible to the General Fund in order to meet its operational needs There are two other sources of potential funds that could be considered The first is the CCCSIF workers compensation fund balance and the other is the internal service account replacement funds As of January of this year, there is currently an estimated surplus of $ 8 million in the City's CCCSIF Workers Compensation Fund Once a year, the City may be either required to make a deposit to the fund if the City's balance is negative, or may be given Estimated Internal Service Replacement Funds the opportunity to request a refund if June 30, 2009 the balance is positive In accordance with the City's BuildingReplacement Funds conservative fiscal policy, the City $ 2.z million has not requested a refund of the Technology Replacement Funds 0 8 million balance when given the opportunity Vehicles & Equipment Replacement Funds 1 9 million Similar to the City's fiscal policy, this $ 5 4 million allowed the surplus in the fund to be used to cover years where changes in the workers compensation claims caused large deficits in the fund This practice has smoothed out the City's workers compensation costs 196 The City also has amounts set aside for replacement of vehicles, equipment, buildings and NW technology The City has the legal right to transfer these funds back to the General Fund however it is not necessarily prudent to do so These are akin to a college savings account for a child. Every year, money is put into the savings account so the child can attend college once he graduates from high school A parent may suspend annual contributions in fiscally hard times and may also dip into the college funds, using them for house payments or other items if the need becomes critical Once the fund is dipped into, it becomes doubly burdensome as the family tries to both replace what they withdrew, and also tries to maintain their annual funding level in order to have enough for the child to go to college at age 18 Similarly, the City puts away amounts annually so that as vehicles, computers, software and buildings become old and no longer function, the City has funds to replace them These funds are legally available to transfer back to the General Fund; however, it does not change the time frame that roofs will have to be replaced or software will no longer be supportable How Long Can the City Last? Now that it is known how much the City has in reserves and other available funds, the question becomes, "How long can the City last?" There are no definitive answers that one can give to that question, as this involves predicting the future and the only known when predicting the future is that the prediction will be wrong What staff can do is project out the future revenues and expenses based on best estimate of what changes will occur in the future and what decisions will be made as that future unfolds Just by projecting out the future and disclosing the information, we in fact hope to, and have the ability to, change that future Based on current projections, it appears that the City will have used up its Undesignated Reserves its Reserves for Economic Uncertainties and its Road Program Reserves by June of 2010 The City will have to borrow funds in 2010-2011 and into the future to meet its cash flow needs, but will still be in the black overall Without alterations to our current course, staff projects that by 2013-2014, General Fund reserves will have completely dried up and budgeted expenses will still outweigh budgeted revenues 6 Year Projection Revenues,Expenses and Fund Balance Actual Estimated Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 Revenues $18,991,391 $18,069,000 $18,559,220 $18,445,950 $19,109,780 $20,077,670 $21,024,760 Expenses (18,591,145) (19,370,510) (20,537,720) (20,918,610) (21.262,740) (21,685,310) (22,105,940) Net Income 400,246 (1,301,510) (1,978,500) (2,472,660) (2,152,960) (1,607,640) (1,081,180) Fund Balance at Beginning of Year 10,634,266 11,034,512 9,733,002 7,754.502 5.281,842 3,128,882 1,521,242 Fund Balance at End of Year $11,034,512 $ 9,733,002 $ 7,754,502 $ 5,281,842 $ 3,128,882 $ 1,521,242 $ 440,062 Comoosltion of Fund Balance at Year End Generel Fund undesignated $ 2,201 408 $ 899,898 $ $ $ $ $ Designated for economic uncertainties 1,500,000 1,500,000 421,398 Designated for road projects 445,000 445,000 445,000 Desingated for due from other funds 960,279 960,279 960,279 Designated for cash flow 4,500,000 4,500,000 4,500,000 3,854,017 1 701,057 93,417 Reserve for adxences to other funds 1,375,175 1,375,175 1,375,175 1,375,175 1,375,175 1,375,175 387 412 Designated for library 52,650 52,650 52,650 52,650 52,650 52,650 52,650 $11,034,512 $ 9,733,002 $ 7,754,502 $ 5,281,842 $ 3,128,882 $ 1.521.242 $ 440,062 Staff has made key assumptions in order to project revenues and expenses into the future �Mrr+r 197 • Current secured property taxes are projected assuming the growth using the following percentages FISCALYEAR PROPERTY TAX ASSSUWTIONS 2008-2009 Assumes 4%growth in Current Secured revenues and MVLF Assumes continued sharp fall off of supplemental and property transfer taxes 2009-2010 Assumes 2%growth in Current Secured revenues and MVLF Assumes increase in supplemental and property transfer taxes 2010-2011 Assumes 3%growth in Current Secured revenues and MVLF Assumes strong increase in supplemental and property transfer taxes 2011-2012 Assumes 4%growth in Current Secured revenues and MVLF Assumes strong increase in supplemental and property transfer taxes 2012-2013 Assumes 5%growth in Current Secured revenues and MVLF Assumes increase in supplemental and property transfer taxes • Sales Tax is projected assuming the following underlying general percentage increases in future years: FISCALYEAR` SALES TAXASSSUMP110NS 2008-2009 Generally flat with a slight upward trend toward the end of the fiscal year This base was then adjusted downward for the loss of the Ford dealership Obispo Pacific and a projected slight continued decrease in Building & Construction. The base was adjusted upward for the addition of Royer Marine and a potential future outlet at Mission Oaks in late 2008/early 2009 2009-2010 Generally an increase of 4% with an adjustment downward (20% of Home Depot revenue) in 4th qtr 2009 for the opening of a Lowes in Paso Robles An addition to the base was made for a potential tenant in the current Rite Aid '410 building and an increase was included for the remaining quarters of the Mission Oaks addition 2010-2011 Generally an increase of 4% with an adjustment downward in the 3rd qtr of 2010 for Lowes opening and adjustment upward in early 2011 for development of commercial pads at the Home Depot Center 2011-2012 Generally an increase of 4% with an adjustment upward for 2 quarters for the commercial pad at the Home Depot Center 2012-2013 Generallv an increase of 4% • Any future sales tax revenues for the Colony square project are not included in the assumptions however development revenues for construction of the project are included • Development revenue is assumed to be slow through 2009-2010 and will pick up in 2010-2011 with continued increases through 2012-2013 • Estimated fees and related expenses for the EIR and Specific Plan at the Del Rio intersection are included in the projection, however other development fees related to permitting, sales tax, and property tax are not accounted for • Development revenues, development expenses, property taxes and any other potential revenues and expenses related to Eagle Ranch are not included in the assumptions • TOT Revenue from the Holiday Inn Express, opening this year, is included and it is assumed that one additional hotel will open within three years • Wage increases after the expiration of the current labor MOUs have not been included in projected expenses wn ° 198 • Minor budget cutbacks implemented in the future are included "' • Potential layoffs or program eliminations have not been included in the projection • Funding for new programs has not been included in the projection • Funding for NPDES Phase II annual City expenses is assumed at $100,000 a year starting in 2009-2010 • Discretionary capital and special projects funded from the General Fund are projected at minimum amounts from 2009-2010 through 2012-2013 Many assumptions are made to project future occurrences What is obvious today is that there is over $11 million between now and crisis The Council's fiscally conservative policy has bought some time to make the changes necessary to avoid a financial crisis The time then buys more options to change the financial future Every policy decision that Council makes and day to day decision that staff makes has the potential to change the financial projection for either the better or the worse Is This Downturn Cyclical or Permanent? The graph to the right depicts the strategic policy the Financial Strategy Council adopted many years ago In a typical cyclical ......_ .......... economy, the straight expense line would evenly dissect the ups and downs of the revenue curve, as shown in the top graph However, a permanent downturn would _ be more accurately represented in the lower graph o "' This graph demonstrates that the portion of the curve below the expense line (representing the deficit years) is greater in size than the portion of the curve above the f`, expense line (representing the boom years) This would Years _ Revenues not be a sustainable situation in the long run Expenses Financial Strategy This begs the question Which graph more closely -" - represents the City's status? As there is no clear answer to how long the City can last, there is no simple answer to "Is this downturn cyclical or permanent?" j Staff believes that there is a combination of long-term, o ' short-term, and unknown factors at work. { I It is clear that the slowing of Property Tax growth and d - --`—........ Years - the drastic decreases in Supplemental Property Taxes Expenses Revenues and Property Transfer Tax are cyclical trends These revenues trend with the California boom or bust real estate market and history has shown that California real estate may rise and fall but that there will continue to be a strong upward trend There is no reason to believe that this historical pattern is going to change with this downturn The question of property tax becomes how long will the real estate market be slow and when will the City see the bounce back? Each economist has their own opinions about when the real estate market will rebound, but the general consensus seems to be sometime in late 2009 The Central Coast tends to lag about 6 months to year behind the rest of the State, so staff is predicting a slow turn around sometime in 2010 Although the real estate market may begin to turn around in 2010, it may still be a 199 number of years before Atascadero sees the boom years that were experienced in 1989-1991 or in 2005-2007 Development has both a cyclical component and a permanent component. Certainly the most visible portion of development revenue trends is the cyclical portion As the real estate market slows, developers are understandably reluctant to develop properties that will not sell in the slow market. Thus revenues from building permits, plan checking and other development fees slow to a halt. As the real estate market recovers, and properties once again begin to sell, developers will again want to develop properties realizing a profit from the real estate boom The less visible component of development revenues has to do with the long-term development of a community which is more akin to a bell curve As a City heads closer and closer to build out, there is less and less land that is available for development and as the City eventually reaches build out, development will slow to just rehabilitation / re-use projects The means that although the City may never see the level of development that it has in recent years with the development of tracts such as Dove Creek, Las Lomas, Apple Valley, De Anza, North EI Camino etc., the City will continue to experience upswings and downswings in development activity with a general downward trend Ignoring the effect of what is being developed, the net effect of swings in development revenues should be $0, having no impact on the City's ability to provide other services to the community Council has set the development fees so that the cost of providing the services (building inspections, plan checks, zone changes, etc. ) equals the amount of fees charged to the developer/homeowner; however, there is an inherent timing difference between when the revenues are received and when the City must provide the services. The downward trend for Sales Tax is more difficult to analyze and has the most potential for change There are certainly cyclical factors at work such as the downturn in building and construction materials sales, however there may be a more permanent factor as well Losses of the top 25 sales tax generators such as Sales Tax Per Capita Comparison Atascadero Ford, Obispo Pacific and Central Coast $300 Mitsubishi cause a significant loss of City $250 revenues that may not :iso o es, return Compounding the $200 $28169 loss of revenues from the closure of large retail $150 outlets in the City are x't $100 ,. Internet sales and retail � �. Atascadero, outlets in neighboring $50 45.66 cities, which continue to draw revenues out of $_ Atascadero The City's sal s tax havee advised consultants hat if � CP a ti��y\ti��\ti�\ti \tiCy \tiCP\ l\ 5�\,yo°�\yo°1 (ZPo°�\,y°P�\,tio�\noo�\o� � Lowe s opens in Paso Robles, similar outlets in Atascadero should expect a decrease of 20% or more All of these items taken in combination lead staff to believe that perhaps this downturn in the Sales Tax Revenue is not just cyclical in nature, but is instead of a more permanent nature, as Atascadero's place in the local economy is redefined 14010, 200 ►' What Has Been Done? The conservative fiscal policy has prepared the City for a few years of economic downturn The City is okay for now, successfully paying its bills and fulfilling financial obligations While these are signs of effective financial management, they are unfortunately also signs that, without closer observation, can lull a person into false security While the City is financially sound now, it is important that adjustments be made now in order to maintain financial stability There are in effect two methods for changing the financial outlook of the City Either revenues can be raised or expenditures can be reduced Staff has taken the following steps, working on both sides of this equation • Reduce Operating Expenses Staff has reviewed each and every operating expense line item within the budget and has made cuts Although no department's budget has been formally slashed, each department now has new lower 'target expenditure amounts for both 2007-2008 and 2008-2009 These savings will be achieved through a variety of methods such as deferring purchases, watering less, raising thermostats, and minor decreases in service levels • Education and Communication Staff has just begun a program where important financial information is disseminated to employees through budget memos, meetings, e-mails and other means of communication It is expected that Finance staff will meet with each department's employees sometime before the end of May to discuss the financial outlook, what it means and the areas in which employees can help VOW Staff will continue to provide both the Council and the public with information regarding the City's financial outlook through both the audit and budget process In addition as with the recent Sales Tax numbers, staff will inform Council and the public about changes to the financial outlook, as staff becomes aware of the changes. • Fees It is anticipated that staff will be bringing a fee update to Council in June The fee update will include regular CPI increases along with adjustments to selected fees so that fees remain in line with Council's fee policies. • Economic Development Council has taken the first steps toward a comprehensive Economic Development Strategy It is hoped that this policy which will be formed by the community's vision of Atascadero will help shape Atascadero's economic future Additionally, staff continues to aggressively pursue retail development for existing centers, new hotels, and support of Colony Square • Identification of Potential Program Cuts and Service Level Reductions Staff is in the process of identifying potential program cuts and service level reductions in the event that these become necessary Staff is working with the operating departments to determine potential areas of service level reductions, the impact on the community of such reductions and the potential savings from each reduction These options will have a direct effect on the community and as such, must be carefully Naw 201 evaluated prior to implementation If the economy and the City's financial picture does not begin to turn around within the next year or two, staff will investigate these strategies NNW more closely and will bring reduction recommendations to Council prior to implementation • Analyze Fund Balance in CCCS/F Workers Comp Account Staff is analyzing the pros and cons of withdrawing the CCCSIF Workers Compensation Fund "surplus" in 2008-2009 and transferring it to the City's General Fund Staff will bring a recommendation to Council as part of next year's mid-year budget report. • Funding of Annual Replacement Reserves Staff has looked at annual funding of the replacement reserves Currently, the City puts enough away annually in replacement reserves to fully fund the replacement of vehicles and technology equipment when they reach obsolescence The City also puts away a significant portion of the amount needed to replace buildings and puts away about $50,000 a year toward equipment replacement. Staff is looking at the long-term ramifications of suspending the equipment reserve and the building replacement reserve Staff has instituted a policy of holding off on the 2008-2009 replacement transfers until the mid-year budget adjustments and/or audit are brought to Council in January • Funding of Annual Roads Contribution The City annually transfers $250 000 of General funds to major road repair projects. This annual transfer was set up to help the Road Program when there was excess revenue in the General Fund The original intent was to eliminate this transfer in periods of economic downturns; however, it is clear that roads continue to be a priority of the Council and the community Staff has begun looking at both the long-term and short-term ramifications of suspending this annual contribution It is expected that staff will bring back recommendations as part of the 2009-2011 budget process • Hiring Chill The City Manager has instituted a 'hiring chill" This is not a hiring freeze that stops all hiring, but a softer form that requires management evaluation for each position that becomes empty due to attrition The hiring manager, before re-filling that position, would take a hard look at the position and its contribution to determine if that position is absolutely necessary in the short run This saves labor costs in the near term without the negative and persistent affects of layoffs or hiring freezes However, it does in effect reduce service levels since the employee is no longer available to provide the service to the public. • Operations Monitoring The most important step staff has taken is increased monitoring This allows staff to regularly update the Council and continuously make necessary adjustments. The staff has implemented a policy whereby each department or division reviews their revenues and expenses on a monthly basis to ensure that targets are being met and adjustments are taking place More importantly, the entire financial outlook is being reviewed and adjusted on an ongoing basis so that changes will be caught early and communicated allowing for adjustments in the financial strategy accordingly 14060 202 What Can Council Do Now? Staff is closely monitoring the situation and as seen above, has accomplished much toward improving the City's financial condition Staff has some key recommendations for the Council at this time Most of these are generalized recommendations that the Council can consider today and use as a basis of a new way of thinking about the future • Budget Adjustments Staff recommends that Council adopt the budget adjustments as proposed in the attachment to this staff report. For the most part, these adjustments to the budget are necessary to reflect current revenue and expenditures activities • Endorsement of Staff Actions Taken Staff recommends that Council support the actions taken by staff to adjust the financial outlook of the City • Revenue Enhancement Staff recommends that Council aggressively pursue revenue enhancement options. The City has some great opportunities on the horizon for economic development including Colony Square, Holiday Inn Express and some form of development at the Del Rio intersection The decisions that the Council makes now will affect our revenues in the future If the City's long-term financial outlook does not improve in the next year or two, only then would staff recommend that the finance committee again look at other more unpleasant potential revenue enhancement strategies such as increased taxes. • No New or Expanded Programs Staff recommends that Council institute a policy of no new or expanded programs Such programs should be deferred until the City is in a better economic climate and no longer budgets at a deficit. It is painfully evident that Atascadero has limited financial resources Every project or program that receives appropriations essentially displaces funding for a handful of other projects or programs, or worse, puts the City in a more severe deficit situation Limiting the City's financial commitments to what has already been obligated will help the City to ease through this time of economic challenge • Maintain Regular Daily Operations Staff recommends that Council upholds the current adopted budget obligations While the City's fiscal situation requires constant monitoring and re-evaluation, drastic modifications are not currently necessary As discussed earlier, the City has sufficient funding to fulfill the current budgeted obligations The assumptions that staff has made to project the General Fund balance for the next six years will no doubt change as the future is realized This is where the constant monitoring and re-evaluation come in The more that the City is able to enhance revenues and hold expenses steady, the better the future years become The key point is to have an understanding of the City's fiscal status and how to mold it to become what the community needs. SUMMARY The Council has done an exceptional job in setting strategic fiscal policy that has put$11 million in the City's General Fund reserves to face current and future economic challenges After analysis of the data available, staff is confident in the City's ability to fulfill current financial 203 obligations and maintain the programs and service levels in the adopted budget. However, staff predicts that if the City stays on its current charted course of revenues and expenditures, it will begin to have severe financial difficulties by fiscal year 2013 Staff has enacted proactive measures to reduce expenditures and increase revenues where possible, closing the deficit gap Council can further ward off impeding fiscal crisis by enacting policy to pursue revenue enhancement and disallow any new or expanded programs and service levels The future brings challenges no doubt, but, working together, the Council, the staff and the public can explore and utilize the many options and tools available to find the solutions that will yield a community we can all be proud of FISCAL IMPACT $970,000 net decrease in General Fund revenues and $368,540 net increase in General Fund expenditures for fiscal year 2007-2008 $1,680,000 net decrease in General Fund revenues and $452,780 net increase in General Fund expenditures for fiscal year 2008-2009 $446,790 increase in revenues for other funds and $103,120 increase in expenditures for other funds for fiscal year 2007-2008 $545,000 increase in revenues for other funds and $575,730 increase in expenditures for other funds for fiscal year 2008-2009 ALTERNATIVES Council has the option to add or delete any budget item. This will decrease or increase the remaining reserve balance at June 30, 2008 and June 30, 2009 by the amount adjusted Council could also choose to allocate the Proposition 1 B funds to an alternate project, however this action would produce a funding shortfall in the 2006/2007 Road Rehabilitation Project. Finally Council can choose to change, add or delete any of the fiscal policies suggested by staff ATTACHMENTS Description of Proposed Budget Adjustments Draft Resolution A Amending the 2007-2008 and 2008-2009 fiscal year budgets Draft Resolution B Approving Proposition 1 B Local Streets and Roads Funding Proposal and accepting Proposition 1 B funding from the State of California Department of Finance to be used on eligible transportation projects within the City of Atascadero 204 Description of Proposed Budget Adiustments err Salaries and Benefits $135,630 for fiscal year 2007-2008 of General Funds, $4,120 in other funds $158,100 for fiscal year 2008-2009 of General Funds, $2,960 in other funds The City pays salary and benefit rates based on the Memorandums of Understanding (MOUs) with the different bargaining groups At the time the budget was adopted on June 12, 2007, the MOUs for fiscal years 2007-2008 and 2008-2009 had not yet been approved and finalized Staff completed budget estimates for labor costs based on the preliminary MOUs. The MOUs were adopted at a rate that was different than was anticipated in June 2007, creating the budget variance The original labor budget for the General Fund was adopted at almost $13.2 million The adoption of the MOUs after the passage of the budget added an additional $135,000 to that labor figure The City has experienced some savings due to vacancies and reduced activity levels, but will need to increase the budget for the MOU adjustment. Police Staff Overtime $85,000 for fiscal year 2007-2008 of General Funds Police staff overtime has exceeded the budgeted amount by $85,000 Atascadero Police Department has a terrific recruit program that generates career interest in individuals new to law enforcement. The program assists in training the recruits to potentially fill police officer vacancies While this program has been very successful, the Police Department must bear the labor costs, including those costs for overtime Additionally, other overtime costs are incurred as officers and police staff are spending more time keeping peace at public meetings and keeping our streets safe Legal $226,310 for fiscal year 2007-2008 of General Funds $200,000 for fiscal year 2008-2009 of General Funds, $20,000 in other funds Legal fees have increased this year and are expected to increase next year as well The position of the City Attorney has been in transition during 2007-2008 For a period of time, the activities of the City Attorney position were accomplished by two interim city attorneys. Because the interim attorneys were only filling in the position temporarily until Council appointed a permanent attorney, many of the City's long term projects were postponed This created an exceptionally large backlog of complex projects to examine when the current attorney took his position Additionally, the contract with Burke, Williams & Sorensen, LLP is more costly than the contract with the prior attorney at Kronick, Moskovitz, Tiedemann &Girard City Clerk Operations $11,600 for fiscal year 2007-2008 of General Funds $11,600 for fiscal year 2008-2009 of General Funds Operating costs for the City Clerk's office have gone up with the increase in Council activity Council has requested expanded public noticing for several controversial projects increasing printing, mailing and advertising costs In addition Council meetings have typically run longer than in the past increasing costs for secretarial services The City Clerk is expecting similar activity next fiscal year 205 Description of Proposed Budget Adjustments Human Services Grant No adjustment recommended Recently Council requested that staff research the City's capacity to extend larger grants for Human Services program recipients. Every project or program that receives budget appropriations essentially displaces funding for a handful of other projects or programs The City is already in the position of adopting deficit budgets and using cash reserves to cover regular operating costs Therefore staff recommends that Council institute a policy to defer the initiation of expanded or new projects until after the City is in a better economic climate and no 'longer budgets at a deficit or uses reserves. By adopting this policy, Council members can contribute to the community their legacy of a more financially stable government. Insurance $ 138,080 for fiscal year 2008-2009 of General Funds $ 27,770 for fiscal year 2008-2009 for all other funds The City is a member of the California Joint Powers Insurance Authority (CJPIA) CJPIA is a self-insurance group whereby its 114 member-agencies pool to share general liability insurance risk. CJPIA arranges and administers programs for the pooling of self-insured losses and the purchase of excess insurance or reinsurance The costs for liability insurance is on the rise and compounding that, several multi-million dollar claims were recently paid out of the pool in which the City shares As a result, the City has a $663,300 retroactive balance to be paid into the pool Because the retroactive balances are so high for most member agencies, CJPIA has spread the payment of these balances across eight years. Beginning in fiscal year 2008-2009, the City's annual retroactive payment is $121,650 The City also participates in CJPIA's worker's compensation group A savings is projected for the worker's compensation side, however, this was already taken into account with the proposed labor budget adjustments Medium Technical Rescue Apparatus ($75,000) for fiscal year 2008-2009 of General Funds The adopted budget included $75,000 to purchase a medium technical rescue apparatus and equipment cache for the Fire Department. This is highly specialized equipment the Fire Department would use during incidents in which the complexity and technicality exceeds the abilities of front line apparatus. Resources for this purchase were to be provided by Mutual Aid Revenues Because of the issues previously cited, Mutual Aid Revenues are down significantly compared to budget, so this purchase will be postponed until the resources to purchase the equipment become available Historic City Hall FEMA Appeal $50,000 for fiscal year 2007-2008 of General Funds Additional funding is necessary to provide for the costs of preparing the first level appeal to FEMA regarding the Historic City Hall restoration project. As directed by Council, the City requested funding from FEMA for repair of the San Simeon Earthquake related damages to the Historic City Hall FEMA approved some of the repairs, but there were extensive repairs for which FEMA did not authorize funding The Federal program allows the City to prepare a formal appeal The City hired a consultant for expert help in preparing the appeal and had additional investigative reports prepared by the project architect and the soils consultant. The City has already received $562,000 in administrative revenues this fiscal year from FEMA and OES to reimburse the City for costs relating to administering the FEMA process for the Historic City Hall PW 206 Description of Proposed Budget Adiustments Corporate Yard Building Interior Improvements $95 000 for fiscal year 2007-2008 from General Government Facilities Fees Fund On December 13, 2005, the City Council authorized the City Manager to execute agreements to construct a new building to house the Public Works Maintenance Operations staff on the grounds of the Wastewater Treatment Plant. This new facility consists of a 20,000 square foot maintenance building that will include office space, a break room, a locker room, a vehicle maintenance shop, storage rooms and covered parking The exterior construction has been completed Only the interior framing and finish work remain to be completed Unfortunately, the interior framing and finish work were left out of the project plans and as a result, were not included in the bid costs An additional appropriation of$95,000 out of the General Government Facilities Fees Fund will complete the interior construction to move-in condition The General Government Facilities Fund will borrow the $95,000 from the General Fund and will repay the General Fund out of future revenues Park Easement Appraisals $4,000 for fiscal year 2007-2008 from Parkland Facilities Fees Fund Funding is needed for appraisal and other costs associated with investigating the acquisition of property easements for Stadium Park Routes to School $21,300 for fiscal year 2008-2009 in Local Transportation Funds to be taken from the Road Rehabilitation Project The City received a grant from the State of California, CalTrans, in the amount of $426,000 The City's match is 10%, half of which will be funded by the Atascadero Unified School District. The grant will provide an eight-foot wide multi-purpose trail along the north side of San Gabriel road from State Route 41 to San Gabriel Elementary School This project will include a flashing cross walk from the multi-purpose trail to the school on the south. San Gabriel Elementary School will supply a crossing guard to assist children crossing before and after school The project will continue to add pedestrian access to rural Atascadero Storm Water Management Program and Regional Water Control Board Basin Plan $10,000 for fiscal year 2007-2008 $20,000 for fiscal year 2008-2009 The Regional Water Quality Board (Regional Board) is requiring the City of Atascadero and all agencies over 10,000 in population to produce a Storm Water Management Program (SWMP) as part of the Federal Clean Water Act. The Regional Board is also amending the Septic System Basin Plan This budget adjustment will allow funding to hire consultants to study the options to produce a SWMP and assist the City in gaining approval of the Program The funding will also be used to hire consultants and studies as may be necessary to gain approval of a Basin Plan that is acceptable to the City of Atascadero San Luis Obispo Council of Governments (SLOCOG) In the 2008 Transportation and Funding Cycle, the SLOCOG Board has awarded the City of Atascadero the following funding These funds are from State and Federal sources and these projects will have no impact on the General Fund 1 Northbound US 101 Auxiliary Lanes from Rosario Avenue to San Anselmo Road $120,000 for fiscal year 2008-2009 +�Irrrr 207 Description of Proposed Budget Adjustments This funding will be used to begin the planning and environmental process to install auxiliary lanes in US101 at the above location This will allow vehicles entering US101 more time to merge into traffic and merge off US101 at San Anselmo Road 2 Downtown Atascadero Streetscape Phase III $375,000 for fiscal year 2007-2008 This funding will be used in Downtown Atascadero to continue the successful Streetscape Program 3 Curbaril Interchange Park and Ride $50,000 for fiscal year 2008-2009 This funding will be used to enlarge the existing Park and Ride facility located on San Luis Avenue next to the Curbaril Interchange The project will be done with the assistance of CalTrans who will handle all permitting and right-of-way work required Proposition 1B Adjustments $446,790 increase in budgeted revenues for fiscal year 2007-2008 On November 7, 2006 California voters approved Proposition 1B, the Highway Safety, Traffic Reduction, Air Quality and Port Security Bond Act of 2006, providing $19 925 billion in bond funds for transportation uses, including $2 billion for cities and counties to use for the maintenance and improvement of local transportation facilities AB 196 specifies that $550 million be allocated to cities The allocation is determined by population, and the City's allocation for 2007-2008 is $446,790.22 At the December 11, 2007 meeting, Council decided to use these funds for the 2006/2007 Road Rehabilitation Project, freeing LTF funds for the Santa Cruz Road Slope Stabilization Project. State procedures were not in place for claiming these funds at the time of the decision The actions proposed tonight will formally allocate the Proposition 1 B funds in accordance with State guidelines to the 2006/2007 Road Rehabilitation Project. The action does not increase the project budget for the 2006/2007 Road Rehabilitation Project which includes the rehabilitation of San Jacinto Road and Del Rio Road General Fund Revenue Adjustments ($ 820,000) net decrease in budgeted revenues for fiscal year 2007-2008 ($ 1,680,000) net decrease in budgeted revenues for fiscal year 2008-2009 It is expected that General Fund Revenues will come in $970,000 short of projections, for fiscal year 2007-2008 however a reduction of$150,000 in mutual aid expenses offsets this reduction for a net General Fund reduction of$820,000 A$1,680 000 reduction is proposed for the projected 2008-2009 revenue shortfall It is prudent for education and communication purposes to adjust down the revenue projections as follows 2007-2008 2008-2009 Positive/ Positive/ (Negative) (Negative) Revenue Budget Revenue Budget Adjustments Adjustments Property Taxes $ (200 000) $ (450 000) Sales Tax (450 000) (850 000) FEMA Administration 560 000 Development Revenues (750 000) (380,000) Mutual Aid (net of expenditure adjustment) (150 000) Interest Revenues 170,000 - Total Projected Revenue Shortfall $ (820,000) $ (1,680,000) 208 Attachment D ITEM C - 1 DATE. 04/28/09 r 1918' r r ri n 1979 , f Atascadero City Council Staff Report- Administrative Services Department 2009-2011 Budget Update RECOMMENDATIONS Council 1 Find it has become necessary to abolish positions of employment and authorize the City Manager to proceed with necessary staff layoffs 2 Receive and file budget update REPORT-IN-BRIEF The effects of the severe decline in the worldwide economy are devastating Local, State, and National agencies are all experiencing unparalleled reductions in revenues. The situation is so bad that some economists are even calling this era the worst economic crisis since the Great Depression Unfortunately, Atascadero has not been spared City staff has been working in this challenging climate to develop the 2009-2011 budget. Developing an effective budget that will maintain essential City services during these strained economic times is a difficult task. Through the helpful efforts of Council, Commissions, citizens, and the entire City staff, the management team has been able to compile enough information to form a tight but smart budget plan Financial Strategy The City has been able to maintain stability through the last decade because of the Council's effective ongoing commitment to a sound fiscal y� strategy The concept of this plan is to provide for downswings in revenues by putting money aside in 26 good times and then using some of that money during cyclical periods of economic slowdownsr �'; This policy generally allows for stable operations and continuity in service to the community, and -" ensures long-term financial sustainability to the Years -- Expenses � Revenues organization "qtr►° 209 ITEM C - 1 DATE 04/28/09 Financial Strategy That strategic policy has performed well over the -400 years as intended, building up an impressive $11 million in General Fund Reserves as of 2006- 2007 However, the drop in the economy has been much sharper and deeper than the policy could reasonable accommodate. While the City has been judicious with its expenditure growth over the years, the drop in revenues has been just too drastic to be made up in reserves alone Yeas Serious operational and staffing cuts must now Expenses "' Revenues be made in order to maintain fiscal sustainability The core missions of the organization will be the top priorities DISCUSSION Revenues The City's General Fund is feeling a decline in almost every revenue source Total General Fund revenues had been growing consistently almost every year since 1993 They are now moving in the opposite direction Fiscal year 2006-2007 was thought to be just one step closer to stable revenues based in Atascadero s affordable home and commercial properties, economic development, and infrastructure improvements Unfortunately, fiscal year 2006-2007 instead became the peak revenue year Revenues began to decrease the following year and still continue their downward spiral Staff is projecting a double-digit (13%) decrease in 2009- 2010 revenues as compared to the peak year of 2006-2007 This, in combination with an average of 3% per year increase in the cost of doing business, leaves the City 22% worse off in just three years. The news is bad and keeps getting worse Last May, the Mid-Cycle Budget Report detailed the decline in revenues and changes to expenditures that were apparent at that time Unfortunately as the economy continues to struggle, so do the revenues, causing ongoing erosion of revenue base General Fund Revenues for 2009-2010 are anticipated to be $16 5 million Although economists are continually revising their estimates, at this point, it appears that the City won't see any significant improvements until fiscal year 2012-2013 Critical to the appreciation of this discussion is the understanding that Atascadero is unlike any other city in the County Of course, that is part of the history and charm of the community The financial challenges that the City faces are only similar to other agencies in that the outflow is greater than the inflow A common comparison to other cities doesn't yield a logical conclusion Some cities have high Transient Occupancy Tax revenue because they are known as vacation destinations. Other cities have high Sales Tax revenues because they are known as popular shopping destinations. Still others have high franchise fees due to their relationships with utility companies Atascadero relies heavily on property tax. In fact, 45% percent of the total General Fund revenues are made up of Property Taxes The next highest piece of the pie is Sales Tax Revenues at 18% Development revenues, which at one time were the third largest revenues, now come in at only 4% 210 ITEM C - 1 DATE. 04/28/09 Estimated General Fund Revenue ,. 2009-2010 t„ Oji W i h3yA aeA �7 ti. r t. Development 4% Property Tax Revenues Property Tax Revenue has always been the bread and butter of Atascadero It has continuously been considered a strong and reliable source of income to the City's General Fund Year-over-year growth rates between 2% and 10% were quite common, and in fact, the growth rate hit a record high of 15% in fiscal year 2006-2007 Unfortunately, a whole new world exists now; a time that some said would never happen The City is no longer seeing this increasing growth rate In May of 2008, the information available to staff indicated that Property Tax revenues would see a significant slowdown in the rate of growth due to the economic downturn Data indicated that although growth slowed, it would indeed remain positive The county assessor's office initially reported that it expected to reduce county-wide home values to 2004 rates, which equated to approximately $600 million in value reductions county-wide Although this is a large reduction county-wide, analysis of this amount indicated that its worst victims would cities other than Atascadero However, recent reports from the assessor's office now indicate that that the values will be drastically lowered to 2003 rates, or a county-wide write-down of $1 billion This is definitely a more severe situation, and caused another round of analysis in terms of what it really means to the City's most important revenue source Property tax revenues are based on property values In a normal market, property values have a built-in mechanism to increase every year based on how the economy is doing Increases are equivalent to the lesser of CPI or 2% Additionally, property is re-appraised to current full market value immediately upon a change in ownership The property base value and thus the City's revenue, therefore typically continues to grow as the years pass, as properties change hands, and as properties are constructed or improved Atascadero land has been considered one of the best deals in the county over the last several years, so a good deal of construction and home sales has taken place This is why the City has seen such positive, sometimes even double-digit, growth over the last 10 years vftw 211 ITEM C -1 DATE 04/28/09 Conversely, however, as the housing market slumps Property Tax Trends and property values decrease, the assessed 25% values can be decreased 20% Typically, the economy goes from good to bad and 15°i° then back to good. The 10% property base is generally 5% _ stable enough to handle such cyclical variations and 0% the City continues to see 5% — slowed but positive growth 10% during those times. However, there are those 15% rare times when the n00 Ol O .--1 N m In W 1� 00 Ol O rl N M rr LnlO 1� 00 M O ­1co °o co 8) 0, rn 01 m m m 6) m m O o 0 o 0o o o o o , g economy goes from good t0 °1 01 01 01 01 0' O1 Q1 Q1 Q1 Q) a) mcD00000000000 IV r11 e-1 1i IV "1 ri IV r 1-1 1- e-1 11 rV 1V fV N N N N N N rV N N UD r� 00 01 O e-1 N rn CF V1 l0 I, 00 01 O rI N M � Ln W I, 00 01 O bad t0 terrible, and this IS rnmmrnmmmrnrnmrnmmrn00000000000 when extreme decreases, -1 rH H H H H -1 H r-i H 14 H -1 N N N N N N N N N NN even negative growth rates, are present. The initial reports of the devaluation to 2004 rates was of course concerning, but at that time was not considered devastating because there was still a significant portion of the property value base that fell under that threshold However, the further write down to 2003 rates, had a much more substantial effect. A larger percentage of the City's property tax base value was now in jeopardy As recently as last November, reliable financial experts expected that the housing market would begin recovering in the Fall of 2009 Data now indicates that the first signs of a turn-around in the housing market may not exist until 2012 Keeping all of this in mind, staff has analyzed the data available at this time and projects, for the first time in history, a two percent decrease in property tax revenues for 2009-2010 Never since incorporation has the City experienced a negative growth rate in this vital revenue Because property taxes make up almost half of the entire General Fund revenues, even a small decrease in the growth rate has a serious ripple effect to the General Fund and results in severe implications Property tax revenues are projected at $7 5 for each of the two fiscal years 2009- 2011 Staff doesn't expect this negative trend to reverse until fiscal year 2011-2012. -0010 212 ITEM C -1 DATE. 04/28/09 °wrr Sales Tax Revenues The news doesn't get any better when it comes to Sales Tax Int reas / �easew revenues In fact, the trend for the Fls'cafYear`? aes Tx* tt���ease , nec ease) { last several years has been negative Sales Tax has dropped a stunning 2005-2006 $ 4,211,140 Na n/a 24% since fiscal year 2005-2006 That is an annual revenue loss of 2006-2007 $ 3,807,713 $(403,427) 10% over $1 million! 2007 2008 $ 3,526,534 $(281,179) -7% Sales Tax Revenues are the second largest revenue source, representing 2008-2009 $ 3,190,907 $(335,627) 10% 18% of General Fund Revenues 2009-2010 $ 2,920,800 $(270,107) -8% Sales tax revenues are down in agencies across the State, but 2010-2011 $ 2,923,200 $ 2,400 1 0% Atascadero was particularly hard hit Underlying Atascadero Sales Tax. This eliminates timing anomalies from because it has a narrowly defined State Sales Tax in Lieu Payments, Sales Tax Base In other words, a large portion of Sales Tax Revenue comes from a few retailers in sectors that have been hard hit. Since calendar year 2001, the City's top two sales tax revenue producing industries have been Building/Construction and Autos/Transportation. Lack of consumer confidence, the soft housing market, and the instability of fuel and energy rates have caused reductions in these both of these two sectors. The deflation in the real estate industry has influenced the Building and Construction industry One of the hardest hit sectors of the economy, this influence is reflected in a statewide drop of 12 4% in building materials sales tax receipts over a year ago Uncertain of future values, consumers are reluctant to invest much toward building and construction projects Additionally, the sub-prime mortgage crisis has affected the credit market for home equity loans and refinancing loans, further reducing the potential for home renovation projects Restored growth in this industry is expected to come slowly Weak sales in vehicles, SUVs and trucks in particular, have caused the City's other main sector to suffer Atascadero Ford, previously a large part of the City's sales tax revenue base closed its doors last year This is a symptom of the depth and length of this recession, as the statewide surplus of auto dealerships continues to be sorted out. From its high point, this is a loss to the City of $320,000 in Sales Tax Revenues annually This has a significant effect on the City's already lagging Sales Tax Revenues. Staff has worked with the Community Development staff, the Office of Economic Development, and HdL, the City's Sales Tax consultant, to project revenues into the future Indications are that there is a general malaise in the economy, causing consumers to be more protective of their disposable income The good news is that there is a projected increase in revenues from Big!Lots and Tractor Supply This increase will help move sales tax revenues in a positive direction However, combined with lower fuel prices and the opening of Lowe s in Paso Robles, the effect of these new retail outlets is softened Staff projects a continued decrease in 2009- 2010, and only a slight increase of less than one percent in the second year of this budget cycle It is only through the Council's commitment to economic development and the hopes of a fir+' 213 ITEM C -1 DATE 04/28/09 rebirth in the economy that this downward trend is expected to eventually turn around in 2010 1.40 - 2011 Development Revenues Development Revenues closely reflect the current real estate market, and thus have decreased significantly in the last few fiscal years While staff anticipated a drop in activity, the velocity and severity in which it came was unexpected In 2005-2006, 276 new residential permits were issued So far in 2008-2009, only 11 have been issued This is a 96% decrease in new residential activity in three years' time New commercial activity has also decreased In 2005-2006 there were 21 new construction permits issues, compared to 4 in 2008-2009 Building Permits by Type Issued 800 700 600 ■New Commercial 500 400 M New Residential 300 ®Residential 200 — Alteration/Addition/Accessory 100 — — — ❑Commercial 0 Alteration/Addition/Sign/Other 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 As of the beginning of fiscal year 2008-2009, there were over 500 new residential and new commercial permits that had gone through plan checks but had not been paid for Council authorized an expiration extension on those permits for developers and homeowners that agreed to pay the fees due The benefits of this program were many The City was able to receive payment on costs that had already been expensed to review the permits and the developer or homeowner will have an easier time starting the project back up when the economy rebounds That is a benefit to the developer or homeowner, and also to the City, as it boosts the local economy The program was a huge success and over $200,000 was brought in from 226 of the 517 permits that were eligible for this program Staff estimates a small increase in development revenues for the next two budget years due to a service fee adjustment, but doesn't expect a volume increase until fiscal year 2011-2012 Other Revenues Generally, revenue discussions are focused on the largest and most critical pieces of the City's revenue base However, there are many other sources of revenues that help complete the revenue pie, and it is important to understand what is happening with these sources to get the full picture of the economy's effect on the City 214 ITEM C 1 DATE 04/28/09 low Atascadero is seeing drops in almost every revenue source The above discussion explained why there are decreases in the three revenue sources that make up 67% of the General Fund Revenues. For the most part, the remaining 33% doesn't look any better Property Transfer Tax, Intergovernmental Revenues, Motor Vehicle in Lieu, Business License Tax, Gas Tax, Transient Occupancy Tax, Recreation Services, Pavilion Revenues, Administrative Charges and Interest Income are all trending downward Taken individually, none of these would pose a significant concern to the City's ongoing fiscal health However, taken together, and on top of the huge losses that already exist in Property Tax, Sales Tax, and Development Revenues, it is easy to see how the City's revenue picture is in a devastating situation Reserves All this might leave a person wondering, "What's the problem? The organization is lean, expenses are tight; just fill in the revenue gap with the reserves That's what they were saved for, right?" These are very good questions, but unfortunately, they are also very complex. Understanding some of the City's financial history is helpful in finding the answers The story begins back in the early nineties As the economy became sluggish, the City began to suffer severe fiscal challenges Revenues were low, expenses were high, and there were essentially no reserves. Without sufficient reserves to fall back on, the independent auditor reported a going concern In other words, finances were so bad at the time that there was a serious question of ongoing solvency in the organization The City Council and remaining staff were able to pull together and rebuild the City, piece by piece The Council's Strategic Policy was born from this crisis and eventually the organization was able to create a reserve balance as high as $11 million in the General Fund That experience certainly was a hard lesson to learn at the time, and one l„w that the City never wants to repeat. By the end of the current fiscal year, the General fund reserves are expected to drop to $8 million Council has been supportive of budgeting $1 million in reserves annually to bridge the gap between expected revenues and expenses This judicial use of reserves should take the City through to fiscal year 2012-2013, when the economy is projected to start turning around At that time, General Fund reserves are expected to be about $4 million Because of the lesson learned in the last economic downturn, it's been Atascadero's unwritten policy to maintain a prudent level of reserves Prudent, in this case, is the combined function of the level of General Fund expenditures, the unavailability of some of the reserves, and the potential for contingencies or emergencies It is critical to retain sufficient resources to maintain services relevant to the City's core missions NOW 215 ITEM C - 1 DATE. 04128/09 General Fund Reserves $12,000,000 $11,000,000 _ . $10,000,000 $9,000,000 77 $8,000,000 ------ $7 000,000 �i ---- S6,000,000 1 $5,000,000 $4000,000 $3,000,000 � $2,000,000 $1,000,000 ;. o h b 1 O ti ti 3 Dh b 1 �i O ti ti 3 CP Ci CP 0h Ch O° O° O° O° O° o° O° O° O° O° O� O, oy by b, nti Cy F5 o� tiT tiT "'r o ti pr (0,b'L 1ti ", 'C5 Cj tiT $ yah $ ���i X00 °O �°O �°O f "°O �°O -f $; Designated for library ■Reserved for long term assets 0 Designated for cash flow ■Designated for road projects 10 Designated for PERS/economic uncertainties El General Fund- undesignated .� Expenditures The available data supports the use of $1 million in reserves annually In order to maintain the use of reserves at this level, it is necessary to adjust the other pieces of the puzzle Although the City is doing what it can to boost economic development, not much can be done to change property taxes or revive the national economy That essentially locks revenues in place The only remaining piece that can be changed is expenses The draft department budgets have been reviewed and the rough pre-cut estimate of General Fund expenses for 2009-2010 is $20 5 million Revenues are coming in at $16 5 million This creates a budget gap of about $4 0 million In order to last until 2012-2013, the reserve fund can only contribute $1 million annually That means the expenses can only be $17 5 $16 5m annual revenues million After the reserve contribution, + $ 1 .0m reserve contribution expenses need to be reduced $3 million to get = $17 5m annual expenses from the draft budget requests of $20 5 million to the maximum the City can responsibly spend of$17 5 million Of course, this year doesn't mark the first year budgets have been cut. As indications of the economic crisis began to appear, budget savings measures became the first line of defense 216 ITEM C- 1 DATE. 04128/09 against what would soon become this unwieldy beast. Staff at all levels came forth with ways to reduce spending, but continue to maintain core mission services The cuts, along with the planned use of reserves as consistent with Council's Strategic Policy, seemed, at the time, to keep the City out of reach of the beast. Unfortunately, the major recession that many economists forecasted seemed to grow closer and its unfavorable influence on the City's revenues was evident almost daily The focus on operational cuts became even more intense Employee meetings were held regularly to keep the staff up to date on the City's current fiscal status, and to gather ideas for reducing . Regular employee budget updates operating costs. Weekly budget meetings were . Ideas submitted from all staffing levels held with representatives from each department . Weekly budget meetings and employee association, and weekly budget . Weekly employee newsletters emails followed up the meetings to keep all • Overtime limited employees in the loop Overtime was used • Weekly department head meetings with judiciously on only the City's core missions Finance staff Staff positions that had become vacant due to • vacant positions chilled,then frozen attrition were chilled and later frozen Through the efforts of each and every employee, $2 3 million has been squeezed out of the ongoing operating budgets, bringing projected expense down to $18 2 million As the City's operations were already lean, the community effect of each of these cuts has been weighed against the benefits they provide Staff is doing everything possible to maintain the City's core missions while trimming out those programs or services that will have the least impact of the citizens of Atascadero The General Fund is the focus of this discussion because it is the fund with which the City generally has the most discretion for spending However, other funds, such as the enterprise funds (Wastewater and Transit), the Gas Tax Fund, the Redevelopment Agency Fund, and the Tree Fund have significant impacts on the General Fund These other funds can have positive or negative effects, depending on how interfund activities are structured In some cases, it is appropriate to charge enterprise funds for administration overhead or support staff costs To the degree these transfers are appropriate, the burden of those related costs effectively shift to the enterprise fund If used properly, this interfund cooperation can provide needed relief to the General Fund Following are descriptions of staff recommended cuts to both the General Fund and to other funds that have a financial relationship to the General Fund If for any reason, one or more of the recommendations are not endorsed by Council, deeper cuts will be required in other areas. • Suspend Funding of Annual Buildinq Replacement Reserve (-$406,060 annually) - Funding replacement of City infrastructure has been a cornerstone of the Council's Financial Strategy for the last several years In July of 2000, the City began putting away funds to repair and replace City buildings and in 2003, staff began charging a building occupancy fee to all enterprise funds and using a building occupancy factor in creating an overhead rate Each department annually contributed its proportionate share to a building replacement reserve For the last several years, the funds that the City allocated to building reserves have largely been used to pay for repair projects and improvements. Staff recommends suspending the funding of this annual building 217 ITEM C - 1 DATE 04/28/09 replacement reserve in order to balance the budget. This will drastically reduce -40#4 available funding for major repairs to City-owned buildings, in effect deferring or putting off these repairs until better economic times • Suspend Fundinq of Annual Equipment Replacement Reserve (450,000 annually) -The City has historically not been able to fully fund a contribution to the equipment replacement reserve account, however, the Financial Plan called for increasing annual contributions and the City was contributing $50,000 a year toward replacing old and outdated equipment. Staff recommends suspending this annual contribution for 2009- 2010 and 2010-2011 This will increase the City's backlog of equipment that needs to be replaced and will defer replacement until better economic times • Suspend Funding of Annual General Fund Contribution to Road Repairs (-$250,000 annual/ - In 1999, the City developed the Atascadero Road Program to address the City's backlog of road maintenance issues As part of that program, the Council agreed to annually fund $250,000 of major road repair projects with General Funds They also agreed to eliminate this annual funding if the City was in tough economic times Staff is recommending that the annual contribution for road repairs be suspended This will in effect lower the overall condition of the City's roads • Reduce Funding for Local Road Paving Proiects (-$50,000 annually) - As part of the Atascadero Road Program, the City began the Local Road Paving Program where local roads were paved using City crews Staff is recommending that this program be reduced in order to balance the budget. This in effect lowers the overall condition of the City's roads • Reduce Strategic Planning, Citywide Training and Committees (-$40,000 annually) - Staff recommends reducing funding for Council and Department Head Strategic Planning This will eliminate the use of a facilitator or other contractors to assist with the strategic planning process Staff also recommends reducing funding for citywide training and committees Reductions include items such as the Leadership Academy supervisor training, the Customer Service Committee and AEDAC (Atascadero Employee Development Advisory Committee) • Reduce Citywide Services & Supplies by 5% (-$159,770 annually) - Each department reduced non-labor operating budgets by 5% This includes reductions such as paper, toner, and other office supplies, cleaning products, landscaping, janitorial costs, contract services, bottled water, utilities, non-essential training, travel expenses, and small equipment replacement. This effectively lowers service levels for services outside of the City's core missions. • Reduce Television Broadcastinq and Archiving of Meetings (-$25,650 annually) — Council voted to begin televising and internet streaming Council and Planning commission meetings in fiscal year 2007-2008. The annual cost of this is approximately $51,000 In this time of economic struggle, staff recommends reducing the cost of this by $25,650 This would eliminate video internet streaming and archiving of meetings and would discontinue all televised coverage of the Planning Commission meetings. 218 ITEM C - 1 DATE 04/28/09 *r • Reduce Chamber and Tourism expenses (-$44,290 annually) — The contributions that the City makes to the Chamber of Commerce and toward tourism and marketing are based on revenues received As the associated revenues decrease with the economy, so do the City's contributions This budget reduction reflects the impact of the sluggish economy but does not change the City's contract commitment toward these important programs • Reduce Contract Arborist, Contract Biologist, and Tree Brochure (-$58,500 annually) — When development was at its peak, the City allocated $30,000 annually toward a contract arborist, $25,000 annually toward a contract biologist, and $3,500 annually toward the printing costs of a Tree Brochure At that time, these costs were a Council priority The services that were used on development permits were reimbursed to the City through the permit fee process. Now that development has decreased drastically, the need for these contract services has also decreased The costs of printing the Tree Brochure have also been reduced While the brochures are important to the preservation of one of the community's top natural resources, staff recommends suspending funding during this time of fiscal crisis • Implement Cost Effective Zoo Animal Food Program (420,000 annually) — One of the nation's top animal nutritionists is on staff at Cal Poly and has volunteered to assist in designing ideal and less costly diets for the Zoo animals Foods that are common to multiple animals can be purchased less expensively in bulk, and then different components can be added to tailor to the dietary needs of each species This has been an effective program, increasing the benefit to the animals, while decreasing the cost to the City • Reduce Community Center Expenses ($40,000 annually) — The Colony Park Community Center is a new building with new equipment. As these assets age, more ongoing maintenance and equipment replacement will be necessary While the Center's budget can be reduced this budget cycle without much effect on the community, at some point, it will be necessary to increase this budget back to its original level in order to properly care for and maintain these assets. There may be a reduction in some services levels at the Center, but the cuts will not interfere with the City's core mission • Institute a Hiring Freeze for Vacant Positions (-$704,000 annually) — A hiring chill has been in place since May of 2008 As positions have become vacant, an analysis of each has been performed to determine if the position could be left vacant (frozen) There are currently seven frozen positions This has affected some service levels and programs but efforts have been made to reduce the negative impact on the City's core missions • Postpone Contribution to Lonq-Term Vehicle Replacement (-$125,880 annually) — The City has a number of vehicles with long-term replacements These are generally fire department apparatuses and streets vehicles with 20- to 30-year useful lives The City's policy is to make contributions from the General Fund to the Vehicle and Equipment Replacement Fund annually so that sufficient funding exists to replace the vehicle at the end of its useful life At this time of economic downturn, staff recommends postponing the General Fund contributions for these vehicles, and making them up at some point in the future This doesn't have any immediate effect on the community, but will increase the future replacement burden 219 ITEM C -1 DATE 04/28/09 • Suspend Contribution to Historic City Hall Operating Reserve (-$174,250 annually) - In December of 2003, the City staff were forced to move out of the Historic City Hall that had housed City services since incorporation While the historic icon was a beautiful place to work, it was a very expensive building to maintain Shortly after the earthquake when staff was evaluating the annual costs of maintaining repairing and replacing its temporary quarters vs the cost of maintaining, repairing and replacing Historic City Hall, it became apparent that there was a large discrepancy Rather than reduce each department's contribution toward building maintenance and replacement, it was decided to keep funding at the level that existed when the City was housed in Historic City Hall This would allow the City to put away funds to repair the building and would facilitate the funding transition of moving back into Historic City Hall Staff recommends reducing building maintenance funding levels to those needed to operate the current City Hall This action in effect will reduce the amounts put away to assist with normal repairs of Historic City Hall and the funding level will eventually have to be increased once staff moves back into Historic City Hall • Utilize Balance of Funds Remaining in Gas Tax Fund (-$76,510 each year) — Like the General Fund, the Gas Tax Fund has accumulated a positive fund balance over the years, by consistently coming in under budget. It is estimated that at June 30, 2009 the Gas Tax Fund will have $153,020 in reserves on hand Staff recommends reducing the General Fund contribution to the Gas Tax Fund by $76,510 in each year, effectively using these Gas Tax Reserves and bringing the Gas Tax Fund Balance to $0 at June 30, 2011 • Restructure Salary Source for Native Tree Planting Activities (-$16,690 annually) — Currently, one of the City's Parks employees performs Native Tree Planting duties, with that employee's salary and benefit costs being paid with General Fund money The portion of this employee's time that is committed to Native Tree Planting Activities will be paid from the Native Tree Planting Fund This will reduce the Native Tree Planting Fund amount available for operations and projects • Reduce Technology Intern (-$22.000 annually) — In July 2007, an intern was hired to assist City Technology staff with the various services that are provided internally Through the Technology allocation, each City department makes an annual contribution to the operation of the Technology department. This will cut the intern's current hours in half, which will proportionally reduce internal services to City employees • Streamline Chipping Program Expenses (-$18,000 annually) — The Chipping Program has historically been over-budgeted This program, while essential, can be streamlined in such a way as to eliminate excess budgeted expenditures While there might a slight decrease in service level to the public, staff believes that most goals of the chipping program can be accomplished with the proposed lower funding level • Elimination of Contract Janitorial Service for City Hall(-$21,000 annually) — Currently the City contracts out janitorial maintenance of City Hall Staff recommends eliminating this service contract and having City staff do the work. Maintenance service levels at all City Facilities will be lowered to accommodate the extra hours needed to clean City Hall 220 ITEM C - 1 DATE 04/28109 r Delay Vehicle Purchases for This Budget CVcle (-$35,430 in 09/10 and -$56,960 in 10/11) — The City has historically funded the future purchase of new vehicles with contributions to the Vehicle and Equipment Replacement Fund Similar to making car payments in advance, when a department's vehicle reaches the amount required to purchase a new vehicle, the old vehicle is replaced Staff recommends delaying purchases of replacement vehicles, along with suspending the corresponding contributions to the vehicle replacement fund for 2009-2010 and 2010-2011 This will increase the City's backlog of vehicles that need to be replaced until better economic times. • Reduce Additional Legal expenditures ($79,120 annually) — In a team effort to assist the organization in reducing costs, City Attorney Brian Pierik has analyzed his City contract and has proposed changes and reductions. Mr Pierik believes that staff can perform certain tasks in advance of seeking his assistance In doing this, costs can be significantly reduced but adequate service levels for the City can still be maintained • Reduce Capital Expenditures (-$86,760 annually)-.— Although historically only a small portion of the City's General Fund budget has been directed toward capital expenditures, the City has been able to purchase various pieces of equipment and other items that made staff more efficient, replaced necessary worn out equipment or furthered one of Council primary goals Staff is proposing that the funding level for capital expenditures be reduced This in effect defers the replacement of needed furniture, equipment and other capital items. • Other Operating Reductions (-$54,600 annually) — A multitude of other small dollar ter►' amount reductions will be implemented throughout the organization These items include things like installing alternate doggie bag stations that would allow us to use grocery or other plastic bags, turning off the lights in the jail, combining newspaper subscriptions, eliminating coffee and washing vehicles less frequently All of these small operating reductions will have an effect on the efficiency of staff and the service levels provided, however careful and analysis and planning will minimize the impact to core missions • Operational Increases (+$275,940 annually) - Although staff was able to reduce budgets in most areas, increased funding levels were required for liability insurance ($109 020), property tax collection ($56,140), animal control services ($30,810), and higher than anticipated employee costs due to low turnover ($25,050) In addition to these increases, reductions in gas tax revenues ($54,920) require an additional contribution of General Funds in order to keep current street maintenance service levels Layoffs The operating services and supplies, capital projects, and special projects have been carved up as leanly as possible Any additional decreases to the departmental budgets would impair the organization's ability to continue to deliver its core missions. Although great effort has been made to avoid decreasing employee services, at some point it becomes the only reasonable option left on the table Because the City is a service organization, historically 73% of the General Fund expenditures have been dedicated to labor and eventually, a reduction to labor costs becomes inevitable 221 ITEM C - 1 DATE 04/28/09 Many cost decreasing options have been investigated Information on voluntary furloughs and early separation programs were researched Expense by Category Unfortunately, the cost savings recognized by these Employee options were not sufficient to the close the remaining services Operating $700,000 - $800,000 gap 73% Supplies and The City Manager therefore services requests that Council find it 22% has become necessary to abolish positions of employment and authorize the City Manager to proceed with necessary staff layoffs This action is taken as a last resort -„ for the long-term fiscal healthII Special and of the organization It is a capital very serious matter as it Debt Projects concerns the positions that Services 5% are laid off, the community, o% and the resulting challenges for the remaining employee positions The City Manger has worked diligently to evaluate all of the positions in the organization selecting those in which the work, project, or program can be eliminated The objective is to remove the work associated with services not considered part of the City's core missions, and reduce expenses by the .fir amount associated position Positions that are already frozen will be included in the layoffs The impact to the community has been and will be thoroughly considered prior to any final decisions by the City Manger In addition, the Personnel Rules and Regulations will be carefully followed and any affected personnel will be provided with information explaining the layoff procedure and resources for services It is critical that all City staff is treated with respect during this challenging time, as this is indeed the most difficult era the City has faced in some time Summary The City is experiencing a financial crisis unequaled in proportion to anything it has been through for the last 15 years Revenues are down across the board For the first time in Atascadero history, property tax revenue growth is negative Sales tax revenues are down $1 million annually since the high point in fiscal year 2005-2006 Development, previously the City's third highest revenue source, is now at 4% of the General Fund Revenues. Compounding the problem, Property Transfer tax, Intergovernmental Revenues, Motor Vehicle in Lieu, Business License Tax, Gas Tax, Transient Occupancy Tax, Recreation Services, Pavilion Revenues, Administrative Charges and Interest Income are all trending downward Although the City is reaching out through economic development, tourism, infrastructure improvements, development permits streamlining, and a friendlier attitude toward business, it cannot change the economy overnight. General Fund reserves have been the City's saving grace during this time of turbulence Born out of the last fiscal crisis, the Council's Strategic Policy created reserves that hit a high of$11 million These reserves have been critical in the organization's efforts to maintain a constant 222 ITEM C - 1 DATE 04/28/09 °fir+ flow of services that make up the City's core missions Reserves are estimated to be$8 million by the end of fiscal year 2008-2009 The available data supports the judicial use of$1 million in reserves annually to help bridge the $4 0 million gap between revenues and expenses However, it is critical to retain prudent reserves. Prudent reserves take into account the level of General Fund expenditures, the inaccessibility of some of the reserves, and the potential for contingencies or emergencies As the City learned during the early 1990's, the need for reserves on hand is crucial to the fiscal health of the organization Several rounds of operating expense cuts have been made Each and every employee pitched in to try to reduce costs and cut programs that weren't essential to the City's core missions. This was a series of productive exercises, yielding $2 3 million in cuts However, even these drastic cuts to the already lean expenditure base aren't enough to close the gap left by the devastative revenues Because the City is a service organization, historically 73% of General Fund expenditures have gone toward labor This is a huge piece of the pie, and eventually, labor cost reductions must be investigated Several options were researched, including voluntary furlough and early separation programs None of these options resulting in savings sufficient to close the remaining $700,000 - $800,000 gap Therefore, it is with great difficulty that layoffs are considered Layoffs are necessary as they are only remaining viable solution for the long-term health of the City This is a serious measure and is done as a last resort. The layoff process will be done respectfully and fairly, addressing those positions in which the program or associated work can be eliminated No individual personnel will be targeted All existing frozen positions will be included in the layoff The effected personnel will be provided with information explaining the layoff procedure and resources for services Staff will continue to keep the Council informed with regular budget updates. 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O N 0 0) N O V N N 0 L O y O COco N , Q✓ d i O O N O U 7 O ¢ to Cn i r c -pp N c 0 m0) ZcaE r, o U � U. r, 0 5 E3G wo-00 o 43) (n CD 0 s � � cn v U S- N N N O N T'C C i ce , p '� N N -0 N Q W 0 CO00 NWoco o N0c0c N_ 00 o i 0 - " 3 N co � U N U r 0 O � W O � 0 a� N dJ � � Go UO .� N ON .14 0 ,. 00 Soo 00 o W '� � Ul vm � C . - E oar 0 . 3: is ° rjLl- c E ::5 X'. j Z J O cc os 0 0 m� p .0 Z5 V � N O :0 �j N CO N N W G W . . N Oro cd W CL p r y c0 N 4 3 cC v 'pv) W ►� N0 U. co rto V C 0 `n et ��-o V °� � E . o 0-0 a) N O o 0 d N N 0. @ p o ScO 6 W to Q Y N } 0 v� � NrQ N Attachment F �F? ITEM NUMBER. c -1 DATE 08/11/09 I�h r 0 F rr: r t ,.r w *4W kwl Atascadero City Council Staff Report - Administrative Services Department Budget Amendment and Update RECOMMENDATION Council adopt Draft Resolution to amend the 2008-2009 fiscal year budget. REPORT-IN-BRIEF On July 28, 2009 the Governor signed a $24 billion budget that included the following grabs and borrowing from the City and Agency- 1 $700,000 Proposition 1A borrowing of General Fund property taxes 2 $1,334,00 (2009/2010) and $275,000 (2010/2011) take of Redevelopment Increment 3 Possible delay in Gas Tax Payments (pending) The results are not good, but they are better than what was expected The City's fiscal planning, conservative fiscal policies, diligent monitoring and adjustments, continue to ensure that the City is positioned to weather the economic downturn and state grabs DISCUSSION History The current economic downturn has hit government agencies hard and the cities and State have not been spared The City of Atascadero is experiencing unparalleled reductions in most revenue sources including property tax, sales tax and development service fees These downturns coupled with the State's latest hit to the City's finances will be difficult, but not catastrophic This City has been preparing for this economic downturn for the last 10 years or more The City Council has adopted Financial Strategies, examined reserve levels, discussed fiscal sustainability, encouraged a revenue education program, surveyed citizens regarding potential tax increases, invested in a fiscal analysis of housing, prepared and 231 ITEM NUMBER. C -1 DATE 08/11/09 reviewed SWOT (Strengths, Weaknesses, Opportunities and Threats) analyses, and spent numerous hours discussing, amending and adjusting various budgets and financial plans, all the while consistently directing staff to implement a conservative fiscal philosophy with a focus toward long-range fiscal stability Staff has unswervingly worked towards Council's fiscal goals using not only staff knowledge and time, but also taking advantage of resources from other cities, professional organizations, community members and consultants such as HDL, David Taussig, Piper Jaffrey, Revenue Cost Specialist, Keyser Marsten and a host of other government finance experts All of the thousands of hours spent planning the City's financial future brings us to where we are today Today As of June 30, 2009 it is estimated that the City's General Fund has around $8 million in reserves, its revenues are projected to be down 13% from its peak in both of the coming two fiscal years, the City budget includes the use of$1 million in reserves in each of the next 2 fiscal years, and the adopted budget closed a $4 5 million gap by- • Reducing citywide services and supplies • Eliminating 14 positions (either through chills or layoffs) • Reducing funding for roads • Suspending or reducing annual reserve contributions • Reducing travel and training • A multitude of other reductions which are enumerated in the April 28, 2009 staff report to Council In developing a fiscal plan for the 2-year budget cycle, the City had to focus on core missions, developing a strategy that would work for both the long-term and short-term health of the organization and community This meant using reserves, eliminating some services or programs (such as the Sunken Gardens Flea Market, "Start-Smart", and non-sport turf areas at Paloma Park), reducing other service levels (trash cans not emptied as often, thermostats adjusted, front counter personnel reduced, turf areas will not be as green), adopting a policy of no new programs, focusing on economic development, increasing fiscal communications and always looking for opportunities The City plans to respond to the State budget takes in the same manner, focusing on core missions, using reserves prudently, looking for ways to tighten budgets, and taking advantage of opportunities State Budget On July 28, 2009 Governor Schwarzenegger signed the State budget into law Although at one point in the budget negotiations Sacramento was threatening to hit cities with takes or borrowing of 4 types of revenues, in the end only the Proposition 1A Borrowing and the take of Redevelopment Agency increment were fully implemented A proposed grab of Gas Tax funds was defeated (leaving a pending potential delay to the City's gas tax payments) and the threat to Proposition 42 Funds never materialized *00 232 ITEM NUMBER. C 1 DATE 08/11/09 *OW As of July 30, 2009, many questions still remain and details are sketchy; however below is a discussion of the revenues affected and current financial strategies being developed Proposition 1A Proposition 1A has been extremely useful in defending local funds against the raids of the State Prop 1A does allow borrowing, but under constitutional regulations 1 Up to 8% of total local property tax is eligible to be borrowed (The adopted legislation includes an 8% borrowing from each local jurisdiction "Hardship Exemptions" may be granted in certain instances If a "hardship exemption" is granted to a jurisdiction, the loans from other local jurisdictions within the same county will increase proportionately to cover the amount of the hardship exemption ) 2 The funds must be repaid within 3 years with interest (June 30, 2013) 3 The funds may be borrowed twice in a 10 year period 4 The funds must be repaid before borrowing again Statewide, $2 billion in property tax revenues will be borrowed from local governments Atascadero will be forced to loan an estimated $700,000 of General Fund revenues to the State This forced loan was not unexpected and staff has been looking at several possible solutions to this forced loan including the following 1 The adopted State budget contains securitization language that is expected to Now,, allow Cities to borrow funds through a Joint Powers Authority Since the budget was adopted just days ago, details on this loan program are not available, and staff continues to monitor the situation to determine if the participation in the potential loan program would be advantageous to the City 2 There are City funds which have available cash that is not programmed for expenditure within the next 5 years While the General Fund may not take these funds, in some instances it is allowed to borrow the funds, repaying them at a later date with interest. This potential solution, along with the others continues to be developed and monitored so that once the details of all of our options are known, the City can chose the solution or combination of solutions that works best. 3 The City has prudently set aside reserves in good times to get us through the tough times that we are facing Although the books are not closed, it is estimated that at June 30, 2009 the general fund has almost $8 million in reserves ($4 million of which are "available") The City's current reserve policy is to use no more than $1 million of reserves in each of the next 2 years to balance the budget, leaving $6 million of reserves that the State loan could be taken out of These reserves may also be needed to fill future budget gaps, and current reserve policy is to not drop below the $4 million in reserves Since these funds will be paid back by the State no later than June 30, 2013, the City could use reserves to fund the loan to the State 4 The City could also make further budget cuts to make up for the loan, spreading the cuts over 1-5 years While staff is not currently considering making $700,000 worth of budget cuts to 2009/2010, it is prudent in these economic times to 233 ITEM NUMBER. C -1 DATE 08/11/09 continue with the City's conservative fiscal policy of continuing the hiring chill, 1- fto and budget tightening measures, while looking for economic opportunities It is expected that potential hiring chills and further budget tightening measures already identified could save $400,000 more than budgeted, making up the $700,000 in less than 2 years Redevelopment Increment The Redevelopment Increment is the Redevelopment Agency's allocation of property tax. The General Increment revenue projection for fiscal year 2009-2010 is approximately $2 3 million Approximately $850,000 of this is used for bond payments, leaving $1 5 million for operations and projects in the Redevelopment Agency such as Economic Development, Administration, maintenance of the Sunken Gardens, current City Hall building maintenance, Zoo Restroom and Entrance project, Downtown Streetscape project, Downtown Parking Improvements, Property Tax Collection costs, Debt Services, and Historic City Hall The State is taking over $2 0 billion statewide of RDA Increment, which for the Agency amounts to $1,334,000 on May 10, 2010 and $275,000 on May 10, 2011 The California Redevelopment Association (CRA) recently won the case against the State for the $275,000 grab that was slated for fiscal year 2008-2009 The State believes they have found a way around the court ruling that allows them legal access to the funds The CRA disagrees and will continue to fight the State on this issue If the CRA is unsuccessful in its attempt to legally stop the take of the RDA Funds, the Agency will not only lose over $1 5 million, but it also has the potential to affect creditors' confidence in RDA increment as a revenue source, thus limiting redevelopment agencies' ability to issue bonds While larger than expected, this second attempt at a grab of Redevelopment Funds was not unexpected The Agency budget adopted in June was a fiscally conservative budget. Because of uncertainties in the bond market, the budget was designed to ensure that the projects funded as part of the budget cycle could be completed, if necessary, without the issuance of bonds Factors currently under consideration by staff to address the $1 5 million grab include those listed below 1 The adopted legislation includes provisions to suspend all or part of the required allocation to the Low/Moderate Income Housing Fund Details on implementation, limitations, and restrictions are not yet defined, however we know that these funds would have to be paid back by 2015 Failure to pay back these funds in time would cause the required amount of Low/Mod restricted funds to move from 20% to 25% for the remainder of the life of the Project. 2 The adopted legislation also permits the Agency General Fund to borrow Low/Moderate Income Housing Funds Again details are not known, however, a finding that there are insufficient funds to meet obligations for the applicable fiscal year would need to be made These funds would also have to be paid back by 2015 3 The Agency currently has enough increment or bonding capacity to issue more bonds In a "normal" bond market / economic climate, the Agency would 234 ITEM NUMBER. C 1 DATE 08/11/09 currently be looking at issuing bonds as part of the normal course of its life as a redevelopment agency in these economic times though, staff is monitoring how the bond market reacts to the adopted State budget and in particular it raid on RDA funds If market conditions make it advantageous to issue bonds, the RDA has the capacity to do so 4 There are City funds, such as the Wastewater Fund, which have available cash that is not programmed for expenditure within the next 5 years The Agency could enter into a loan agreement with the City fund This loan could benefit both the loaning fund as it earns a lucrative interest rate, and the Agency 5 In keeping with the Agency's conservative fiscal policies, the Agency is seeking ways to further tighten operations and is looking to delay the Downtown Parking Improvement Project. 6 The budget legislation includes a one-year extension on the Agency's life if the Agency makes its ERAF payments in a timely manner While this is not a solution to the grab, this seems to provide an opportunity for the Agency Currently if the Agency were able to borrow or suspend the entire grab by State, it would be able to complete all of its currently budgeted projects and pay back the loan / suspension in 2013/2014 (One year prior to the deadline) Staff will continue to monitor the situation (legal, legislative and economic) and will work to determine which combination of suspending payments, borrowing funds and/or trimming expenditures will work best towards the Agency's goals and fiscal health As with all fiscal plans and budgets, communications and adjustments will be brought before the Agency's Board as information becomes available or the situation changes Gas Tax (HUTA) Gas Tax is the common name for the Highway Users Tax (HUTA) This is the 18 cents per gallon that is paid at the gas pump The City receives a portion of that revenue which amounts to about $500,000 annually It is used for the operations of the Streets Department for payroll, pavement markings, street lights, drainage maintenance, signal maintenance, and road signs among other things Gas tax revenues are deposited in the Gas Tax Fund, separate from the General Fund, but as gas tax revenues are taken by the State, they must be backfilled with General Fund dollars As late as July 23rd, 2009 it looked as if the State would take nearly all of the City's Gas Tax in 2009-2010 and 2010-2011 Luckily this State grab failed in the Assembly and there was no State grab of Gas Tax included in the current adopted budget. There was, however, language that was adopted in preparation of the State grab that delays Gas Tax payments It is uncertain at this time whether the delay language is actually valid since the grab did not pass This is a pending issue that is expected to be resolved through clean-up legislation In keeping with the City's policy of being fiscally conservative, staff is recommending that some funds be reallocated This reallocation of funds would better position the City to weather any delays in Gas Tax funding payments and future potential grabs by the State 235 ITEM NUMBER. C 1 DATE 08/11/09 The fiscal year 2008-2009 budget had $321,000 budgeted in the Gas Tax fund for the San Andres Road Rehabilitation Project. By switching the funding source for this project to the Local Transportation Fund (LTF), $321,000 is freed up in the Gas Tax Fund This switch is important because while Gas Tax Funds may be used for street operations or street projects, LTF funds may only be used for street projects This switch would free up the street operations funds needed for traffic signals, street striping and other street operations that are critical to the safety of the community The effect of this switch would be a temporary delay in the LTF funded Atascadero Avenue Overlay Project. Staff also recommends a temporary delay of the San Luis Avenue Overlay Project, and the San Ramon Overlay Project which are funded through Traffic Congestion Relief Funds Delays in these projects allow the City to hold onto precious street operations funds until such time as the fallout from the State budget is known and we are confident that the State will not need to look to Gas Tax funds to balance future budget shortfalls Once the City is confident that Gas Tax Funds are safe, these three projects can once again move forward Staff will continue to monitor the situation and report to Council as things change Summary The State plans on taking over $2 million of Atascadero revenues within a two-year period, and borrowing another $700,000 This is terrible news, but given the State's track record for siphoning off local funds, this wasn't unexpected The City has been carefully positioning itself to be able to thoughtfully respond to the State's decisions While cost-cutting is never easy, it is being done in a measured manner, at the rate necessary to keep the delicate balance between the City's responsibilities to provide quality services to the public with its need to maintain fiscal health The City's financial plan will continue to evolve and adapt as new developments arise, and fiscal realities change Staff will carefully monitor the revenues and expenses, and the actions of the State that affect local government. Until more is known, staff will move forward with budget tightening and the budget adjustment, if approved by Council Through this process, the City will be strategically positioned to take advantage of opportunities and to provide mission critical services to the community, while still maintaining the health of the organization FISCAL IMPACT The proposed budget reallocation will move $321,000 in expenditures from the Gas Tax Fund to the Local Transportation Fund ATTACHMENT Draft Resolution of the City Council of the City of Atascadero Amending Fiscal Year 2008-2009 Budget •.r0° 236