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HomeMy WebLinkAboutCC Resolution 11445 (Budget Amendments)RESOLUTION NO. 11445 A Resolution of the San Rafael City Council amending the 2003-2004 Budget WHEREAS, the City Council approved Resolution 11359 adopting the Fiscal Year 2003-2004 two year budget; and WHEREAS, additional funds are required for some City operations; and WHEREAS, it is the intention of this Council to review recommendations from staff regarding the City's financial condition, including revenue projections and available resources and provide funding for various ongoing, capital and other service needs; and WHEREAS, the City Manager has submitted to the City Council a report outlining the additional budget items; and WHEREAS, after examination, deliberation and due consideration, the City Council has approved the same report and recommendations. NOW, THEREFORE, BE IT RESOLVED, by the San Rafael City Council that Resolution 11359 for fiscal year 2003/2004 is amended to adjust total expenditures up by $839,390 for the City budget to reflect a sum of $61,868,087 and reduce total revenues by $37,731 to bring projected revenues to a total of $59,367,169 as presented in the staff report and related Exhibits I & II, and I JEANNE M. LEONCINI, Clerk of the City of San Rafael, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting of the Council of said City on Monday, the 17th of November, 2003 by the following vote, to wit: AYES: COUNCILMEMBERS : Cohen, Heller, Miller, Phillips & Mayor Boro NOES: COUNCILMEMBERS : None ABSENT: COUNCILMEMBERS : None JEA NE M. LEONCINI, City Clerk MManagement services- WorkFile\Finance- WorkFile\Council Materia1\Reso1utions\2003\#1 Amend City budget 03-04 mid yr.doc HILTON FARNKOPF ` .-iOBSON, LLC Advisory Services to — Municipal Management 2175 N. California Boulevard, Suite 990 Walnut Creek, California 94596 Telephone: 925/977-6950 Fax: 925/977-6955 www.hfh-consultants.com Sent via a -mail; original by mail November 14, 2003 Mr. Kenneth A. Nordhoff Assistant City Manager/ Director of Management Services City of San Rafael P.O. Box 151560 1400 Fifth Avenue San Rafael, CA 94915-1560 Northern California Southern California Central California Robert D. Hilton, CMC John W. Farnkopf, PE Laith B. Ezzet, CMC ATTACHMENT A Subject: Refuse Vehicle and Construction Vehicle Impact Analysis - Final Report Reference Number: S1927 Dear Mr. Nordhoff: Hilton Farnkopf & Hobson, LLC (HF&H) was engaged by the City of San Rafael (City) to analyze the impact of residential solid waste, recycling, and yard waste vehicles (Refuse Vehicles) on residential street maintenance costs. The City subsequently expanded the scope of the engagement to include analyzing the impact of commercial Refuse Vehicles on collector and arterial street maintenance costs and the impact of Construction Vehicles on the City's residential, collector and arterial street maintenance costs. This report communicates our results. We have also included a summary of a recent legal opinion regarding the validity of imposing a Refuse Vehicle impact fee (Attachment 1). Our analysis is based on available information related to annual street maintenance costs, traffic volumes and vehicle profiles, the types of Refuse and Construction Vehicles providing service in the City, the weights and axle configurations of those vehicles, and service frequency. Should there be material changes to that information in the future, the City may wish to review the results of the analysis and make appropriate changes to the calculated impacts and associated fees that might be established. Objective To estimate the portion of the City's residential, collector and arterial street maintenance costs attributed to Refuse and Construction Vehicles. Approach The underlying premise for the analysis is that the weight and loading of Refuse and Construction Vehicles impose a particular, specific, and identifiable impact on residential, collector and arterial streets that can be quantified in terms of the portion of the annual HILTON FARNKOPF & HOBSON, LLC Mr. Kenneth A. Nordhoff November 14, 2003 Page 2 of 9 maintenance cost attributed to those vehicles. The analysis is based on the fact that the typical residential, collector and arterial street is designed to handle a certain amount of vehicle traffic (loading) over its design life, with that loading a function of both the number and weight of vehicles. The lifetime "vehicle loading" that a street can accommodate can be expressed as the total number of Equivalent Single Axle Loads (ESALs). Each vehicle type (e.g., cars, Refuse Vehicles, Construction Vehicles, and other trucks) can also be converted into an associated ESAL, based on the vehicle weight, and its distribution among the vehicle's axles. By projecting the type and number of vehicles that will travel on a street over its design life, the total number of ESALs can be calculated and the street designed to handle that projected loading. Similarly, the relative impact of each type of vehicle on that street can be calculated, based on the percentage of the total available loadings attributed to each vehicle type. Findings Refuse Vehicle and Construction Vehicle Impacts on Residential Streets Based on the specified methodology and assumptions, we project that Refuse Vehicles account for approximately 12 percent of the total loadings (ESAL) that a typical residential street experiences, as shown in the following table (Attachment 2 contains a copy of the more detailed supporting analysis). Assuming a similar percentage of the associated maintenance cost can be attributed to Refuse Vehicles, this is equivalent to approximately $196,000 annually (� $1.65/ residential account/month). Construction Vehicles account for approximately 20 percent of the total residential street ESAL loadings. This is equivalent to approximately $322,000 in annual street maintenance costs or 1.03 percent of the total annual value of residential construction permits issued in the City. Total ESAL Loadings / Annual Vehicle Type Average ESAL / Trips /week / Vehicle T e Type Percent of Total Maintenance Vehicle Vehicle Type Weekly 20 -yr Lifetime Cost Solid Waste Vehicles 2.019 1.0 2.02 2,100 6.3% $ 101,000 Yard Waste Vehicles 1.495 0.5 0.75 777 2.3% $ 37,000 Recycling Vehicles 0.580 2.0 1.16 1,207 3.6% $ 58,000 Other Trucks 0.240 61.2 14.68 15,271 45.6% $ 731,000 Construction Vehicles 0.923 7.0 6.46 6,722 20.1% $ 322,000 Automobiles 0.00080 8,888.3 7.11 7,395 22.1% $ 354,000 Total 8,960.0 32.18 33,472 100.0% $ 1,602,382 Total Refuse Vehicle Impact = 12.2% $ 196,000 Total Construction Vehicle Impact = 20.1% $ 322,000 HILTON FARNKOPF & HOBSON, LLC Mr. Kenneth A. Nordhoff November 14, 2003 Page 3 of 9 Accordingly, if the City wishes to recover the full residential street maintenance cost attributed to residential Refuse and Construction Vehicles it would assess the residential collection franchisee (Marin Sanitary Service) an annual fee of $196,000 and set a fee of approximately 1.0 percent on the valuation of all residential construction permits. It should be noted that the impact of both residential Refuse and Construction Vehicles calculated above is specific to residential streets. Those vehicles, however, also travel on collector and arterial streets to access residential neighborhoods and exert an associated impact on those streets as well, which is not reflected in the above analysis. Refuse Vehicle and Construction Vehicle Impacts on Collector and Arterial Streets While it was the intention of the study to model the impact of Refuse and Construction Vehicles on collector and arterial streets as well as residential streets, key data specific to the impact of those vehicles on collector and arterial streets, similar to that available for residential streets, was not available (e.g., the number of commercial Construction Vehicle trips), or was suspect (e.g., commercial Refuse Vehicle axle configurations). Accordingly, we have not included an analysis of that impact as part of this report. Should data become available in the future that would allow for an effective modeling of those impacts, the City may wish to perform the associated analysis. Overview Road maintenance is based on deterioration. While roads will deteriorate if simply left unused, most deterioration is associated with use. The damage caused by vehicles increases much more than proportionately with size and weight. Hence, maintenance costs are greater for trips made by heavy vehicles. A single, large truck can cause as much damage as thousands of automobiles, and a truck's configuration can affect the amount of damage as well. If the load is spread over more axles, allowing for less weight on each wheel, then damage is reduced.' Refuse and Construction Vehicles are generally some of the heaviest, if not the heaviest, vehicles regularly operating on residential streets. Accordingly, Refuse and Construction Vehicles contribute significantly to the cost of maintaining those streets. It is generally acknowledged that preventative maintenance is the single most important component of an effective pavement management program, and that each dollar spent on preventative maintenance now saves as much as $5 or more in future costs. The key is to maintain streets and roads in good condition (at a relatively low cost), rather than allowing pavement to deteriorate to the point where extensive rehabilitation or reconstruction becomes necessary. The unit of measure used to rate the condition of pavement is the Pavement Condition Index (PCI), which rates pavements on a score of 0 to 100. The City's streets have an average PCI of I Rufolo, Cost -Based Road Taxation, Cascade Policy Institute, Policy Perspective #5, November 1995. dft HILTON FARNKOPF & HOBSON, LLC Mr. Kenneth A. Nordhoff November 14, 2003 Page 4 of 9 60.2 While this falls within the category of "good" (60-74), pavement at the low end of this range, as is the case with the City's streets, have significant levels of distress and may require a combination of rehabilitation and preventative maintenance to keep them from rapidly deteriorating. Rapid deterioration of pavement typically occurs after roadways drop to a PCI score of 60 or lower,3 therefore, assuring adequate funding for an effective pavement management program for the City's streets is critical. Delays in preventative maintenance increase the quantity and severity of pavement defects, and result in higher costs during pavement life. Consequently, using only a routine and reactive approach will considerably increase the life cycle costs of the pavement. 4 A recent study, conducted by HF&H for the City of Petaluma, projected the annual maintenance cost impact of Refuse Vehicles on residential streets at approximately $1.3 million. The City of Modesto estimated the annual damage to streets and alleys associated with garbage trucks to be $1.7 million, while the City of Santa Rosa projected the annual load -related damages of garbage trucks to be approximately $5 million over the next 10 years. A number of neighboring jurisdictions have also established fees based on the valuation of construction permits to cover the cost of street maintenance associated with Construction Vehicles. The County of Marin set a fee equal to 1.0 percent of the valuation of construction permits (excluding permits of less than $10,000), while the City of Sausalito set a fee of 0.85 percent. The cities of Belvedere and Larkspur both set fees at 0.75 percent, while Larkspur set a fee at 0.70 percent and the Town of Ross established a fee equal to 0.5 percent of the valuation of construction projects. Methodology The methodology used to project the impact of Refuse and Construction Vehicles can be summarized as follows: Determine Number of Vehicle Trips by Vehicle Tvve • The City provided an estimate of the total number of daily vehicle trips on typical streets, and the percentage of those trips associated with trucks (vs. automobiles) based traffic count analyses that it had conducted; • The number of trips associated with residential Refuse Vehicles was determined based on information provided by Marin Sanitary Service (Company); • The number of trips associated with residential Construction Vehicles was based on survey data obtained by the City; 2 Based on the City's Pavement Management Program. As a point of reference, the Metropolitan Transportation Commission reported an average Bay Area Local Streets and Roads PCI of 66% (Street Talk. Volume 15, Number 2, July 2002). 3 Ibid, "Current Issues in Pavement Maintenance and Management." 4 A Pavement Preventative Maintenance Program; Larry Galehouse, P.E., L.S.; Michigan Department of Transportation. HILTON FARNKOPF & HOBSON, LLC Mr. Kenneth A. Nordhoff November 14, 2003 Page 5 of 9 The number of trips associated with trucks other than Refuse and Construction Vehicles (Other Trucks) was determined by subtracting the number of trips associated with Refuse and Construction Vehicles from the total number of truck trips; 5 and • The number of trips associated with automobiles was determined by subtracting the number of trips associated with Refuse Vehicles, Construction Vehicles and Other Trucks, from the total number of vehicle trips.6 Determine the Impact of Each Vehicle Tune • The impact of each of the above vehicle types was determined based on the estimated average weight of each vehicle type and the distribution of that weight among the velucles axles. This impact was expressed as an average ESAL for each vehicle type; • The total ESALs associated with each vehicle type was calculated by multiplying the average ESAL for each vehicle type by the average number of vehicle trips associated with that vehicle type; • The total ESALs experienced by a typical street was calculated by adding together the ESAL loading of each vehicle type, as determined above; • The relative impact of each vehicle type on a typical street was calculated by dividing the total ESALs associated with each vehicle type by the total ESALs experienced by a typical street, as determine above; and • As a reasonableness check, the total ESAL's calculated above for a typical residential street was compared to the typical industry ESAL street design standards used by various California jurisdictions, including the City. Proiect Maintenance Costs Associated with Each Vehicle Tv -pe To project the maintenance cost associated with each vehicle type, the City's total annual street maintenance cost was allocated in proportion to the calculated relative impact of each vehicle type, as determined above. Key Assumptions/Inputs The analysis that was conducted relied in part on the following key assumptions that were provided largely by the City and the Company, supplemented with data from other sources, as noted; 5 Based on data provided by the City. 6 Ibid. &A _ HILTON FARNKOPF & HOBSON, LLC Mr. Kenneth A. Nordhoff November 14, 2003 Page 6 of 9 General - (Applicable to Both Refuse and Construction Vehicles) • An average of 1,280 vehicles travel on a typical residential street each day over its lifetime, with 0.8 percent of those vehicles being trucks. On average a residential construction vehicle makes one pass down each residential street segment each day; • Axle weight data for cars and Other Trucks was based on data from a variety of sources including a recent study conducted by the Parsons Transportation Group (Parsons Report), and the American Association of State Highway Transportation Officials (AASHTO); • The average annual residential street maintenance cost is $14,800 mile per year; and • There are currently a total of 108 miles of streets in the City designated as residential streets. Refuse Vehicles • There are currently a total of 9,887 residential accounts in the City; 7 • Residential solid waste and recycling service is provided weekly, while yard waste service is provided biweekly; • Residential solid waste and yard waste vehicles travel on each residential street segment once to provide service (i.e., they service one side of the street on a single pass), while recycling vehicles make two passes down each street segment to provide service,$ • Refuse Vehicle tare weight and payload weight data was provided by the Company, supplemented with industry data, as necessary. Axle weight distribution profiles were based on data provided by vehicle manufacturers for similar vehicle types. Construction Vehicles • The annual value of residential building permits issued in the City during fiscal year 2002- 2003 was $31,280,0009; and Construction Vehicle tare and payload weight data and axle weight distribution data was based on information contained in the Parsons Report. Using the assumptions noted above, and other relevant data, the annual residential street maintenance cost associated with Refuse and Construction Vehicles was calculated following the previously described methodology. 7 Marin Sanitary Service (Mardell Sarkela (4-3-03)), 8,151 accounts in San Rafael service area; 1,736 in Los Galinas Sanitary District within the City of San Rafael. 8 The analysis does not account for any additional passes due to vehicle routing (e.g., "dead -heading' over a previously serviced street). Also, the Company stated that solid waste and yard waste vehicles do make two passes down certain streets. 9 Based on records from the City's Community Development Department. —� HILTON FARNKOPF & HOBSON, LLC Mr. Kenneth A. Nordhoff November 14, 2003 Page 7 of 9 Limitations • Our analysis does not account for the impact of factors not specifically identified (e.g., underground utilities and pavement cuts). • Our analysis is based on a number of underlying assumptions, including: — Average annual/ lifetime residential street maintenance costs, — Total number of vehicle trips per residential street segment per day per vehicle type, — The percentage of those vehicle trips associated with Other Trucks and Construction Vehicles, and — The average ESALs associated with the various vehicle types considered in the analysis. Changes in those assumptions may have a material impact on the resulting findings. Sensitivity Analysis As noted in the Limitations section above, our analysis is based on a number of key assumptions, and that changes to those assumptions may have a material impact on the resulting findings. The following information summarizes the relative impact of changes in our key assumptions on the projected street maintenance costs associated with Refuse and Construction Vehicles. Maintenance Costs Our analysis assumed an average annual residential street maintenance cost of $14,800 per mile, based on City -provided information. Changes to the assumed average annual maintenance cost have a direct proportional impact on the projected "cost" of residential Refuse and Construction Vehicles (e.g., a change in the assumed annual maintenance cost of 10% would result in a 10% change in the associated cost impacts). It should be noted that reported annual maintenance costs often vary widely among jurisdictions. In some cases, this may be due to differences in the level of maintenance and maintenance schedules, and the corresponding condition of a city's streets. By comparison, the City of Petaluma reported an annual maintenance cost of $43,000 per mile.10 The City of Fort Collins, Colorado reported an annual maintenance cost of approximately $17,000 per mile.11 Refiise and Constnictim Vehicle Trips Changes in the number of trips assumed for Refuse and Construction Vehicles has a direct effect on the projected maintenance cost (e.g., the calculated impact for a Refuse Vehicle that makes two passes down each street segment is twice that of a Refuse Vehicle that makes only one pass). The number of trips associated with residential Refuse Vehicles is fairly well established given the specific collection schedule and the means of collection (i.e., one pass or 10 The City of Petaluma reported an average PCI of approximately 4140, with a target value of 70%. Accordingly, substantial effort and cost is required to bring the City's streets up to their target PCI value. 11$2001 (based on $14,000 ($1994) escalated at CPI). 0HILTON FARNKOPF & HOBSON, LLC Mr. Kenneth A. Nordhoff November 14, 2003 Page 8 of 9 two pass). The number of Construction Vehicle trips is was based on survey data obtained by the City. Total Vehicle Trips and Percentage of Vehicle Types Changing the number of total vehicle trips (without changing the number of Refuse Vehicle or Construction Vehicle trips), affects the projected maintenance costs in roughly inverse proportion (e.g., doubling the number of total vehicle trips reduces the maintenance cost impact of Refuse and Construction Vehicles by about half, while cutting the number of total vehicle trips in half roughly doubles the maintenance cost). Changing the percentage of total vehicles that are assumed to be Other Trucks has a material impact on the analysis. The impact (ESAL loadings) of Other Trucks is relatively substantial, therefore, as the percentage of Other Trucks increases the relative impact increases while the relative impact of all other vehicles decreases. There is a similar relationship with cars, however, that impact is not as significant due to the lesser relative impact of cars. Equivalent Single Axle Loadings (ESAL) Changes in the assumed ESAL for both Refuse and Construction Vehicles has a roughly proportional affect on the calculated impact. If we double the associated ESAL the impact roughly doubles. Similarly, if we reduce the assumed ESAL by half the impact is reduced by about 50 percent. While we have attempted to estimate the ESAL's for Refuse and Construction Vehicles as accurately as possible, those calculations are highly sensitive to assumed vehicle weights (both loaded and unloaded) and the distribution of that weight among the vehicles axles. In the case of Refuse Vehicles the Company provided vehicle weight data and the number of axles, and we used axle weight distribution data provided by manufactures for similar types of equipment. In the case of Construction Vehicles data specific to the types of construction vehicles operating in the City, their weight, and the distribution of that weight among the vehicles axles could not be established directly due to the numerous and varied nature of that data. Therefore, we modeled the impact of Construction Vehicles using data taken from the Parsons Report, as previously discussed. The associated analysis is highly sensitive to changes in the underlying assumptions. Finally, the assumptions regarding the ESAL's of Other Trucks and automobiles also affects the calculated impacts associated with Refuse and Construction Vehicles. Changes in the assumed ESAL's of Other Trucks and cars has an inverse effect on the calculated impact of Refuse and Construction Vehicles (i.e., as the assumed ESAL of Other Trucks and/or cars increases the calculated impact of Refuse and Construction Vehicles decreases and visa versa). The impact of changes in the Other Truck ESAL, however, is much more significant than similar relative changes in the ESAL of cars since the overall relative loadings of Other Trucks are more significant. HILTON FARNKOPF & HOBSON, LLC Mr. Kenneth A. Nordhoff November 14, 2003 Page 9 of 9 Legal Opinion In Howard Jarvis Taxpayers Association v. City of Los Angeles, the court reaffirmed that: (1) a fee imposed on a user (such as a refuse collection company) rather than a property owner is not a property related fee; and (2) a fee may not exceed the cost of service or facility provided. A recent legal opinion from Betsy Strauss, Esq., City Attorney for the City of Rohnert Park and Special Counsel to the League of California Cities, found that such a fee: • Is a (regulatory) fee, not a tax, provided the amount of the fee does not exceed the sum reasonably necessary to cover the costs of the regulatory program (street maintenance); • Is not subject to the procedures and restrictions of Proposition 218, because it is not a property -related fee or charge, since it will not be imposed on property owners for a public service having a direct relationship to property ownership; • Would require a study that considers appropriate jurisdiction -specific factors necessary to substantiate the basis of the amount of such a fee; and • Would be lawful to include in any new refuse collection franchise, and may be possible to impose during the term of an existing franchise, provided certain conditions are met. A more detailed legal opinion is provided in Attachment 1. We appreciate the opportunity to be of service to the City. If you have any questions regarding this submittal, please do not hesitate to call me directly at (925) 977-6952, or William Schoen at (530) 759-1651. Very truly yours, HILTON FARNKOPF & HOBSON, LLC Robert D. Hilton, CMC President Attachment 1- Legal Opinion on the Validity of Imposing a Refuse Vehicle Impact Fee Attachment 2 - Supporting Spreadsheet Analysis W:\Management Services- WorkFile\Finance- WorkFile\Refuse-waste service\impact fees\Final Report 111403.doc 11-14-03 11:32 From -Hilton Farnkopf & Hobson,LLC Davis 15301591655 BETSY STRAUSS Attorney atLaw VIA FACSIMILE July 19, 2002 William Schoen Hilton Farakopf & Hobson 2940 Spafford Street, Suite 210 Davis, CA 9616 Dear William: T-162 P-002/000 F-466 Attachment 1 Hilton Farnkopf & Hobson has requested that i provide a legal opinion on the validiry of imposing a refuse vehicle impact fee_ The purpose of this letter is to set forth that opinion. The Residential Refuse Vehicle Impact Fee . The residential refuse vehicle impact fee is a fee imposed on a refuse hauler to defray the impact of residential refuse vehicles on the cost of maintaining residential streets. The fee would be imposed upon, and payable by, the city or county's refuse hauler. The fee is based upon the assumption that the weight and loading of refuse vehicles impose a particular, specific, and identifiable impact on residential streets that increases the cost of maintaining those streets and reduces their useful life, The Factual Assumptions The analysis in this letter is based upon the following factual assumptions: 1 _ The useful life of a typical residential street is 20 years. An average of 250 vehicles travel on a typical residential street each day over its lifetime, with 4% of those vehicles being trucks other than refuse vehicles. 2. Roadway maintenance is based on deterioration. There are three primary causes of roadway damage: aging of asphalt (20%); sun, rain, and other weather conditions (20%); and vehicle impact (609/6). 3: The weight of the refuse vehicles (as well as other vehicles) and the munber of axles are significant factors in the calculation of impact. The damage caused by vehicles does up much more than proportionately with size and weight, 4. The impact of a vehicle on a residential street is measured in terms of single axle equivalents (SAE)_ One car is equal to _0008 SAE. One trash truck; one-half full is equal to 0.379 SAE (or 475 cars). One single axle trash truck, one-half full is 1595 KingAvenue Nada, CA 94559 (707)253-005 Fax (707)25,9--989,2 munilaw@aol.com 11-14-03 11:33 From -Hilton Farnkopf & Hobson,LLC Davis 15307591655 T-162 P.003/009 F-486 equal to 2.71 SAE (or 3390 cars). One recycling truck is equal to 0.524 SAE (or 655 cars). 5. There are 5 SPIE per day on a typical residential street_ Assuming that the useful life of a typical residential street is 20 years, then there will be 36,500 SAE over the life of the street divided between all cars, all trash trucks and all other trucks_ If the SAE for trash trucks were removed from the equation, the useful life of the street would be extended if the SAE for all cars and other trucks remains constant_ 6. It costs the same amount to maintain a street over its lifespan, regardless of the length of the lifespan,_ If the length of the Iifespan is extended, then the annual cost of street maintenance goes down. There are four legal issues associated with the proposed fee: (1) Is the fee actually a tax that requires voter approval? (2) Is the fee subject to the requirements of Proposition 218? (3) Is the fee preempted by State law? (4) Would imposition of the fee on an existing refuse collection franchisee violate the contracts clause of the federal or state Constitution? Fees and Taxes Government levies fall into three categories: taxes, special assessments, and user or regulatory fees_ Each class of charge has particular characteristics, limitations, and purposes.' "Tax" is a term without fixed definition_ The word may be construed narrowly or broadly depending on its particular context and the purpose for which the definition is to be used. In its broadest sense, a tax includes all charges upon persons or property for the support of governmelnt or for public purposes. In narrower contexts, the Nvord has been construed to exclude charges to particular individuals which do not exceed the value of the governmental benefit conferred upon or the service rendered to the individuals; and to exclude charges against particular individuals for governmental regulatory activities where the fees involved do not exceed the reasonable cost of the regulatory activities.' The residential refuse vehicle impact fee is a regulatory fee (rather than a user fee) since the fee is not imposed to "use" residential streets. Rather, the fee is imposed for governmental regulatory activities that are directly related to the fee payer's activities. If a business imposes an unusual burden on city services, a municipality may properly impose fees pursuant to its police power to assure that persons responsible pay their fair share of the cost of government. 3 1 Special assessments, not at issue in this opinion, are made for the purpose of completing a specific public improvement in a designated disnicr pursuant to express legislative authority; they are compulsory charges and are imposed upon specific real property to defray the cost of the proposed local public improvement.. Isaac s. City of Los Angeles (1998) 66 Cal. App. 4t' 586, 594. '- d,1111s v. Counry ofTrinity (1990) 108 CalApp_3d 656. 659_ The former are called -user fees;' the latter are called "regulatory fees. - 3 Sinclair Paint Co. v_ State Board vfEquali=utivn (1997) 15 Cal -0 447, 455. 1) 11-14-03 11:33 From -Hilton Farnkopf l: Hobson,LLC Davis 15307591655 T-162 P. 004/009 F-486 Traditionally, courts have determined whether a local government charge denominated a regulatory fee is an exercise of the police power or the power to raise revenue by analyzing the use of the fee involved rather than relying on its label. The general rule is that a regulatory fee must not exceed the stun reasonably necessary to cover the costs of the regulatory program in order to be considered a fee rather than a guise for a tax.' As long as enactments are not in conflict with general laws, the power to impose valid regulatory fees is not dependent on any legislatively authorized taking power but exists pursuant to the direct grant of police power under article XI, section 7 of the California Constitution.' CONCLUSION: The residential refuse vehicle impact fee is a (regulatory) fee, not a tax, because the amount of the fee will not exceed the sum reasonably necessary to cover the costs of the regulatory program (street maintenance). Proposition 218 Fees In November 1996 the voters approved Proposition 218, the Right to Vote on Taxes Act. The proposition amended the California Constitution, adding article XIIID. Section 3(a)(3) provides that: No tax, assessment, fee, or charge shall be assessed by any agency upon any parcel of property or upon any person as an incident of property ownership except. _ _ as provided in this article. "Fee'' or "charge" means "any levy other than an ad valorem tax, a special testi, or an assessment, imposed ... upon a person as an incident of property ownership, including a user fee or charge for a property -related service. "Property -related service" means "a public service having a direct relationship to property ownership."' This definition means that not all fees or charges must comply with Proposition 218: Proposition 218 applies only to that subset of fees imposed upon a person as an incident of property ownership, or levied for a public service having a direct relationship to property ownership. Proposition 218 only restricts fees imposed directly on property owners in their capacity as such.' For example, the City of Los Angeles adopted an ordinance that required owners of all residential rental properties subject to inspection under its program to remedy substandard housing conditions, to pay a fee_ The City did not comply with the procedures and restrictions of Proposition 218. The Court upheld the fee finding that although property owners paid the fee, the fee was imposed on landlords not in their capacity as landlords, but in their capacity as business owners. The fee was only imposed 4 Mills v County of Trinity (1930) 108 Cal.App_3d 656, 661. ' Counry of p/nntas v_ Wheeler (1906) 149 Cal. 758.763. For a cautionary note on whether the proposed Fee conflicts with the general law, please see page _ ofthis letter. 6 Art. X111D, § 2(h). rl partrnew Association of Los . fteles Counnr v. City of Los Angeles (top 1) 24 Cal.0 8.30, $38. i1-14-03 11:33 From -Hilton Farnkopf & Hobson,LLC Davis 15307591655 T-162 P.005/009 F-466 on those landowners who chose to engye in the residential rental business, and only while they were operating the business. The residential refuse vehicle impact fee will be imposed on a business owner, not a property owner. The fee is for a public service (road maintenance) but that service does not have a direct relationship to property ownership. Road maintenance more likely has a direct relationship to the safety of pedestrians and motorists. CONCLUSION: The residential refuse vehicle impact fee is not subject to the procedures and restrictions of Proposition 218 because it is not a property -related fee or charge because it will not be imposed on property owners for a public service having a direct relationship to property ownership. State Preeraution As discussed above, the authority to impose a regulatory fee derives directly from the police power Granted by article XI, section 7 of the California Constitution. That section provides that a city or county may adopt ordinances and otherwise regulate in the public interest, as lona as the regulation is not in conflict with the general laws of the State. An ordinance is in conflict with the general laws of the State if it (1) contradicts; (2) duplicates; or (3) enters a subject matter area that has been fully occupied by state law. When the state determines that a particular subject matter area is of paramount state concern, then the legislature prohibits local regulation in that area to achieve a uniform statewide approach. The analysis is slightly different for charter cities. For a general law city, the inquiry stops with the question of whether a conflict exists between the local ordinance and the state law. If there is a conflict, the local ordinance fails. However, the home rule provisions of the Constitution,9 authorize a charter city to exercise plenary authority over municipal affairs, free from any constraint imposed by the general law and subject only to constitutional limitations_ In addition to explicitly granting charter cities sovereignty over municipal affairs, the home rule provision recognizes state legislative supremacy over matters which are.not municipal affairs and are. instead; "statewide concerns." If there is a conflict between the charter city's local ordinance and the state law, the charter city ordinance will survive -unless the subject matter area is a "matter of statewide concern_" Only the courts can answer the question of whether the subject matter is a matter of statewide concern. [ a In November 1989 the voters approved Proposition 111. A.moug other provisions, this ballot measure increased the excise tax on motor vehicle fuel from $.09 to $_ 14, and increased commercial vehicle weight fees by 40% in August 1990 and an additional 10% in January 1995. Commercial vehicle weight fees are paid to the State by commercial vehicles with a certain minimum weight. The legislature adopted a companion measure $ Id a[ p. 340_ e Cal. Const An XI, Section :5. 1 ° California Federal Savings and Loan U. Cin- of Los. ingeles (1991) 54 Cala d 1 _ 4 11-14-03 11:34 From -Hilton Farnkopf & Hobson,LLC Davis 15307591655 T-162 P.006/000 F-466 to Proposition 11.1 (SCA 1) that would only take effect if the voters approved Proposition 111. Vehicle Code § 9400.8 provides: Notwithstanding any other provision of law, if the voters approve Senate Constitutional Amendment l ...no local agency may impose a tax, permit fee, or other charge for the privilege of using its streets or highways, other than a permit fee for extra legal loads, after December 31, 1990, unless the local agency had imposed the fee prior to June I. 1989. Vehicle Code § 9400.8 occupies the field of charges that may be imposed "for the privilege of using its streets or highways...." This means that a general law city may not impose a tax, :fee or other charge for the privilege of using its streets or highways. A charter city may adopt such a tax, fee, or other charge unless the subject area — charging for the use of streets and highways - is a matter of statewide concern- A court would ultimately determine whether the state has a more substantial interest in the subject than the charter city. 11 Although it is not possible to predict with certainty how a court would treat the conflict between a charter city's fee for the privilege of using its streets and the prohibition contained in Vehicle Code § 9400.8, it would seem reasonable to conclude that because this section of the law was adopted in conjunction with a voter -approved statewide measure, that the state bas a more substantial interest in the subject than the charter city. The prohibition contained in Vehicle Code § 9400.8 seems intended to ensure that the commercial weight fees increased by Proposition 111 would be the maximum fees imposed for the privilege of using the streets. Vehicle Code § 9400.8 was adopted as part of Chapter 1337 of the 1989 Statutes. Section 4 of Chapter 1337 is an uncodified section of the law that provides: Nothing in this act shall be construed to allow local governments to impose fees not otherwise authorized by statute. The Constitutional grant of the police power provides the authority to impose the residential refuse vehicle impact fee. Therefore, it is not necessary to rely on he "act' for authority. The word "statute" is construed to include a reference to the California Constitution. CONCLUSION: The proposed residential refuse vehicle impact fee is a regulatory fee not a user fee_ (The nature of the regulatory fee will be discussed in the section on methodology.) As a regulatory fee, it would not violate Vehicle Code § 9400.8 because it does not charge refuse trucks for the "privilege of using-" streets or highways but rather charges refuse trucks to defray the increased maintenance costs attributable to those trucks. I have been unable to find any interpretation of Vehicle Code § 9400.8. Nor have I been able to find any interpretation of the uncodified section of Chapter 1337 of the 1989 statutes. This causes me to provide a cautionary note: If the phrase "privilege of using its streets," in Vehicle Code 5 9400.8 is construed broadly_ it is possible that a court could determine that the residential refuse vehicle impact fee were such a fee. Cities and 1' Johnson v. Badley (1993) 4 Cal.4`h 389. +03-404. 5 Il-la-ud WS4 hrom-Milton Farnkopt & Hobson,LLC Davis 15307591655 T-162 P.007/009 F-486 counties receive a portion of the commercial weight fees. These funds are eligible to be used for rhe same purposes as is the tax on motor vehicle fuel. 12 One of these eligible purposes is street maintenance. L3 It is possible to construe the residential refuse vehicle impact fee as a prohibited fee for the privilege of using the streets, since funds generated by the same law in which the prohibition is found, may be used for street maintenance. do not think that such an interpretation would be correct_ Any city or county adopting this fee should include language in the enabling ordinance to distinguish the residential refuse vehicle impact fee from a fee for the privilege of using its streets. Contracts Clause The Constitution prohibits either the state or a local government from passing a law that impairs the obligations in an existing contraet.14 The City of Santa adopted a trench cut fee ordinance and imposed the fee on gas companies. Southern California Gas has held a franchise to provide gas service to the City of Santa Ana since 1938. The Court assumed that the trench cut fee was a valid exercise of the police power. However, the Court in Sourhern California Gas v. City of Santa Ana ruled that the franchise right granted to the Gas Company to lay and maintain pipes and appurtenances in return for payment of a 2% franchise fee was impaued by the imposition of any additional charge by the City. The Court discounted several reservations iu The 1938 franchise, including one requiring the franchisee to comply with all subsequently adopted police power regulations. Although not articulated, it seems reasonable to speculate that the fact that the trench cut fee was imposed only on holders of gas franchises influenced the- Court and inclined it toward the impairment of contracts argument. The Santa Ana case has been appealed to the federal circuit court of appeals_ CONCLUSION: It clearly would be lawful to include the requirement to pay the residential refuse vehicle impact fee in any new refuse collection franchise. There is no contracts clause issue until there is a contract to impair. .However, if a local government proposes to adopt this fee during the term of its refuse collection franchise, three steps must be taken (1) carefully review the language of the franchise agreement to determine whether the contract requires the franchisee to pay subsequently adopted fees; (2) carefully review the language of the franchise agreement to determine whether the agreement implicitly or explicitly requires the city to maintain the streets (without further compensation from the franchisee); and (2) follow the progress of the Santa Ana case on appeal. IVlethodoloav ':1 Vehicle Code § 4120:�. 13 Caf.Const. art. XIX. k3. 14 Cal, ConSC. Art. 1 § 9_ 9 11-14-03 11:34 From -Hilton Farnkopf & Hobson,LLC Davis 15307591655 T-162 P.008/009 F -4B6 A regulatory fee must be limited to the amount necessary to carry out the purposes and provisions of the regulatory program. 15 Such costs include all those incident to the system of supervision and enforcement. 16 The government bears the burden of proving that a regulatory fee is a valid fee, 17 This means that the government must set forth the evidence that supports the nature of the fee, rather than the challenger setting forth the evidence explaining why the fee is invalid. The government must establish (1) the estimated costs of the service or regulatory activity; (2) the portion of those costs attributable to refuse collection vehicles; and (2) the basis for determining the scanner in which the costs are apportioned, so that charges allocated to the payer bear a fair and reasonable relationship to the payer's burdens on the regulatory activity. Courts look to a variety of evidence in determining whether the agency has satisfied that burden. The record must demonstrate a reasonable relationship between the fees to be charged and the estimated cost of the service or program to be provided; that requirement may be satisfied by evidence showing only that the fees will generate substantially less than the anticipated costs. is The methodology proposes to isolate the maintenance cost associated with the operation of refuse vehicles on residential streets. Cost is expressed as lost savings: Annual maintenance cost savings cannot be realized because of the impact of the operation of refuse vehicles on residential streets. The operation of refuse vehicles on residential streets increases the local governments' annual maintenance cost by reducing the useful life of the residential street. But for the operation of refuse vehicles on residential streets, the useful life of the streets would be extended and, therefore, the annual maintenance cost would go down. Prior to considering adoption of the residential refuse vehicle fee, an extensive study would be required to (1) relate, and if necessary, modify the factual assumptions so as to make them applicable to the city or county adopting the fee; 19 (2) establish the annual cost of maintenance of a residential street; (3) calculate that portion of the cost of maintenance attributable to refuse vehicles; (4) establish the estimated cost of foregoing the adoption of the fee; and (5) substantiate the basis for determining the manner in which the costs are apportioned, so that charges allocated to the payer bear a fair and reasonable relationship to the payer's burdens on residential streets. I have reviewed some of tale material that your initial analysis relies on, including the Ft. Collins' study and the information generated for the City of Petaluma. In my opinion the methodology is sound. However, the factual assumptions must be confirmed against the local conditions in the city or county that proposes to adopt the fee. Your proposal 15 There is some risk that a court would find that maintenance of residential streets is not a "regulatory program." A regulatory program is often discussed in terms of licenses, permits, and investigation. It may also be possible to describe the program for which this fee is charged as regulation of refuse collection_ 16 California Association of Professional Sciendtsrs (2000) 79 Cal.App.4'' 935, 945. 1' Beaumonr Investors v. Beaumont -Cherry Valley [Yater Disrricr (1985) 165 Cal.App.3d 227, 235. 1S City of Dublin v. County of Alameda (1993 ) 14 Cal.App.4%h 164, M. = 19 For example, determine whether the factual assumptions regarding the number of SAE per day per residential street; the SAE attributable to the refuse trucks used by the locality's franchisee; the percentage of deterioration due to weather-related conditions, and the useful life of residential streets. 7 11-14-03 11:35 From -Hilton Farnkopf & Hobson,LLC Davis 15301591655 T-162 P.009/009 F-466 relates the cost of maintaining a residential street to each residential account because - refuse vehicles are providing service to*each residential account 20 Therefore your proposal distributes the cost among the residential accounts_ I would suggest that this step not be included in the methodology for two reasons: by spreading the cost over residential refuse accounts, the fee begins to take on characteristics of a user fee rather than a regulatory fee. If the fee is a user fee that is imposed on the refuse hauler, then (1) it potentially runs afoul of Vehicle Code § 9400.8; and (2) the methodology to determine The amount of the fee will be different. Since the fee is imposed on the refuse hauler to defray its impact on the maintenance cost of residential streets, I suggest that the fee be expressed only In a lump sum amount CONCLUSION: The proposed methodology, with one exception, is sound and conforms to the principle that a regulatory fee must be reasonably related to the fee payer's impact on the regulatory program. I am recommending excluding that step in the methodology that determines the average residential street maintenance cost per month per residential account It will be necessary for a city or county proposing to adopt the fee to review its franchise agreement to determine whether (1) the fee can be passed through to the customer; and (2) if so, if the pass-through constitutes a rate increase that is inconsistent with the terms of the fcancbise or wbi-ch requires the city or county to undertake rate increase proceedings_ Proper drafting of the enabling ordinance for the residential refuse vehicle impact fee is critical to the legal validity of the fee. If you continue to be interested in proposing this fee to your clients, you may wish to consider providing a model ordinance with your materials. Thank you for the opportunity to work on this very interesting project. Please call me to discuss any questions or comments that you have about the information contained in this letter. Sincerely, Betsy Stra s c: Bob Hilton 20 The avcrage residential street mainranance cost per month per residential account associated with refuse vehicles is calculated by dividing the annual "cosi" by rhe total number of residendal accounts: and then dividing by twelve months. Attachment 2 REFUSE AND CONSTRUCTION VEHICLE IMPACT ANALYSIS RESIDENTIAL STREETS Assumptions: 108.05 Miles of Residential Streets in San Rafael 9,887 Residential Refuse Accounts $ 14,830 Annual street maintenance cost per mile $ 1,602,382 Total annual Residential Street Maintenance Cost 1,280 Vehicles per day or 8,960 Vehicles per week 0.80% Percentage of total that are "Trucks" (includes Refuse and Construction Vehicles) 99.20% Percentage of total that are Automobiles Total ESAL Loadings / Annual Vehicle Type Average ESAL / Trips / week / Vehicle Type Percent of Total Maintenance Vehicle Vehicle Type Weekly 20 -yr Lifetime Cost Solid Waste Vehicles 2.019 1.0 2.02 2,100 6.3% $ 101,000 Yard Waste Vehicles 1.495 0.5 0.75 777 2.3% $ 37,000 Recycling Vehicles 0.580 2.0 1.16 1,207 3.6% $ 58,000 Other Trucks 0.240 61.2 14.68 15,271 45.6% $ 731,000 Construction Vehicles 0.923 7.0 6.46 6,722 20.1% $ 322,000 Automobiles 0.00080 8,888.3 7.11 7,395 22.1% $ 354,000 Total 8,960.0 32.18 33,472 100.0% $ 1,602,382 Total Refuse Vehicle Impact = 12.2% $ 196,000 Total Construction Vehicle Impact= 20.1% $ 322,000 Percent of Total Loading due to Refuse Vehicles = 12.20% Percent of Total Loading due to Construction Vehicles = 20.08° o Total Annual Residential Street Maintenance Cost = $ 1,602,382 Maintenance Cost due to Refuse Vehicles $ 196,000 Increase per Account per year = $ 19.82 Increase per Account per month $ 1.65 Maintenance Cost due to Construction Vehicles $ 322,000 Value of Residential Building Permits per year =_ $ 31,280,000 Maintenance Cost as a Percentage of Total Permit Value 1.03% ATTACHMENT B MEMO DATE: November 14, 2003 TO: San Rafael City Council FROM: Vaughn Stratford, Library Director Gail Lockman, Library Manager RE: Use of permanent staff only to cover open hours Scheduling staff hour by hour to work three (3) public service desks is unique to the library. We are open an uneven number of hours on each day. We need to schedule for lunches and breaks daily, in addition we need to schedule for vacations and cover sick time. • The library has enough permanent staff to cover 3 public service desks for five days. When we opened the library on Mondays and then on Sundays, we did not add any permanent staff to cover those hours of operation. • We used temporary staff distributed throughout the week to cover these added hours. This gave staff adequate time off the desk to complete necessary tasks associated with running the library. • Scheduling ONLY permanent staff makes it difficult to cover all six days. I have to schedule people to work six days straight and then give them four days off in a row. This will not work for the MOU. Using temporary help on Sundays solves this problem and leaves staff alternating weekends, working either Friday or Saturday with Sunday off. • It defeats the purpose of having Mondays as our "backroom -catch up day". (If I can only schedule permanent staff, half of them will be off on any given Monday.) When permanent staff only are scheduled to DAY HOURS Hours Open Minimum Staffing 1. Sunday 1-5 4 hours open to public 6 staff 2. Monday Closed Closed to public 3. Tuesday 10-9 11 hours 10 staff 4. Wednesday 10-9 11 hours 10 staff 5. Thursday 10-9 11 hours 10 staff 6. Friday 10-5 7 hours 7 staff 7. Saturday 10-5 7 hours 7 staff (This does not include shelvers who are temporary workers.) • The library has enough permanent staff to cover 3 public service desks for five days. When we opened the library on Mondays and then on Sundays, we did not add any permanent staff to cover those hours of operation. • We used temporary staff distributed throughout the week to cover these added hours. This gave staff adequate time off the desk to complete necessary tasks associated with running the library. • Scheduling ONLY permanent staff makes it difficult to cover all six days. I have to schedule people to work six days straight and then give them four days off in a row. This will not work for the MOU. Using temporary help on Sundays solves this problem and leaves staff alternating weekends, working either Friday or Saturday with Sunday off. • It defeats the purpose of having Mondays as our "backroom -catch up day". (If I can only schedule permanent staff, half of them will be off on any given Monday.) When permanent staff only are scheduled to work on the desl. as much as I am scheduling them, there is little time to complete tasks associated with running a library, e.g. ordering, weeding, cataloging items, program planning, collection development, committee work. Monday is generally the only day staff has to attend training or meetings with MARINet. We do not participate as much as we should within our library region due to lack of staffing to cover reference desks. • The library needs to have two staff on the Reference desk for each hour that we are open, except evenings. Librarians provide reference desk assistance, catalog assistance, Internet and public computer assistance. Assisting users with the copy machine and Microfilm copier can take time. Many of our users are elderly or non-native language speakers and are unaccustomed to the technology in the library. Not to mention problem patrons like Santa Claus. • Librarians must .'ook for items constantly, since we do not have enough shelves to accommodate the collection. The catalog may say "check shelf' but. the book has not yet been reshelved or it can't be reshelved because there is no space. Librarians must go downstairs and search book trucks and the circulation shelties trying to track down the book satisfy the needs of users. This "book hunt" takes staff away from the reference desk. • Staff in other city departments are not searching for answers to questions like "how can I track down a specific dye lot of an item or how did the Japanese react to the bombing of Hiroshima and Nagasaki or how can I get my vital statistics records out of Cuba (You can't, unless you use a Cuban National as an intermediary.)" Many reference searches take time and it is impossible to handle all the reference duties with just one librarian on the desk between 10 a.m. and 5 p.m. Library service is "high-tech and high touch." We all develop personal relationships with our clients. • Children's service is understaffed as is, and riecds to use temporary help to cover all the hours they are open. This is where the relationship to the library and to our future readers is formed. • Children's staff must perform nearly all their backroom tasks while at the reference desk. The Children's librarian dues story hour at Pickleweed on Mondays so she only gets a half of "backroom day" on Mondays. During story time or children's programs it is necessary to have two librarian's staffing the Children's Room.