STORMWATER: A Ten-Step Funding Plan By: Kim Boehler, Director, and Tim Seufert, Managing Director

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1 SPRING 2018 NEWSLETTER STORMWATER: A Ten-Step Funding Plan By: Kim Boehler, Director, and Tim Seufert, Managing Director Virtually every community in California is facing significant and unfunded needs within the spectrum of stormwater. The problem is no longer maintaining a permit and providing basic services to comply with the National Pollutant Discharge Elimination System (NPDES). Clouds are on the horizon, and a veritable financial storm is brewing; a storm which might engulf the general fund. Responding to all of the stormwater-related challenges is tough, but it is doubly so considering the competing financial needs for public safety, streets and transportation improvements, community services and so on. It is an imperative to review your needs and consider the tools in your financial toolbox. This effort must be broad-based, cross virtually all departments, and include a healthy dialogue within your community. THE TEN FUNDING OPTIONS After the technical issues are addressed, it is necessary to formulate strategies to finance both capital improvements as well as fund ongoing maintenance and operations. The passage of Proposition 218, and later Proposition 26, created challenging hurdles to establishing new funding sources, including those for stormwater management. Any community facing these challenges must first ask if all has been done in terms of enhancing current revenue streams. Then, one must investigate additional options: Storm drain financing and funding can be accomplished via a number of elements, as listed to follow. Items 1 to 3 should be most any community s first steps, while the next may or may not apply: WATER/SEWER/TRASH UTILITIES In some cases, there are justifiable methods to allocate some revenues from these funded utilities. 2. DEVELOPMENT IMPACT FEES (DIFs) These are one-time fees to fund capital only for developing areas (can also be part of a development agreement). 3. REGULATORY FEES Plan review and inspection fees can fund specific functions. 4. PROPERTY-RELATED FEES A property-owner ballot process or election is typically required to implement such a fee. 5. GENERAL OBLIGATION BONDS Voter-approved bonds to fund capital is an option. 6. COMMUNITY FACILITIES DISTRICTS (CFDs) A voter-approved (or landowner-approved in the case of undeveloped land) CFD can fund capital, maintenance or both. 7. SPECIAL PARCEL TAXES A voter-approved parcel tax can fund capital, maintenance or both. 8. ASSESSMENT DISTRICTS A property-owner approved assessment can possibly fund a portion of capital, maintenance or both, typically for a well-defined area within the larger community. 9. GRANTS AND OTHER SOURCES Federal (FEMA and others), State and local grant sources are sometimes available, particularly as a match to the other funds mentioned herein. 10. THE GENERAL FUND This is your last resort. These ten items are alternatives that can generate funds for stormwater improvements, operations and maintenance in your community. Article continues on next page helping communities fund tomorrow nbsgov.com

2 SPRING 2018 STORMWATER: A Ten-Step Funding Plan Continued from cover article IN SUMMARY Funding stormwater requires a broad and multi-disciplined effort. Establishing a multi-disciplined team, including staff, community leaders and specialists in engineering, public finance and public outreach is the key to success. Reaching out to the public early and often in the process and maintaining a focused approach can improve the chances of successfully creating a suite of funding tools that will allow your agency to endure the storm. Authors note on property-related fees: As of this writing, the current environment for property-related fees is in flux. Recent court cases, such as in Salinas and elsewhere, arechallenging. A constitutional amendment to add stormwater categorically to the list of water, sewer, trash has been proposed, but not approved by either the legislature or the California electorate. SB 231 and AB 2403 must be taken in context with Proposition 218 and court cases to date. New court cases are on the horizon. For an electronic or hard copy of the complete Stormwater: A Ten-Step Funding Plan pamphlet, please send your or mailing address to contactnbs@nbsgov.com. California Senate Bill 231 was signed by the Governor in October This bill essentially amended the Proposition 218 Omnibus Act to redefine sewer to include storm sewers. This effectively allows public utilities to include some stormwater program costs in their current water, sewer or trash fees (rates approved via the regular Proposition 218 process) if the stormwater program benefits these other utilities. For example, keeping stormwater out of the sewer system reduces the amount of effluent that needs to be stored and/or treated at the wastewater treatment plant. This bill also allows for certain new stormwater property-related fees to be noticed but not balloted fees; a notice is sent, but ballotsare not sent for a protest-ballot tabulation, as with regular water, sewer, and trash fees. (Note that recent court cases call this bill into question). No Water? Cape Town, South Africa, is a beautiful city and a renowned tourist destination. However, it could also become famous for being the first major city in the world to run out of water. Three years of very low rainfall is the main culprit, coupled with increasing consumption by a growing population. The local government is racing to address this potential calamity, with desalination plants to make seawater drinkable, groundwater collection projects, and water recycling efforts. However, in the interim, the mayor recently stated we have reached a point of no return. They expect Day Zero to occur, meaning the city will essentially run out of tap water, come mid-april Listen up, California!

3 SPRING 2018 Building Relationships with Property Owners Part 2 By: Danielle Wood, Associate Director In my previous article (please see the NBS Fall 2017 Newsletter), I shared various proactive steps which keep property owners, or constituents, informed of agency progress as it relates to their property within a landsecured Financing District (the Financing District ), such as assessment or special tax districts. The first such step was providing information that is easy to access in a central location, such as the agency website. Placement and layout of information on the agency website is an important consideration when working to build and/or maintain healthy relationships with constituents. Information on Financing Districts is placed in various locations on agency websites depending on the agency; and it is safe to say, no two agencies are alike. Some agencies place their information under a link on the finance department page; some have a link shown on the homepage while others bury material somewhere that requires a trained detective to find it. To finance professionals, showing updates on Financing Districts under the finance page makes sense because the finance department is the department that tracks funds for these districts; however, to most constituents, the association is less apparent. As a public agency, the number one goal is to serve constituents. Agencies need to make sure residents can easily see accomplishments associated with their Financing Districts. Constituents should be able to find a direct link on the homepage to a dedicated page that highlights what is being done on their behalf. The layout and format of the Financing District page must be deliberate. As your agency continues to grow and develop a robust set of documents that highlights accomplishments, it may become difficult to filter through the information, particularly when there are multiple districts. The best approach is to have an individual section dedicated to each Financing District. Constituents can locate the Financing District that applies to them by a search completed on an address, assessor parcel number or owner name. Visual searches using maps is another great way to link constituents to the correct set of data. Also, consider constituents when creating your file naming convention. Use information-rich filenames with sufficient elements in the structure to be intuitive. Documents should be listed including details from general to specific as much as possible. A few basic considerations when organizing the Financing District section of your agency website will help build confidence in the service level provided by your agency. Constituents will appreciate the ability to find useful and relevant material in an easy manner. As a public agency, the number one goal is to serve constituents. Agencies need to make sure residents can easily see accomplishments nbsgov.com

4 SPRING 2018 Upcoming Conferences: California Society of Municipal Finance Officers (CSMFO) Annual Conference: February RIVERSIDE CONVENTION CENTER, Riverside District 9! Risk and Compliance in Special Districts with speakers Pablo Perez (NBS), Michael Colantuono (Colantuono, Highsmith & Whatley) and Sandra Burkhart (City of Oxnard) The Raging Storm: Funding Stormwater Needs in California with Tim Seufert (NBS), Lalo Perez (City of Palo Alto) and Dan Schaaf (Schaaf & Wheeler) California Building Officials (CALBO) Annual Business Meeting: March HYATT REGENCY SAN FRANCISCO AIRPORT, Burlingame Building Department Fees You Need a Plan with panelists Nicole Kissam (NBS), Will Crew (City of Elk Grove) and William Kelley (County of Marin) Fire Districts Association of California (FDAC) Annual Conference: April MONTEREY TIDES HOTEL, Monterey California Municipal Treasurers Association (CMTA) Annual Conference: April MARRIOTT OAKLAND CITY CENTER, Oakland Government Finance Officers Association (GFOA) Spring Conference: May 6 9. AMERICA S CENTER CONVENTION COMPLEX, St. Louis, MO Association of California Water Agencies (ACWA) Spring Conference: May SACRAMENTO CONVENTION CENTER, Sacramento California Association of Recreation & Park Districts (CARPD) Spring Conference: May 30 June 1. LAKE TAHOE RESORT, South Lake Tahoe Recreation and Park District Revenue Toolbox with NBS speakers Greg Ghironzi and Tim Seufert Coming Soon! NBS will again host NBS University later in 2018 Topics will focus on enhancing existing revenue streams and getting new revenues approved STAY TUNED for details to be released soon! Case Study: Culver City Parcel Tax, the Clean Water, Clean Beach Parcel Tax The voters of Culver City recently approved a new parcel tax aimed at stormwater, presumed to be the first in California. Measure CW was approved by 74% of the voters, over the 2/3 requirement needed. Culver City was struggling with how to finance infrastructure needed to manage stormwater runoff, and provide funding to reduce/prevent water pollution in the local watersheds and comply with state and local regulations. After careful evaluation, the City decided to pursue a tax measure that generates $2 million in new revenue annually. This new funding source won t fund 100% of the needs, but it is an initial first step in a long-term plan. The primary reasons Culver City pursued a parcel tax are due to the level of flexibility in the formula used to levy the parcel tax, and the fewer administrative and legal procedures required when compared to other funding mechanisms. The critical efforts taken throughout the process ensured its success this included careful evaluation of tax levels the public would support through the use of public opinion polling, a public information campaign and timing of placement on the ballot. NBS White Papers Greg Clumpner, Co-Director of NBS Utility Rate Group has authored two new papers: Social Justice and Water Rates Changing Perspectives on Outside Surcharges For a copy, please send an to contactnbs@nbsgov.com nbsgov.com

5 Revised and reprinted 2015 SPRING 2018 NBS Promotes Two experienced NBS consultants, Sara Mares and Stephanie Parson, were recently promoted to Associate Directors. Both Sara and Stephanie have exemplary and lengthy resumes, with a broad client base who appreciate their abilities, experience, and get it done mentality. In their new roles, Stephanie will develop and expand the practice in terms of Fiscal Impact Analyses (FIA) and related consulting. Sara will expand her role in the realm of formations of new Community Facilities Districts, Assessment Districts, and other funding and financing tools. Additionally, Kim Boehler was promoted to Director, where she co-directs the NBS Utility Rate Group. Kim also has an exemplary resume working on a broad range of funding and financing tools for many California public agencies. Kim will continue to help develop our utility rate practice areas, as well as NBS presence in stormwater and groundwater management funding. All of us at NBS appreciate their combined half century of experience, and we congratulate them for these welldeserved promotions! Sara Mares S Stephanie Parson K Kim Boehler Assembly Bill 195 on Local Tax Measures Signed into Law AB 195 applies to all tax measures on the ballot starting in 2018 (a similar earlier requirement only applied to initiatives), including parcel and sales tax measures, for example. The consensus is that this also applies to General Obligation (GO) bond measures. Sponsored by the Howard Jarvis Taxpayers Association, this bill amends the California Election Code section to require all local tax measures to specifically state the annual revenue to be raised, and the rate and duration of the tax. Careful wording of the 75-word measure and accompanying ballots statements, which shall be impartial, is required. NBS Publications Download our publications via or order via at contactnbs@nbsgov.com: Special Financing Districts Primer, revised and republished in 2015, has been credited as the best publication on SFDs in a decade by prominent industry professionals. Rates, Fees and Charges Compendium, released 2015, has received high regard and interest from industry professionals. Stormwater Pamphlet, just released January 2018, contains a ten-step funding plan to support stormwater-related efforts. SPECIAL FINANCING DISTRICTS An Introduction to Special Assessments and Special Taxes RATES, FEES AND CHARGES IN THE POST-PROPOSITION 13, 218 AND 26 ERA IN CALIFORNIA A Compendium on Water, Wastewater, Recycled Water and Stormwater Rates, as well as User, Regulatory and Development Impact Fees STORMWATER R A Ten-Step Funding Plan By Kim Boehler and Tim Seufert Tim Seufert NBS 1

6 32605 Temecula Parkway, Suite 100 Temecula, CA INSIDE: FEATURED ARTICLES Stormwater: A Ten-Step Funding Plan Senate Bill 231 NBS Promotes No Water? Assembly Bill 195 Building Relationships with Property Owners Culver City Parcel Tax SPRING 2018