The City provides wastewater service to various properties located outside the City limits. Payment for these services is received through property tax assessments. In accordance with legal requirements for the collection of fees on the property tax roll, the City Council set a public hearing on proposed charges for wastewater services provided by the City of Sunnyvale to properties located outside the City limits. A report addressing the hearing and the proposed FY 2003/2004 assessments was filed with the City Clerk.

Staff recommends adoption of a resolution establishing outside wastewater charges to be placed on the FY 2003/2004 property tax roll.

On June 3, 2003, the City Council adopted a resolution setting June 17, 2003 as the date for the public hearing on proposed assessments for 1,867 properties located outside of the City which are served by the City’s wastewater utility. As shown on Attachment D, the areas serviced are bounded by Stevens Creek Blvd., Lawrence Expressway, Blaney Ave., and Bollinger Road in the City of Cupertino, and by Bollinger Road, Lawrence Expressway, Johnson Avenue and Castle Glen Avenue in the City of San Jose. A report containing each parcel number receiving wastewater services from the City was filed with the City Clerk and was made available for public inspection on May 28, 2003.

Assessments are made pursuant to Section 5473 of the Health and Safety code and Section 12.16.020 of the Sunnyvale Municipal Code.

Wastewater rates are based entirely on the City’s cost for operating and maintaining its wastewater facilities and services. The Wastewater Management Fund is experiencing an increase in personnel costs of $8.2 million dollars in the first 10 years of the long-term financial plan. In addition, environmental regulations continue to ratchet down on numerous pollutants, requiring additional study and increased public outreach efforts to reduce the amount of pollutants reaching the bay. Staff is currently undertaking efforts to renew the City’s discharge permit under these more stringent requirements. Another impact to the Wastewater Management fund is that permit fees charged to the City by the State have more than doubled with further increases anticipated in the coming year.

Infrastructure maintenance and replacement continues to be a large issue for this fund. The Resource Allocation Plan reflects large infrastructure expenditures on projects that are underway in the early years of the plan. These projects were largely funded by revenues from the Water and Wastewater Revenue Bonds, Series 2001.

Portions of the treatment plant and collection system are approaching 50 years in age. Staff is continuing to identify projects for the future and is working to isolate the cost and life span of various pieces of infrastructure, both at the treatment plant and in the collection system. When identified, projects will be incorporated into a long-term infrastructure replacement plan which will then drive the financing of the projects and ensure that all wastewater collection and treatment processes are maintained in working order. Potential funding sources are being explored with the goal of minimizing the impact of infrastructure renovation and replacement on rate payers.

There are 1,864 single family residential properties, two multi family properties, and one commercial property for a total of 1,867 total properties located outside the City limits that are serviced by the City’s wastewater collection and treatment system. Charges for single family residential customers are equal to the City’s yearly flat rate charges adopted on April 22, 2003. Multi family customers pay a yearly, per unit, flat rate, also the same as adopted by council for similar customers within the City. The commercial property is charged based on the customer’s water usage over the past fiscal year.

The proposed annual assessment for a single-family residential property is $225.96 per parcel. Four single-family properties are not being assessed as they do not have any structure on the parcel and therefore do not impact the City sewer system. The proposed annual assessment for the two multi family properties is $564.72 for parcel number 375-07-003 (four units) and $5,647.20 for parcel number 375-07-0600 (forty units). The proposed assessment for the commercial property is $1.8373 per hundred cubic feet of water consumption. Based on the property’s past year consumption, their total proposed charge for Fiscal Year 2003/2004 is $1,980.60.

During the April 22, 2003 Public Hearing on the utility rates for FY 2003/2004, Council adopted reductions to wastewater service levels. These reductions included the discontinuance of services to repair, replace or install clean-outs or private sewer laterals. Preventive maintenance and environmental outreach activities are also being reduced. These service level reductions will affect the outside sewer service area in the same way they affect City sewer customers.

The City collects these fees as part of the County Tax Roll. The fees go directly into the Wastewater Management Fund and are used to offset the costs of operating the City’s wastewater utility. The proposed assessments total $428,930.04 an increase of $29,063.15 compared to the Fiscal Year 2002/2003 assessment of $399,866.88.

Notice of public hearing was published in the San Jose Mercury News. A copy of the list of properties to be assessed and the proposed assessment amounts was made available in the City Clerks office on May 28, 2003. A copy of this report is also available in the Library and on the City’s Internet home page.