July 27, 2004

SUBJECT: Status of Emergency 911 Access Fee Implementation Efforts (Information Only)

The purpose of this report is to provide information to the City Council regarding the status of implementation efforts of Sunnyvale and other jurisdictions to enact Emergency 911 Access fees. No recommendations are being made and no action is required.

On June 8, 2004, the Council approved the concept of a Sunnyvale Emergency 911 Communications Access fee to recover the reasonable cost of providing emergency dispatching services to the community, as contained in RTC#04-203. Around that time, a lawsuit had been filed by AT&T Wireless and Verizon Wireless against the City of Union City, alleging, among other things, that their newly enacted 911 fee was actually a tax. At the June 8^th meeting, Council directed staff to return with a draft ordinance after the courts have decided the fee v. tax issue. The lawsuit against Union City was ultimately withdrawn. However, another lawsuit on similar grounds was immediately filed by the same plaintiffs against the City of Stockton, which had just adopted a similar ordinance. Staff will closely monitor the lawsuit. Should the legal issues be resolved, staff will return to Council with a draft ordinance.

At the meeting of June 8^th, the Council also directed staff to look at two fairness issues relating to the fee structure to examine the potential impacts on Sunnyvale residents and businesses. The first issue centered on multiple residential lines within each household and whether the City would consider exempting the access fees for certain residential lines that are dedicated to tasks other than voice communications (such as dedicated data or fax lines). The second issue concerned raising the threshold at which low-income residents would qualify for fee exemptions. Staff has begun researching both of these items and will present options for Council consideration in conjunction with a draft ordinance. Staff also continues to assess potential alternatives to the recommended items identified in RTC 04-203, again in terms of fairness issues raised by the Council. Some examples of this would be the amount and administration of a fee cap, structure of the trunk/super-trunk fees, size and scope of exemptions, etc.

On July 9, 2004, staff attended a 911 Fee Update meeting of the Santa Clara County Assistant City Managers. A representative from the City of Stockton attended the meeting and shared valuable information on their fee enactment process that we can potentially incorporate into the draft ordinance. Staff will continue to attend the update meetings to keep abreast of any developments associated with implementation efforts of other jurisdictions. A meeting is also being planned with city representatives, SBC and several wireless providers to discuss the various issues surrounding the fee.

While the majority of cities in the Bay Area who are considering the fee have adopted a wait and see approach, the Cities of Cupertino and San Jose brought the 911 Access Fee to their respective Councils. On June 17, 2004, the Cupertino City Council voted to not implement the fee, opting to reassess their fiscal situation during FY 2004/2005 after the effects of other budget actions could be measured. The San Jose City Council approved the fee as part of their Tier II budget package. Tier II will be activated once the State budget takeaways are fully defined (currently estimated at $13.5 million annually). At that time, the ordinance will be brought before the Council. The San Jose fee has been set at $1.75 per line, has a $20,000 cap, and sunsets in FY 2005/2006. Its extension would be contingent upon future Council approval. Interestingly, San Jose staff reports that no representatives from telecom companies and no members of the business community attended the Council meeting when the fee was discussed.

Public contact was made through posting of the Council agenda on the city's official notice bulletin board, posting of the agenda and report on the city's web page, publication of the Council agenda in the San Jose Mercury News, and the availability of the report in the Library and the City Clerk's Office.

Prepared by:

Pete Gonda
Senior Management Analyst, Finance

Reviewed by:

Mary J. Bradley
Director, Finance

Approved by:


Amy Chan
City Manager