February 7, 2006

REPORT IN BRIEF

This report recommends that the City Council authorize the City Manager to sign the Second Amendment to the Memorandum of Agreement (MOA, Attachment A) Providing for Implementation of Santa Clara Valley Urban Runoff Pollution Prevention Program (SCVURPPP or Program).  The existing MOA, as amended in March 2005, is set to expire on March 10, 2006.   

In March 2005, when the term of the MOA was last set to expire, the 15 participants/co-permittees agreed to extend the term of the MOA by one year with the First Amendment, and to hire a third-party consultant to review the cost-allocation methodology used by the Program, as well as to review the term, scope, and cost of the Program MOA.    

The firm of Hilton Farnkopf and Hobson was hired to perform the review of the program.  The study was completed during the latter half of 2005 and finalized in November, 2005. The study included findings that the Program is well managed and that the cost allocation methodology currently being used is in keeping with methods used by other large storm water programs.

The 15 member agencies of SCVURPPP agreed, in a meeting of the Management Committee on December 9, 2005, that the existing cost allocation methodology should continue to be used, and that the term of the MOA should be modified to eliminate the administrative difficulties which have arisen with the current definition of the term. 

BACKGROUND

In May 1990, Council approved an agreement that implemented the Santa Clara Valley Nonpoint Source Pollution Control Program.  The Agreement joined the City of Sunnyvale with twelve other cities in Santa Clara County, plus the County and the Santa Clara Valley Water District together as “Co-permittees.”  The Agreement allowed these entities to jointly apply for and implement their NPDES storm water permits.  The Agreement outlined area-wide programs for cohesive program planning, water quality monitoring, outreach and education.  The term of the agreement was five years with an automatic renewal provision upon the approval of the co-permittees at that time.

In December 1999, City Council approved the revision to the Memorandum of Agreement (MOA) that is currently in effect, which joins these same co-permittees under the program title of Santa Clara Valley Urban Runoff Pollution Prevention Program (SCVURPPP or the Program). The current MOA also allows the Program to jointly apply for and implement aspects of the NPDES storm water discharge permits on behalf of these entities.

A required application for a new permit for discharge of storm water was submitted collectively by the 15 members/copermittees of SCVURPPP in February 2005 and is still pending.  The Regional Water Quality Control Board, responsible for issuing the permit, is in the process of developing a storm water permit that would be issued to the entire Bay area.  This Bay area-wide approach is intended to provide a level playing field for all Bay area counties.  The SCVURPPP co-permittees will be issued a permit at such time as the regional permit is fully negotiated.  In the meantime, the existing permit remains in force.

The First Amendment to the MOA was brought forward and approved by City Council on March 1, 2005.  This amendment extended the term of the MOA for one year through March 10, 2006.  At that time, the 15 members of SCVURPPP also agreed that a study should be conducted by a third-party consultant to evaluate the term, scope and cost of the Program MOA, and to revisit the cost allocation methodology for appropriateness for this program and its members.

The current cost sharing allocation set forth in the MOA allocates 30% of costs to the Water District, 30% to the City of San Jose, and the remainder is allocated very roughly in proportion to population for the remaining 12 cities and the county. Sunnyvale’s share is the next largest at 7.25%, with the rest of the cities and the County’s share being smaller, ranging from less than a percent (City of Los Altos Hills) to 6.23% (City of Santa Clara).

The background for the basis of this original allocation is not well documented.  Some anecdotal evidence indicates it was proportional to runoff from respective jurisdictions as computed for purposes of the Santa Clara Valley Water District’s Benefit Assessment Revenue Program.  However it also seems likely that final numbers were derived through a negotiation process.

EXISTING POLICY

Surface Runoff Sub-Element Policy 3.4, A.1 supports the City’s continued participation in SCVURPPP to identify and develop Best Management Practices to assure the reasonable protection of beneficial uses of creeks and San Francisco Bay, as established in the Regional Board’s Basin Plan and to protect environmentally sensitive areas.

Surface Runoff Sub-Element Policy 3.4, A.2 also states that the City will comply with regulatory requirements and participate in processes that may result in modifications to those requirements.

DISCUSSION

The SCVURPPP is a nation-wide model for regional NPDES storm water permit compliance and is a leader in developing and implementing approaches to storm water issues for local Bay Area storm water programs. 

The firm of Hilton Farnkopf and Hobson was selected to perform the review of the program.  The study concluded that, relative to the cost of the Program, the SCVURPPP program is in line with other Bay Area program budgets and is the most cost-effective, based on the cost and the scope for services provided.  The study found that SCVURPPP’s program is more rigorously managed than the others reviewed as it includes management controls, self-audit procedures, budget monitoring and reporting requirements not found in any of the other programs.

The term of the Program MOA has been established to coincide with the term for the storm water discharge permit.  This approach has led to some administrative complexity and a modification to the term is thus included in the proposed amendment.  Instead of running concurrent with the permit, the proposed modification is to have it extend for one fiscal year beyond the term of the (pending) permit.  This will allow the Program time to agree on any changes that might be warranted as a result of the new permit.

The study found that when the cost allocation method used by SCVURPPP is compared with formula using measures of benefit used by other programs, it approximates the allocations that rely on the average of surface area and population.  While there is variation between the programs surveyed, all of them use a form of proportionate allocation and some combination of population and surface area.  Based on the study findings, a discussion of alternatives, and the needs of the individual agencies as well as the program as a whole, the co-permittees determined that a change to the existing cost allocation was not in order.  The Santa Clara Valley Water District has decided that it will utilize different revenue sources to fund its allocation.

Approval of the MOA amendment will allow for the City’s continued participation in the SCVURPPP and negotiation of the pending storm water permit. Continuing with the collective approach of the South Bay communities will provide for the ongoing economies of scale in permit compliance that have been achieved in the past through the Program.

FISCAL IMPACT

The fiscal impact of continuing to participate in the MOA, which includes the re-application for the City’s NPDES Storm Water Discharge Permit was planned for in the FY 05-06 Operating Budget for the Wastewater Management Fund.   Current costs to the City in FY 05-06 for participation in the Program are $242,934.  If the City were to try to implement all of the NPDES Storm Water Permit provisions on its own without the assistance of the SCVURPPP, it is likely that significant additional City funds would be needed to ensure compliance with permit provisions.

CONCLUSION

Approving the amendment to the MOA to continue the City’s participation in the SCVURPPP will allow the City to utilize an area-wide approach for program development and provide a cost-efficient and effective way to comply with current storm water permit conditions and to negotiate the next storm water permit.

PUBLIC CONTACT

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, and the availability of the report in the Library and City Clerk’s Office.

ALTERNATIVES