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User Fee Increases 4 July 30, 1998 Storm Water Current Proposed Monthly Monthly Monthly Last R= R= Increase Increase Residential $ 2.19 $ 2.49 $ .30 1993 Commercial (per acre) $17.55 $19.94 $2.39 In 1993 the City Council established the Storm Water Management and Discharge Control Program. It was intended that there would be an ongoing funding source to cover the activities required by the City's National Pollution and Discharge Elimination System permit requirements. Part of this program was the establishment of a service charge to all properties discharging storm water to San Leandro's collection and conveyances system. When the original rates were established the calculation included $424,000 in County grant funding revenue. However, it was one-time grant and not the ongoing revenue source. Although the fund expenditures increased annually, the service charge was never increased to make up for loss of the grant. The program has received an annual subsidy for its street sweeping activities from Gas Tax in 1996-97 and 1997-98. While this is not a prohibited use under the State code, it does take funds away from the necessary street repair activities. It is more appropriate to have the Storm Water Fund be self-sufficient. This rate increase will partially accomplish that goal. CONCLUSION The City needs to follow sound financial principals in the management of all services. Enterprise Funds, by definition, are to be self -funding and not require annual subsidies from other funds. The rate increases are necessary to minimize General Fund subsidies, although future increases will be needed to fully cover current operations. City Council approvals of the resolutions covering the necessary rate increases are recommended. The deadline for the Alameda County Auditor -Controller to process new rates on the secured property tax bill is August A There may be alternative services and service delivery syst ms that the City Council may want to evaluate during 1998-99. Comprehensive cost allocation a that studies for all City services are included in the 1998-99 City Council Approved Budget. , 1A_ TH:JOL 18