Pro & Con on Measure A, the Sewer Tax Surcharge

The Feb. 7, 2012 Piedmont Municipal Election includes a vote on Measure A, which would impose a 50 percent surcharge on the existing sewer parcel tax for 10 years to fund replacement of a portion of the city's sewer system. Passage would cost Piedmont home owners somewhere between $200 and $500 a year.

Recent weeks have seen debate on the necessity of the surcharge. At the League of Women Voters of Piedmont earlier this month, Michael Rancer, chair of the city's 2011 Municipal Tax Review Committee, and Rick Schiller, a Piedmont resident opposed to the surcharge, presented their views for and against the measure.

Their remarks are below. (Note: These are comments as prepared for presentation at the LWV event and provided to Piedmont Patch by the speakers, not a transcript from the event.)

Following the arguments for and against Measure A, there are links to more information on the Feb. 7 election and the sewer tax surcharge. Measure A as it will appear on the Feb. 7, 2012 ballot and an analysis by the city attorney are in the PDF above.

Editor's note: This is much longer than the usual article on Piedmont Patch. However, we felt that Measure A is a complex and important subject for Piedmont voters and deserved as full an airing as possible.

Michael Rancer, in favor of Measure A:

Measure A is a 10-year surcharge on the dedicated parcel tax we pay to operate, maintain and replace the city’s sewer system. It is a 50 percent increase for that term designed specifically to meet an Environmental Protection Agency mandate
governing pollution control over water discharged into the Bay.

The EPA mandate is in the form of a federal court order imposed on Piedmont and six other cities within this East Bay MUD drainage area, due to their failure to meet clean water requirements over the past 25 years. All seven cities and East Bay MUD worked together and with the EPA to develop feasible and effective programs regarding the operation, maintenance, monitoring, repair and replacement of crumbling old sewer systems, many of which, like Piedmont’s, go back up to 100 years.

The Measure A surcharge was unanimously recommended by the Municipal Tax
Review Committee (or MTRC) as part of its quadrennial report to the City Council
in August. The MTRC studied the issue between March and August, including
publicly televised sessions here in the Council chambers.

I think it’s fair to say that, despite the unanimous vote by the MTRC, the idea of a 50 percent surcharge has given some of the members heartburn, myself included. But the 50 percent temporary surcharge is a big reduction from the 100 percent permanent increase originally suggested by staff. However, after fine-tuning the admittedly uncertain and imprecise enforcement costs, and the schedule of the city’s sewer replacement plan, MTRC concluded that the goals of the program, including compliance with the court order, could be met with the temporary surcharge.

Since the Council’s decision to place the surcharge on the ballot, there has been
some debate in the community about the need for added revenue, most of it
centered around the two questions of (1) whether there really is an EPA mandate requiring all the compliance actions listed in the MTRC report and (2) whether Piedmont really needs to comply with such a mandate. In his comments, Rick may raise these or related issues, so I’ll deal with them now as directly as I can given the time limits of this presentation.

First, as to the nature of the mandate: Because of these and other questions that have been raised, I’ve sat in on meetings over the last three weeks involving other members of MTRC, interested members of the public, and several city officials.

We have gone through reams of documents, text as well as financial data and
forecasts, some of which were at an even greater level of detail than we had
reviewed during the MTRC deliberations. Those involved have had the chance to
spend several hours examining the documents and asking questions about them.

I can’t speak for anyone else who attended those meetings, but at this point I
have a high degree of confidence that the court-ordered requirements are real,
are detailed, are expensive to implement, and were hammered out as technical
specifications over a period of one to two years by the seven cities, East Bay MUD and the EPA. They involve mandated monitoring and scheduled inspection of the sewers in all the cities, and critical repairs and replacements on failing system components where necessary. Most of the cities, like Piedmont, will need to complete scheduled – not accelerated, but scheduled – full sewer system
replacements if they have not already done so. The requirements are consistent
with current national standards.

Second, as to whether Piedmont really needs to comply, the answer is clearly
yes. We are under a federal court order, along with six other cities. Our failure to
comply would result in fines of up to $2,000 per day. Oakland, for example, may
decide to follow that route because they could reason that $2,000 per day
($730,000 per year) in fines is cheaper than spending tens of millions of dollars to replace a failing sewer system. But for Piedmont, fines at that level would eat up a third of our sewer revenues per year and would probably make it impossible for us to replace the remaining 40 percent of our system that has not already been done, most of which is 80 to 90 years old already.

Moreover, if we failed to complete the system replacement, or even if we delayed
it, then we would face annual emergency repairs of failed segments that could eat up the rest of the sewer fund money, a course that in the long run would be more expensive than finishing the replacement. And that says nothing about the cost of claims against the city when raw sewage backs up into the sewer lines of
individual homes. So in the long run, failure to comply would almost certainly cost Piedmont taxpayers more than the proposed surcharge.

To conclude, the 50 percent, 10-year surcharge is meant to cover the cost of mandated EPA compliance while the city works to complete its sewer replacement program around the end of the decade. Once the system has been replaced, there will still be continuing costs for operation and maintenance, as well as the debt service on construction loans from the state (at a very favorable interest rate of 1 percentto 2 percent per year). But it is expected that the existing basic sewer tax will be able cover those costs going forward.

Even as a temporary measure, 50 percent is a big increase, one that should give
every voter pause, but it is essential if Piedmont is to comply with long-standing
water pollution laws.

Rick Schiller, opposed to Measure A:

The Proponent ballot measure twice states the following: The City of Piedmont must comply with the 2011 EPA order requiring additional rehabilitation. In contrast the EPA Compliance of ficer overseeing the 2011 Order wrote the following: “The Stipulated Order does not specify a deadline by which Piedmont must complete the mainline sewer replacement work, nor is there a stipulation for penalties to be assessed against Piedmont if they fail to replace or repair a certain length of pipe each year.” The only order to ever require mainline replacement was issued by the Regional Water Board in 1993. We fully complied by 2005, replacing the leakiest half of our system, nine years ahead of schedule. By 2010 another 13 percent was voluntarily completed.

The single Staff plan given to the MTRC was presented as a final enforceable plan. In fact it was a revisable draft plan, the final being due July 15, 2012. Again the EPA compliance officer confirms in writing: “The City is required to submit by July 15, 2012 . . . their Asset Management Program. . . Once the plan is approved, the plan and its accompanying schedules are enforceable.”

Ryan Gilbert, half of the MTRC sewer sub-committee, is now against this measure based on what he has now learned. As others who have carefully investigated this matter, Ryan believes there should have been an entirely different process.

Measure A overestimates the financial need for our sewer program. In total $11M would be raised by this surcharge, the MTRC shows a sewer fund surplus at the end of that period of $4.5M to $7.4M. Additionally, the well researched report at PiedmontCivicAssociation.org reveals the actual EPA compliance costs going forward have been overstated. Initial costs alone have dropped from $3M to $1.5M.

The Sewer Fund need not be a cash cow for uses other than our sewers. Inexplicably, the Surcharge was written to allow storm drain use. Other misuses of the sewer fund including the money taken for the Crest Road washout during the Private Undergrounding incident. I direct your attention to this Tuesday’s Council meeting, Item 2A.

The financial burden on residents is dramatically increasing. Next year your parcel taxes will no longer be deductible, this will be a much increased tax burden. This year we vote on two more parcel taxes: City Services and Schools. More dramatic is the $5,000 to $20,000 cost many residents will have to pay to replace their own sewer lateral. Eventually necessary, this cost will come sooner to more in Piedmont as the City has enacted a very aggressive testing program.

I value Staff’s enthusiasm for aggressively cleaning up the environment. However only one option was presented to the MTRC. The proposed surtax can be rejected without the risk of the city violating any legal or regulatory requirements.

Piedmont has the best mainline system in the East Bay and the most aggressive lateral replacement program. We are doing the right thing. Piedmont can implement the required monitoring program, and then slowing down our sewer rehab without imposing this surcharge. The EPA has not stipulated any timeframe for mainline replacement. Should the EPA requirements change,
we can reasonably analyze, discuss and implement needed funding.

I again encourage residents to review the Piedmont Civic Association material which gives a good view of various options, unlike the single option presented to the MTRC.

Before voting ask yourself three questions:

- What is really obligated by the EPA?
- Do we need $11M more?
- What is your total out of pocket cost?

I have extensively researched this matter, I have not arrived at my position lightly and I thank all voters wishing to educate themselves, regardless of position taken.

Additional sources of information on the Feb. 7, 2012 election and on Measure A:

Measure A as it will appear on the Feb. 7, 2012 ballot and an analysis by the city attorney are in the PDF above.

Alameda County Registrar of Voters website. The Piedmont Municipal election page includes registration and vote-by-mail dates and links to the official candidate list, the Voter Information Guide, the official wording of Measure A and a list of Piedmont polling locations.

Alameda County Registrar of Voters, voter profile page. Here you can look up your polling place and download a copy of the sample ballot, among other things.

City of Piedmont website, 2012 Municipal Election page. Information on when election results will be available and links to the Alameda County Registrar of Voters.

Piedmont's Municipal Tax Review Committee. Includes a link to the committee's final report, with information on the municipal sewer tax.

Smart Voter by the League of Women Voters. Click on "Feb. 7: Alameda County (City of Piedmont) for information on local candidates.

Smart Voter: Candidates Answer Questions on the Issues. Questions for Piedmont City Council candidates include, "The ballot measure in February asks for a 50% increase in the Sewer Tax. This will cost homeowners several hundred dollars per year for the next ten years. Do you support or oppose the Sewer Tax measure?"

KCOM-TV broadcast schedule. Check here for rebroadcasts of the League of Women Voters Election Forum.

City of Piedmont video archives. Scroll down to "Other Public Meetings" to view video of the League of Women Voters Election Forum.

Piedmont Civic Association. Includes an article on whether the sewer tax surcharge would be tax deductible.

Earlier articles on Piedmont Patch. These include , and .