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Citing criticisms, Council delays new drainage fee

Tuesday, May 26, 2015 by Tyler Whitson

Despite a request from staff to adopt a new drainage charge by the end of the month, City Council is delaying action until the middle of June with the hope that its Public Utility Committee will be able to address major concerns with the proposal.

Council voted to adopt an ordinance on first and second reading Thursday that would put in place the reworked fee structure that staff has recommended to replace the current charge, which is pending state legal action. The proposal is now headed back to committee on June 17.

“There are some remaining issues that need to be worked out, and I think doing it at the committee level would be the most appropriate place,” said Council Member Ann Kitchen, who sits on the committee.

Community stakeholders and Council members brought up several points of contention during a public hearing prior to the vote.

These included concerns that the proposal might disincentivize the compact and connected development outlined in the Imagine Austin plan, that it would disqualify multifamily residents from receiving direct discounts under the Customer Assistance Program and that it would remove an incentive for commercial property owners to build and maintain detention ponds.

Mayor Steve Adler recommended that committee members follow an “iterative” process with staff when assessing the proposal in the weeks leading up to the next committee meeting. Council would have to adopt the ordinance on third and final reading on June 18 – the following day – in order to take care of the issue before going on summer vacation in July.

Assistant City Attorney Mitzi Cotton emphasized that the clock is ticking for the city to address the drainage charge issue. “I think staff is very concerned about the timeline,” she said. The implementation target, she noted, is Oct. 1 – the start of the new fiscal year – and Austin Energy staff has requested three or four months to put the fee in place after adoption.

Watershed Protection Department Director Victoria Li originally requested in a memo to Adler and Council on April 30 that Council take action by the end of May.

State District Judge Amy Clark Meachum ruled in June 2014 that the current drainage charge structure violates a portion of Texas Local Government Code that requires cities to offer drainage service on “nondiscriminatory, reasonable and equitable terms.” The city appealed the ruling in October 2014, and the courts have postponed action on the case until Oct. 22.

Watershed Protection Department Engineer Saul Nuccitelli was hopeful that the city would be able to address the issue before the stay on the appeal expires. “If we make the changes in the ordinance, our understanding from legal is that the appeal would be moot,” he said.

Staff has recommended that Council adopt a fee structure that does not take into account a property’s land use, like the current structure does. Instead, it would be based on the number of square feet of impervious cover on a property, the percentage of the total property that includes impervious cover and a monthly base rate that applies to all accounts.

Impervious cover, such as concrete, prevents rainwater from permeating the ground and can contribute to runoff and flooding.

Staff projects that, among other shifts, the proposal would decrease the total drainage charge contribution for multifamily residential properties by 9 percent, and increase it for single-family properties by 7 percent and nonresidential commercial properties by 4 percent. Concerns that multifamily residents are paying more than their fair share have been a major factor in the legal battle.

Staff has proposed using an “adjustment factor” to increase charges for properties with a higher percentage of impervious cover than the citywide average and decrease it for properties with a lower percentage.

Zoning and Platting Commission Parliamentarian Gabriel Rojas spoke against the idea. “The newest science says you cluster your development … and you leave more spaces open,” he said.

“What the adjustment factor does is it penalizes people for building more impervious cover on their lot. What that’s doing is, on a watershed level, you’re sprawling, and you’re creating much more water quality issues and flooding issues,” Rojas said. “What you want is to incentivize people to build more impervious cover on their lot, which is what Imagine Austin says.”

Rojas went on to suggest an alternative. “What the real metric should be is whether you’re disconnecting your impervious cover from the system,” he said.

Staff is also proposing that the city charge the fee to property owners rather than to customers, as it currently does. In the case of an apartment complex, for example, the property owner would be responsible for distributing the cost of the drainage fee among tenants.

Nuccitelli said that, in such cases, low-income customers living in multifamily developments would not be able to pay a discounted charge through the Customer Assistance Program because they would no longer be the ones paying directly for it.

Council Member Greg Casar raised concerns about the potential impact on low-income multifamily residents. “Their drainage fee is supposedly being reduced because we’re trying to be more equitable with the charge of the drainage fee, but then many of those customers that are getting 50 percent of the drainage fee off may no longer get it off,” he said. “I’m interested in continuing that conversation.”

Li noted that staff’s proposed discontinuation of a 20 percent discount for commercial properties with detention ponds has been a “major issue,” but staff stands behind the reasoning it provided to Adler and Council on April 10.

“This discount is neither equitable nor reasonable for a number of reasons,” the memo reads. Among these are the assertion that “only a relatively small number of businesses (not residential properties) are eligible for the discount, and the amount of the discount does not correspond to the actual maintenance costs of the ponds.”

Nuccitelli added that keeping the discount would mean that other customers, including residential customers, would be responsible for covering the lost revenue.

Kitchen said she will take the lead on compiling a list of the issues that Council has identified with the proposed fee structure and post it on the City Council Message Board.

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