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HomeMy WebLinkAbout11. Receive mock-ups of sample Prop 218 Notices, as requested by Administration Committee Page 1 of 13 Item 11. CENTRALSAN CENTRAL CONTRA COSTA SANITARY DISTRICT November 15, 2018 TO: HONORABLE BOARD OF DIRECTORS FROM: EMI LYBARNETT, COMMUNICATIONS AND INTERGOVERNMENT RELATIONS MANAGER REVIEWED BY: PHIL LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION ANN SASAKI, DEPUTY GENERAL MANAGER ROGER S. BAILEY, GENERAL MANAGER SUBJECT: RECEIVE MOCK-UPS OF SAMPLE PROPOSITION 218 NOTICES, AS REQUESTED BYTHE ADMINISTRATION COMMITTEE At the May 9, 2017 Administration Committee meeting, during biennial review of Board Policy No. BP 011 - Policy for the Submission and Tabulation of Proposition 218 Notice Protests, Member Williams said he would like to see an easier process for the public to protest rate increases. The idea of having a Proposition 218 notice with different alternatives for which a customer might protest, including a tear-off card, was suggested. At the September 18, 2018 Administration Committee meeting, staff presented three mock-up Proposition 218 notices based on the 2017 Proposition 218 notice, each with a tear-off card or cut-out portion for filing protests. The Committee discussed at length the concept of including a tear-off card, the associated costs (including estimated staff time for processing an anticipated increase in the number of protests), staff's deep concerns about the reputational damage that can result from using such an approach, and other more proven methods for obtaining customer feedback. Ultimately, the Committee was split with regard to the idea of incorporating a tear-off protest card in the Proposition 218 notice. Because of the split decision, the matter is being presented to the full Board with no Committee recommendation. Attachment 1 contains excerpts from the minutes of both Administration Committee meetings referenced above. The information presented in the following three sections below augments the discussions at the Committee meetings. Proposition 218 Requirements To raise rates, Central San must notify customers on how they can protest a proposed rate increase. Section 6 of Article XI I I D of the California Constitution states: 1. The parcels upon which a fee or charge is proposed for imposition shall be identified. The November 15, 2018 Regular Board Meeting Agenda Packet- Page 71 of 254 Page 2 of 13 amount of the fee or charge proposed to be imposed upon each parcel shall be calculated. The agency shall provide written notice by mail of the proposed fee or charge to the record owner of each identified parcel upon which the fee or charge is proposed for imposition, the amount of the fee or charge proposed to be imposed upon each, the basis upon which the amount of the proposed fee or charge was calculated, the reason for the fee or charge, together with the date, time, and location of a public hearing on the proposed fee or charge. 2. The agency shall conduct a public hearing upon the proposed fee or charge not less than 45 days after mailing the notice of the proposed fee or charge to the record owners of each identified parcel upon which the fee or charge is proposed for imposition.At the public hearing, the agency shall consider all protests against the proposed fee or charge. If written protests against the proposed fee or charge are presented by a majority of owners of the identified parcels, the agency shall not impose the fee or charge. During the last Proposition 218 cycle, Central San exceeded the minimum requirements of Proposition 218 by: 1. Conducting commercial and residential customer rate workshops 2. Expanding the Proposition 218 notice to be more readable, engaging, and accessible to customers by including graphics, maps, locations of projects, and summarizing information. 3. Incorporating notice of the proposed rate increase and public hearing in the Pipeline newsletter in an effort to reach additional customers, including both property owners and tenants 4. Receiving protests through ways other than traditional mail, including email and fax 5. Hosting a Community Information Line (phone) and specific email address where customers can directly connect with employees to have their questions answered regarding the proposed rate increase Central San's Protest Policy The Board has adopted a policy for dealing with protests under Proposition 218, BP 011 - Policy forthe Submission and Tabulation of Proposition 218 Notice Protests, which is included as Attachment 2. The policy is consistent with California Government Code 53755(b), which dictates how each protest is counted, states: One written protest per parcel, filed by an owner or tenant of the parcel, shall be counted in calculating a majority protest to a proposed new or increased fee or charge subject to the requirements of Section 6 ofArticle X111 D of the California Constitution. Protest Tallies from Recent Rate Cycles Historically, Central San has received relatively few protests. Staff reviews all protests for validity and categorizes them based on the nature of the feedback, if any. Below are the numbers of legally valid protests received during the last seven rate cycles: Year Proposition 218 Notice Mailed Number of Legally Valid Protests 2017 19 2015 55 (31 from one school district) 2013 67 2011 101 2009 115 2007 27 2004 16 November 15, 2018 Regular Board Meeting Agenda Packet- Page 72 of 254 Page 3 of 13 Sample Mock-Ups,Associated Costs and Case Studies Hard copies of the mock-up examples will be distributed at the Board meeting. The estimated added costs associated with each of the alternatives is provided in Attachment 3.Additionally, the second page of the attachment includes case studies of two of the three known agencies that have pursued alternative Proposition 218 response options. One of those agencies, Napa Sanitation District, gave a presentation on the process of transitioning to a Proposition 218 tear-off card notice at the California Association of Sanitation Agencies (CASA)Annual Conference in August 2017. A slide from that presentation is included as Attachment 4. Staff Recommendation/Request for Direction Based upon the information received from case studies, the extraordinarily low number of protests the District receives, and Central San's previously established significant outreach with customers as part of the Proposition 218 process, staff recommends keeping the existing 2017 format for the upcoming Proposition 218 notice, and utilizing existing methods such as surveys to gain input on customer feedback and satisfaction about Central San operations and any associated rate increases. Staff is seeking direction from the Board at this time. ATTACHMENTS: 1. Excerpts from Administration Committee Minutes 2. BP 011 - Policy for the Submission and Tabulation of Proposition 218 Notice Protests 3. Costs forAlternative Mock-Up Prop 218 options 4. Napa San slide on results from tear-off card transition November 15, 2018 Regular Board Meeting Agenda Packet- Page 73 of 254 Page 4 of 13 ATTACHMENT 1 MINUTES EXCERPT May 9, 2017 Administration Committee Meeting 1. ... [R]eview proposed revisions to the following existing BPs: a. BP 011 — Proposition 218 Notice Protests Ms. Boehme explained that District Counsel Kent Alm reviewed the policy and concurred that protests submitted do not need to be confidential and may be distributed in advance of the public hearing. It is recommended that that language be deleted from the policy. Member Williams agreed to the change in the policy language, and brought up philosophical questions as to how to make it easier for the public to protest rate increases. Chair McGill stated that Proposition 218 clearly states what the process is to protest the proposed change in rates. Member Williams would like to know what alternatives there could be to writing a letter, signing it, and mailing it in, which can all be viewed as hurdles; he would like to see an easier process. Chair McGill suggested the idea of having the Proposition 218 Notice with a tear-off card that can have a line to add the parcel number or address, signature line, whether the individual is opposed to the change or not, and have it prepaid and pre-addressed, in order to make it as simple as possible for ratepayers. He requested a mock-up of this style to be reviewed by the Committee at a future date. He also requested additional information on who is eligible to vote:parcel owners, tenants, or both. Chair McGill and Member Williams recommended Board approval of the revised Board Policy. Once a mock-up Proposition 218 Notice is reviewed, another revision to the policy may be needed. COMMITTEE ACTION: Reviewed and recommended Board approval. November 15, 2018 Regular Board Meeting Agenda Packet- Page 74 of 254 Page 5 of 13 MINUTES EXCERPT September 18, 2018 Administration Committee Meeting 4. Other Items a.* Receive mock-ups of sample Proposition 218 notices as requested by Committee at the May 9, 2017 meeting Ms. Barnett noted that the 2017 Proposition 218 notice was a big departure for Central San in its style and format, which included more imagery and less text. She said this is considered a best practice from the standpoint of communicating the District's messaging. Due to its success, other agencies, including East Bay Municipal Utility District and Contra Costa Water District, have or are in the process of updating the style of their Proposition 218 notices to model Central San's most recent notice. In response to the Committee's request, Ms. Barnett distributed three sample Proposition 218 mock-ups as referred to in the agenda material, each of which included either a cut-out form or tear-off card for customers to use to protest proposed rate increases. Cost projections associated with processing the protests were also provided, with variations for whether or not postage was prepaid by Central San, and staff time related to several anticipated return rates. Member Williams said he had no problem with tracking staff time to process additional protests, but he said the cost of doing so should not be a consideration in evaluating his suggestion. Ms. Barnett also shared a slide from a presentation given by Napa County Sanitation (see attached) about the results of an approach similar to that suggested by this Committee implemented with their last Proposition 218 notice. As indicated on the slide, Napa San incurred reputational damage and a lot of ire in their community. She noted that it can take a significant amount of time and money to recover from such an outcome; in fact, it can take years. It can also serve to vulcanize a small group of ratepayers who may have hard feelings toward the District for one reason or another. With this sort of approach, it is unlikely that protest levels will rise to a majority of ratepayers, yet the process will have upset a large portion of customers who may only know the agency by its good reputation. If trusted customer feedback is the end goal, Ms. Barnett said, in her opinion, there are other more accurate ways to obtain it without causing the damage that this suggested process could incur. One such option would be statistically accurate customer surveys. Chair McGill said that Ms. Barnett raised a significant point. Ultimately, genuine customer feedback is the most useful. He said it appears to him November 15, 2018 Regular Board Meeting Agenda Packet- Page 75 of 254 Page 6 of 13 that generating a Proposition 218 notice to meet legal requirements, and obtaining meaningful customer feedback are two separate issues that are being mixed. Member Williams agreed that Central San's reputation is sterling and probably one of the best around and he does not want to interfere with that, but if the only thing a customer receives is positive feedback from the agency (e.g. awards won, quick response times), they are the ones paying for the service. He suggested pointing out something that is not positive about Central San, though such things are few and far between. This is just part and parcel of being a community. The people paying rates should understand that they have the right to be for or against any rate proposals. Mr. Bailey said distributing an informative and transparent Proposition 218 notice is important, but it is by no means a substitute for the multitude of information and data the Board has received during many hours of Board and Committee meetings and Board workshops leading up to making rate decisions on behalf of Central San. So, in essence, the ratepayers are being asked to make a cursory decision about rates based solely on a Proposition 218 notice. In his experience, he said most taxpayers will vote against any tax increases, so he suspects that if the protest process was as simple as sending in a pre-paid tear-off card, most likely they will do so. But that does not mean it is a good and reasoned vote. Mr. Bailey said he would encourage the Board Members to utilize the authority that the ratepayers/voters have entrusted them with and say no to considering this approach and not shy away from making informed decisions that are in the best interest of Central San's customers. Member Williams said that would amount to saying the Board does not need the ratepayers'opinions with regard to rates. He then said the question becomes whether the District wishes to abide by the spirit of Proposition 218, or not. Ms. Barnett said that customer feedback based on focus groups has indicated that customers do not have time to follow the District's issues as closely as staff and Board Members. To help keep them informed, Central San distributes both a legal Proposition 218 notice as well as a "soft" notice by reproducing virtually the entire text in the Pipeline publication during the Proposition 218 comment period, which also is mailed to every customer. Other agencies do not do that. Central San also goes above and beyond by hosting rate information workshops for residential and business customers throughout the service area. Mr. Bailey pointed out that Central San's current Board Members are all very engaged in the District's business and very well educated on the November 15, 2018 Regular Board Meeting Agenda Packet- Page 76 of 254 Page 7 of 13 issues it faces. They do not rubber stamp anything and when it comes to considering rates; they make very informed decisions about which the public can be proud. He said he feels good about the current process. Ms. Barnett reiterated that the staff recommendation is to utilize a similar Proposition 218 notice in 2019 as that used in 2017 and to use other methods to obtain customer feedback. Member Williams said he preferred the mock-up Option 3 with a tear-off card insert. Chair McGill said he was inclined to support the staff recommendation as stated by Ms. Barnett. COMMITTEE ACTION: The Committee was split on this matter, with Chair McGill preferring to use a similar Proposition 218 notice in 2019 to that used in 2017 and utilizing other methods such as surveys to obtain customer feedback, and Member Williams preferring to modify the Proposition 218 notice to include a tear-off card insert to make it easier for ratepayers to protest. Because of the split decision, the matter will be presented to the full Board for consideration with no Committee recommendation. November 15, 2018 Regular Board Meeting Agenda Packet- Page 77 of 254 ATTAt*W eWt 2 Central Contra Costa Number: BP 011 Sanitary District Authority: Board of Directors Effective: March 17, 2011 Revised: June 1, 2017 =- Reviewed: Initiating Dept./Div.: Administration BOARD POLICY POLICY FOR THE SUBMISSION AND TABULATION OF PROPOSITION 218 NOTICE PROTESTS PURPOSE To establish a policy for handling protests related to fee or charge increases subject to Proposition 218, in accordance with Article XIIID of the California Constitution and California Government Code Section 53755. POLICY This policy establishes the criteria for handling written protests of fee and charge increases subject to the Proposition 218 notification requirements. The policy provides standards for validation of the tabulation of protests in the event of a challenge or claim of irregularity. Submittal of Protests 1. Any property owner and/or tenant of a parcel may submit a written protest to the Secretary of the District for the affected parcel. 2. To be valid, a written protest must bear the signature of the record owner or tenant of the parcel and may not have been altered by anyone who did not sign the protest. Each protest must identify the affected property by Assessor's Parcel Number or street address. 3. Protests may be delivered to the Secretary of the District or submitted at the public hearing. Protests may be delivered by personal delivery or mail. Electronic copies of signed written protests will also be accepted by fax or as a PDF attached to an e-mail. Preferably, mailed protests will note on the envelope, "Sewer Service Charge Protest" or "Recycled Water Fee Protest." Protests submitted by mail, by fax or e-mail must be received prior to the start of the public hearing; personally delivered written protests must be received by the end of the public hearing. No postmarks will be accepted. No electronic means of November 15, 2018 Regular Board Meeting Agenda Packet- Page 78 of 254 Page 9 of 13 Number: BP 011 PROPOSITION 218 NOTICE PROTESTS Page 2 of 3 communication will be accepted as a valid protest unless it is fully compliant with the signature and informational requirements set forth herein. 4. Only one protest will be counted per parcel. If a signed written protest is received from both the property owner and tenant, only one protest will be counted. If a parcel served by the District is owned by more than a single record owner, each owner may submit a protest, but only one protest will be counted per parcel and any single protest submitted in accordance with these rules will be sufficient to count as a protest for that parcel. 5. Any person who submits a protest may withdraw it by submitting to the Secretary of the District a written request that the protest be withdrawn. A property owner may also withdraw a protest of a tenant. The withdrawal of a protest shall identify the affected property by Assessor's Parcel Number or street address and the name of the record owner or tenant who submitted both the protest and the request that it be withdrawn. 6. The Board welcomes input from the community at any time, including during the public hearing on the proposed charges, but only written protests consistent with this policy will be counted as formal protests. 7. Upon the request of a property owner, the Secretary of the District will disclose the receipt of a protest by a tenant for a particular property prior to the public hearing. Tabulation of Protests 1. The Secretary of the District shall determine the validity of all protests. The Secretary of the District shall not accept as valid any protest if the Secretary of the District determines that any of the following conditions exist: a. The protest does not identify a parcel currently receiving sewer service from the District or reasonably served by the District's recycled water pipelines; b. The protest does not bear a signature of a record owner or tenant of the parcel identified on the protest; C. The protest does not clearly state its opposition to the proposed charges; d. The protest was not timely received prior to the public hearing or presented to the Secretary of the District before the close of the public hearing on the fee increase; e. A valid request to withdraw a previously-submitted protest is received prior to the close of the public hearing on the proposed charge; f. The protest was altered by one other than the owner or tenant who signed it. November 15, 2018 Regular Board Meeting Agenda Packet- Page 79 of 254 Page 10 of 13 Number: BP 011 PROPOSITION 218 NOTICE PROTESTS Page 3 of 3 2. The Secretary of the District's decision that a protest is not valid or does not apply to a specific charge shall constitute a final action of the District and shall not be subject to any administrative appeal. 3. A majority protest exists if written protests are timely submitted and not withdrawn by the record owners or tenants of a majority of the parcels subject to the proposed charge. November 15, 2018 Regular Board Meeting Agenda Packet- Page 80 of 254 ATTACHMENT 3 Estimated Costs of Various Mock-Up Proposition 218 Notice Options Comment/ Response Staff Prop 218 Comment/ Printing Postage Total Protest Postage Cost to Log Protest Design Alt. Type Cost Cost Cost* Protests** Cost Existing- Section with Written letter sent description of how to protest via email, fax, hand $11,642 $43,067 0 $74 $54,783 via written response (2017) delivery, or mail Option 1 - Cut out section, Cut-out form sent $16,132 customer would pay for via email, fax, hand (5% return) $73,132 envelope and postage delivery or mail $13,000 $44,000 0 $32,264 $89,264 (10% return) Option 2 - Perforated tear- Tear-off form sent $2,507 $16,132 off postcard; District pays via email, fax, hand (5% return) (5% return) $83,511 response postage costs delivery or mail $20,872 $44,000 $5,014 $32,264 $102,150 (10% return) (10% return) Option 2 A- Postage not paid Same as Option 2 $16,132 by District $20,872 $44,000 0 (5% return) $81,004 $32,264 $97,136 (10% return) Option 3- Postcard stitched Pull-out form sent $2,507 $16,132 or glue-dotted into notice; via email, fax, hand (5% return) (5% return) $78,639 District pays for postage costs delivery or mail $16,000 $44,000 $5,014 $32,264 $97,278 (10% return) (10% return) Option 3 A- Postage not paid Same as Option 3 $16,132 by District (5% return) $76,132 $16,000 $44,000 0 $32,264 $92,264 (10% return) *Assumes 109,000 unique parcels as estimate for 2019. **Staff costs are the average of the four employees ($74/hour) that are responsible for reporting, categorizing, and responding to Prop 218 responses and include internal overhead costs minus unfunded actuarial accrued liabilities (UAAL). Estimate is 4 hours of staff time per 100 protests received, based on requirements of Central San's BP 011 Prop 218 protest policy. November 15, 2018 Regular Board Meeting Agenda Packet- Page 81 of 254 Case Study Examples (staff was able to provide details of two of the three known that offer alternatives to the designated Prop 218 protest): NapaSan — In 2016, at the request of the local taxpayers' association, NapaSan provided a cut-out option that required customers to use their own envelope and pay the postage costs to protest. Protests increased from 200 to over 2,200 (11-fold) with the change in protest option. Note: NapaSan's rate increase changed from annual CPI to a 5-year 54% total increase which may have also been a contributing factor to the increase in protests. Alameda County Water District— In 2015, ACWD offered a protest-by-email option which increased protest responses from roughly 500 to 2,000 (4-fold). In 2017, ACWD allowed for an online protest form via the District's website. In total, 6,700 protests (return rate of 5.7% and 4-fold increase from previous Prop 218 notice) were received with the majority via online protest. November 15, 2018 Regular Board Meeting Agenda Packet- Page 82 of 254 ATTACHMENT 4 Ides LAtS 20 negative Letters to the Editor Ads in newspaper opposing rate .� ..., ,.. increase Yard signs opposing the rate increase NEW TAXES ! Positive editorial in the Napa In Napa county Register Protest the 53% Sewer Rate Increase! 2,268 protests (less than 10%) November 15, 2018 Regular Board Meeting Agenda Packet- Page 83 of 254