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HomeMy WebLinkAboutE-09 JPA for Enhanced Watershed Management ProgramCONSENT ITEM E-9 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: TROY L. BUTZLAFF, ICMA-CM, CITY MANAGER FROM: LOUIE F. LACASELLA, MANAGEMENT ANALYST DATE: AUGUST 15, 2016 SUBJECT: CONSIDERTION OF A NON-BINDING LETTER AUTHORIZING THE EXPLORATION OF A JOINT POWERS AUTHORITY FOR THE MANAGEMENT OF ENHANCED WATERSHED MANAGEMENT PROGRAM RESPONSIBILITIES SUMMARY: In 2012, the California Regional Water Quality Control Board, Los Angeles, acting on delegated authority under the federal Clean Water Act, issued a new Municipal Separate Storm Sewer System Storm Water Permit (MS4 Permit) regulating discharges in Los Angeles County. To comply with the MS4 permit requirements, the City is participating in a sub-regional group known as the Rio Hondo / San Gabriel River Water Quality Group that includes the cities of Arcadia, Bradbury, Duarte, Monrovia, Sierra Madre, LA County, and the LA County Flood Control District. Together, the group has developed an Enhanced Watershed Management Plan (EWMP) to comply with mandatory MS4 storm water permit requirements. The EWMP plan calls for the construction of $1.4 billion of storm water projects by 2028. Of that amount, the City’s obligation has been estimated at over $340 million. In light of the significant cost of compliance, and given that facilities will be located in a variety of different local jurisdictions, the cities are exploring the creation of a Joint Powers Authority to serve as a separate legal entity that would be responsible for building and maintaining sub-regional stormwater projects. The proposed action authorizes Staff to execute the attached (Attachment 1) non-binding letter regarding the creation of a Joint Powers Authority for the management of Enhanced Watershed Management Program responsibilities in the Rio Hondo / San Gabriel River Watershed Group. RECOMMENDATION: Staff recommends that the City Council take the following actions: 1) Approve a non-binding letter authorizing the exploration of a Joint Powers Authority for the management of Enhanced Watershed Management Program responsibilities in the Rio Hondo / San Gabriel River Watershed Group. 2) Authorize the City Manager to execute a non-binding letter on behalf of the City. APPROVED COUNCIL MEETING 8/15/2016 JPA for Enhanced Watershed Management Program August 15, 2016 Page 2 DISCUSSION: In California, stormwater issues fall under the management of the State Water Resources Control Board, and every municipality is required to obtain through their respective Regi onal Water Quality Control Board a Municipal Separate Storm Sewer System (MS4) Permit that regulates stormwater discharges. The current MS4 Permit for Los Angeles County has been in effect since December 28, 2012, an overview of the provisions required by the permit include the following:  Permittees are required to eliminate all non-stormwater discharges.  Permittees are required to implement best management practices to prevent/minimize stormwater pollution.  Permittees are required to enforce pollutant limits through the establishment of Total Maximum Daily Loads (TMDLs) for 33 specific pollutants. A TMDL establishes the maximum amount of a pollutant that a waterbody can receive and still meet water quality standards. Pursuant to the provisions of the LA County MS4 Permit, each municipal permittee is required to be in strict compliance with stormwater pollution discharge limits. Alternatively, jurisdictions can delay strict compliance by developing and adopting either a Watershed Management Plan (WMP) or an EWMP. The City of Azusa is located within the Rio Hondo / San Gabriel River watershed, and in 2013, the City made the decision to achieve compliance through the development of an EWMP by partnering with several other jurisdictions. Given that the program partners selected were located in both the Los Angeles River and the San Gabriel River watersheds, the group formed the Rio Hondo / San Gabriel River Watershed Group (Group). Agencies in the Group include: Arcadia, Bradbury, Duarte, Monrovia, Sierra Madre, LA County and LA County Flood Control District. Together, the Group developed a EWMP to comply with the mandated MS4 Permit requirements. Included within the EWMP are identified stormwater capture and retention projects that have been assessed as being integral to achieving stormwater pollution TMDL compliance. The projects involve capturing stormwater through the construction of stormwater retention projects and the development of green streets to collect polluted stormwater before it gets into the stormdrain system. Based on the EWMP, the total estimated compliance cost for the Group is $1.4 billion. Of that amount, the City’s share has been estimated at $340.1 million. It is also important to note that throughout all of Los Angeles County, MS4 Permit compliance costs are estimated at $20 billion. Given the scale and cost associated with compliance with the MS4 Permit requirements , the city managers of the cities in the Group have |identified that the following overall EWMP-related work plan should be carried out collectively and regionally on behalf of all Group members:  Public outreach and education regarding the details of the MS4 permit, the requirements, and implementation costs associated with the EWMPs.  Advocacy for policy change to make the MS4 permit and EWMP requirements more viable and sustainable. JPA for Enhanced Watershed Management Program August 15, 2016 Page 3  Work towards compliance within the framework of our approved EWMP. As it relates to compliance activities, eventually, the Group will be required to construct and maintain stormwater capture facilities. Given that those facilities will be located in a variety of different local jurisdictions, development of a Joint Powers Authority (JPA) as a separate legal entity that would be responsible for building and maintaining sub-regional stormwater projects has been identified as a high- priority and low-cost compliance effort. Staff has reviewed a proposal to form a JPA for the purpose of jointly carrying out the EWMP Group’s activities, as outlined in the memorandum from the City of Monrovia’s City Attorney dated July 8, 2016 (Attachment 2). To further develop the overall JPA concept, Staff is seeking City Council authorization to sign a non- binding letter. Authorizing this letter will not require the allocation of any funds, nor would the City have to join the JPA if established. This action merely allows Staff to continue the dialogue with the other cities in the Group to determine the feasibility of the JPA concept. FISCAL IMPACT: There is no fiscal impact associated with the recommended actions. Prepared by: Reviewed and Approved: Louie F. Lacasella Troy L. Butzlaff, ICMA-CM Management Analyst City Manager Attachments: 1) Rio Hondo/San Gabriel River Watershed EWMP Group: Non-Binding Letter 2) JPA Formation Memo from City of Monrovia’s City Attorney CITY OF MONROVIA O F F I C E O F T H E C I T Y AT T O R N E Y 415 South Ivy Avenue, Monrovia, California 91016 Telephone 626.932.5550 Facsimile 626.359.8507 12335-0001\1964616v1.doc MEMORANDUM TO:Rio Hondo/San Gabriel River Watershed EWMP Group City Managers FROM:Craig A. Steele, City Attorney DATE:July 8, 2016 SUBJECT:Potential EWMP JPA Management and Financing Structure Summary The City Managers of the cities in the Rio Hondo/San Gabriel River Watershed EWMP Group and a Los Angeles County representative (collectively “the Group”) have been meeting informally to start to plan for implementation of the Group’s EWMP activities.Our office was tasked by the City of Monrovia to suggest a possible structure for the long-term management, financing, implementation, maintenance and ownership of the Group’s activities and projects. The intent of creating a management and financing structure is to assist the Group and all its members in carrying out the Group’s regional EWMP responsibilities in a way that best protects the individual member entities. This memorandum proposes that the members of the Group form a Joint Powers Authority (“JPA”) for EWMP activities. Discussion The members of the Group have identified the following strands of EWMP-related work that should be carried out collectively and regionally on behalf of all Group members: 1.Public outreach and education regarding the details of the MS4 permit, the requirements and costs of the EWMP, and the need for a viable financing mechanism. 2.Working toward compliance with the approved EWMP, including financing, project design, project construction and long-term ownership, maintenance, and management of improvements. 3.Advocacy for policy change to make the MS4 permit and EWMP requirements more viable and sustainable. Following research regarding the various management and financing structures available to help all the members of the Group meet the Group’s regional responsibilities, our office suggested that the members of the Group form a JPA pursuant to the authority of California’s Joint CITY OF MONROVIA MEMORANDUM Rio Hondo/San Gabriel River Watershed EWMP Group City Managers July 8, 2016 Page 2 12335-0001\1964616v1.doc Exercise of Powers Act (the “Act”)1. Under the authority of the Act, the members of the Group, including a Los Angeles County entity,may form a JPA as a separate legal entity to jointly exercise powers that are common to the members. JPAs can be formed for such purposes as construction and maintenance of facilities, acquisition of property and joint management of regional projects. A JPA may levy taxes, assessments or fees to accomplish its purposes on a regional basis, as long the members share those powers.A JPA also may contract for services or hire its own staff to carry out the responsibilities of the JPA2.Members of the Group already participate in regional JPAs for various purposes. A JPA appears to be the best structure for the members of the Group to jointly carry out the regional responsibilities of the members under the EWMP. Although there are structures that could theoretically accomplish the management and functional responsibilities, each of those structures would impose unacceptable levels of risk for the individual member entities. In addition, less formal structures carry potential political accountability challenges that would make it unlikely that the accepted EWMP work of the Group will get accomplished in a reasonable period of time. Considerations The main advantages of the proposed JPA structure are: 1.Cost sharing and accountability: A JPA structure provides the members of the Group to equitably share the costs of all of the EWMP tasks described above. As each member of the Group would agree to fund a share of EWMP obligations, that contractual obligation among the members would both spread EWMP costs and provide a legally enforceable mechanism to ensure that all members contributed to the regional solutions. A less formal arrangement could result in a “free-rider” problem and funding shortfalls. In addition, the JPA could propose and, if approved, administer a regional funding mechanism for Group projects, such as a Community Services District special tax or other mechanism. Creating a separate entity for funding and administrative purposes would not impact the debt status of the individual member entiti es or leave the entities liable for the debts of the JPA.However, each member of the proposed JPA must recognize that the EWMP work will require substantial funding commitments from members. 2.Risk transfer:One of the main challenges under the EWMP regime in the long term will be determining the long term ownership and maintenance obligations of the EWMP 1 Government Code Section 6500,et seq. 2 Government Code Section 6507 CITY OF MONROVIA MEMORANDUM Rio Hondo/San Gabriel River Watershed EWMP Group City Managers July 8, 2016 Page 3 12335-0001\1964616v1.doc improvements. As a separate legal entity, a JPA can acquire, finance, own and manage facilities and improvements, take on debt and sue and be sued its own name. A permanent and financially viable JPA structure can relieve the Group member entities from the long-term ownership, management and maintenance obligations of the EWMP facilities.Further, a JPA structure will shield member entities from liability arising out of the EWMP activities and improvements. However, the members of the Group will remain permittees under the MS4 permit and liable for compliance. There appears to be no way to shift permittees’ compliance liability to the JPA. 3.Dedicated Staffing: The EWMP regime will undoubtedly be staff-intensive for Group members. Each member is aware that accomplishing the EWMP compliance work and the public information and advocacy work outlined above will require the dedication of staff and funds.A JPA may hire its own staff and/or contract for services to accomplish the powers it will exercise on behalf of its members.Adequately funded by the Group members, a JPA could hire staff and/or contract for the services necessary to implement the EWMP and associated activities on a regional basis. Since the Group members already know that the EWMP activities will require every member of the Group to make financial commitments, the JPA structure provides an efficient way to get the work done without taxing existing staff or requiring any member entity to take on new staff members or administer new consulting contracts. 4.Fair Regional Governance: In any type of joint endeavor with an informal governance structure, participants’ level of interest and time co mmitment could vary widely. In the case of the EWMP activities, varying levels of attention and interest by the Group Members could mean that priorities and activities are skewed toward those members that are more involved on a day-to-day basis, perhaps jeopardizing the regional solutions the EWMP proposes. The JPA structure, with a separate governing board representing each member, will ensure that the regional solutions proposed in the EWMP remain a priority. Next Steps To move forward with the proposed EWMP JPA structure, the members of the Group must take the following “next steps”in the near term. 1.Execute Non-Binding Letter of Commitment: Prior to undertaking the work to form the JPA, all the potential members should execute a non-binding letter that commits each potential member to working on the formation of a JPA and coming up with an agreement for consideration by all the potential members. CITY OF MONROVIA MEMORANDUM Rio Hondo/San Gabriel River Watershed EWMP Group City Managers July 8, 2016 Page 4 12335-0001\1964616v1.doc 2.Agree on Business Points:Membership; financing (initial and project-related) formulas; governance structure; technical advisory structure; staffing; designation of treasurer and fiscal agent/processes; oversight and supervision; inclusion of new members and withdrawal; disposition of JPA assets upon dissolution. 3.Draft proposed JPA for consideration by members. 4.Designate a member entity to oversee start-up activities. 5.Adoption of JPA by each member entity.We do not anticipate moving forward with a JPA for these purposes unless all members of the group approve and execute the agreement. 6.Filing of JPA with Secretary of State. 7.Initial Financing and Start-up activities. While these “next steps” obviously represent an ambitious work program, with appropriate start - up funding from members of the Group, we believe the JPA could be ready for approval by member entities and established by the fall of 2016.