For Immediate Release
Contact: Renee
Ledbetter (209) 577-5463
No. 02-049
April 10, 2002
City Cancels Storm Drain
Election
On Tuesday, April 9, the Modesto City Council
directed staff to cancel the April 29th Storm Drain Surcharge Election and order
City Clerk Jean Zahr to destroy approximately 28,000 ballots already submitted
to the city.
In a late closed session last night City
Attorney Mike Milich informed council members that the city has under-billed the
owners of multi-family, commercial, industrial property for the past decade to
the tune of approximately $1.5 million. The under billing does not affect
property owners of single family homes.
Next Tuesday, the council will take formal
action to ratify the direction given to staff.
Milich advised city councilmembers that the
significant billing error discovered late last month, after ballots were mailed
to the property owners, is reason to believe the city violated that part of the
California Constitution known as Proposition 218. He advised the council to
cancel the upcoming election, order the city clerk to destroy the unopened
ballots, and start the election process over.
Under the Proposition 218, the city must
disclose the basis of the rate calculation and all the reasons why an increase
in the storm drain rates is necessary.
"Because of the error property owners were
not fully informed as to how the city currently calculates the rates and the
reasons why the rate increase is necessary. In my opinion these two defects in
the notices constitute a violation," said Milich.
The ballots were mailed to property owners on
March 12. Soon after, customers who needed assistance calculating their bills
inundated the city with phone calls. City staff was stumped when the calculation
methodology for the proposed charges conflicted with the city's current billing
practices.
The problem stems from a complex rate structure
developed in 1991 and staff's assumption that the billing system was charging
according to the method adopted that year.
Since 1991, property owners have only been
charged for the actual size of their property, rather than in a step-range
method, as directed in a resolution adopted by a 1991 city council. The
"stair step" method calls for all commercial and industrial property
owners within a certain lot size range to pay the same rate. The stair step
ranges are established in 3,500 square foot increments. This means a business on
a lot size of 3,501 square feet would pay the same fee as a business on a lot
size of 7,000 square feet.
"The bottom line is keeping the faith of
the voters," said City Manager Jack Crist. "Not only are we
accountable for our actions, but we are accountable for the actions of our
predecessors."
All six council members present agreed that
despite the significant expense already incurred by the city, that canceling the
election is the right thing to do.
"It's important that we be up-front and
honest with the citizens of this community and explain that we made a
mistake," said Councilmember Janice Keating. "You can't put a price on
integrity."
City councilmember, Will O'Bryant also compared
the integrity of a clean election for storm drains to the failed city council
runoff election conducted by Stanislaus County last December, which was
invalidated by a Stanislaus County Superior Court judge.
"We can't let it get to that point. Any
hint of impropriety justifies canceling the election. We must take action now
and cancel this election," said O'Bryant.
Mayor Carmen Sabatino, who is visiting the
city's Japanese sister city, Kurume this week, said by phone Wednesday morning,
"I agree with the rest of the council that property owners have a right to
know all the facts before casting their votes. I support their decision to
cancel the election."
The intent of the election is to fund ongoing
maintenance costs of the city's storm drain system -- a deficient system that
causes many city streets to flood, even during mild storm conditions.
"This problem is very upsetting to us
because not only is our storm drain system badly in need of maintenance and
overall improvement," said Crist.
On Tuesday, staff will also recommend to
council to change the resolution to conform to the city's current billing
practices.
Other staff recommendations on Tuesday will be
to
- Begin an immediate audit of the city's rate
structure to make sure our billing
practices conform to council adopted rates.
- Modify the actual bills to show all
information required by the customer to calculate proposed charges. This may
require customizing the billing system.
- Move the function of establishing rates from
the city's Engineering and Transportation Department to the Finance
Department so that rate setting and billing are under the management of the
same department.
- Test any and all future calculation methods
against the billing system prior to the distribution of ballots/notices.
"We need to regroup and do this thing
right," said Councilmember Tim Fisher. "We need to fix our storm drain
system, but if we are not honest with our citizens now, fixing the system will
never happen."
It is not known when the city will hold another
election for a storm drain rate increase, but one thing is certain, a proposed
rate increase will not be put before the voters again until these issues are
resolved.
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