Committee proposes delay on drainage fee

With pressure mounting for City Council to adopt a new drainage-fee structure in the face of legal and budgetary concerns, the Public Utilities Committee took up the issue Wednesday but made no official recommendation to Council.

The ordinance that the Watershed Protection Department has proposed is on today’s Council meeting agenda but will likely be postponed. “I think I’m safe in saying that we will not be hearing this tomorrow,” said Council Member Ann Kitchen.

Instead, the consensus seemed to be that Council will delve into the issue at its next work session on Tuesday and make a decision at the subsequent Council meeting on June 25, the same day it will be meeting as the Austin Energy Utility Oversight Committee.

Council adopted the ordinance on first and second reading on May 21, but chose to send it back to committee for further vetting rather than adopt it on third and final reading.

Speakers expressed concerns before the committee that the ordinance would raise the average charge for single-family residents, require multifamily property owners to pay the fee for their entire property and then charge renters accordingly, discourage dense development and more.

“Ultimately, at this point, there are more questions than answers,” said Deanne Desjardin, representing Catellus Development, the corporation in charge of constructing the Mueller planned unit development.

Mike Rodriguez, a member of the Onion Creek Homeowners Association, said the proposal “would largely shift the burden to single-family home dwellers.”

A few speakers said they were worried that, even though staff has projected that multifamily residents would pay less under the proposed structure than they do currently, the new allocation method would encourage property owners to shift the new burden onto renters in a way that exceeds the actual costs.

Housing advocate Stuart Hersh said that the proposed ordinance “may have language that treats the renter majority unfairly,” referring to the fact that more than half of Austin residents are renters. “It will not feel like greater affordability if my drainage fee drops to zero but my rent increases by $50 or $100 a month,” he said.

Some speakers requested that the committee postpone adoption even further in order for the city to hold an expanded stakeholder process.

There are other factors, however, that may discourage Council from delaying adoption of the ordinance. “We are under some legal deadlines and some things that are causing us to make this decision now,” said Council Member Ellen Troxclair.

District Judge Amy Clark Meachum ruled in June 2014 that the current fee structure violates Texas Local Government Code. The city subsequently filed an appeal, and the courts have stayed action on that appeal until Oct. 22, at which point legal proceedings may resume.

According to Assistant City Attorney Mitzi Cotton, adopting a new drainage fee structure before the end of the stay could resolve some of the city’s legal issues.

Watershed Protection Advertising and Outreach Coordinator Craig Bell said his department’s staff has requested that Council adopt the new structure in time for staff to have it ready for the upcoming fiscal year, which begins Oct. 1. Austin Energy staff, he said, have requested 90 to 120 days to prepare its billing system.

In order to meet the requested timeline, Council would have to adopt the new structure by the end of the month, prior to going on vacation for the majority of July.

Bell explained that there are ways the city could soften the impacts of the new structure on residents in its first year of implementation. Council, he said, could take action during the budget deliberation process — presumably after it adopts a new structure — when it sets the fees for the coming fiscal year.

One option, put forward by staff, includes setting a cap on individual fee increases in a single year. However, Watershed Protection Department Director Victoria Li wrote in a memo to Mayor Steve Adler and Council on Wednesday that this approach presents “severe feasibility issues.”

Another option that Rodriguez put forward and Council Member Don Zimmerman appeared to support involves dividing customers into tiers with different rates that would be categorized according to their amount of impervious area.

Li told the Environmental Board when she first unveiled the proposed drainage fee structure on Dec. 3 that she and her staff believed it to be more fair and equitable than what is currently in place.

The structure, Li explained in a memo on April 30, is “land-use” neutral in that it directs staff to formulate the fee for all properties — be they commercial, industrial or residential — in the same way.

That formulation would be based primarily on a property’s overall lot size, the overall amount of impervious cover on a lot and the proportion of the lot that includes impervious cover. It would also incorporate an “adjustment factor” that essentially raises the fee for properties that have a proportion of impervious cover greater than the citywide average, and vice versa.

Bell noted in a presentation that removing the adjustment factor from the equation would create highers costs for single-family residents and lower costs for nonresidential property owners than the proposed ordinance.