SUMMARY MINUTES OF A WORK SESSION

OF THE CHAPEL HILL TOWN COUNCIL

WEDNESDAY, JANUARY 28, 2004 AT 5:30 P.M.

(Rescheduled from January 26, 2004 due to Weather)

Mayor Kevin Foy called the meeting to order at 5:30 p.m.

Council members present were Sally Greene, Ed Harrison, Cam Hill, Mark Kleinschmidt, Bill Strom, Dorothy Verkerk, Jim Ward, and Edith Wiggins.

Staff members present were Town Manager Cal Horton, Deputy Town Manager Florentine Miller, Assistant Town Manager Bruce Heflin, Town Attorney Ralph Karpinos, Stormwater Engineer Fred Royal, Engineering Director George Small, Senior Long Range Planning Coordinator Chris Berndt, and Town Clerk Joyce Smith. 

Agenda Item 1 - Progress Report on

Potential Establishment of a Town Stormwater Utility

Mr. Horton pointed out that the Council was at a point where they needed to discuss whether or not to continue developing a stormwater utility. The Town was receiving assistance on this from a consultant and a highly knowledgeable committee of community volunteers, he said.  Mr. Horton introduced Town Engineering Director George Small to make a brief presentation.  He noted that the consultant and Advisory Committee members were also available to answer questions.

Mr. Small explained that the Committee and staff were presenting a five-year plan for a stormwater management program that could be funded through establishment of a utility.  If the program and utility concept meet with the Council's approval then the Committee would move forward to the steps outlined in their written presentation, he said.  Mr. Small pointed out that Committee Members Mark Cate, Phil Berke and Julie McClintock were present, as was Consultant Maureen Hartigan, of AMEC Earth and Environmental.  Mr. Small emphasized that there would be much work to do in the next 60-90 days if Council members chose to move ahead with the plan and utility.

Advisory Committee Co-Chair Mark Cate reported that the Committee had reached consensus on the following issues:

· Town has underspent on stormwater for many years.

· The stormwater program is in need of a stable source of funding.

· The utility should be able to demonstrate that it is a good investment.

· The Town should continue to commit funds generated from property taxes to the stormwater program.

· Funds generated from stormwater utility fees should be considered incremental to the funds generated from property taxes.

Mr. Cate said that the intent of the program was to meet the mission in a cost-effective and responsible manner using a dedicated, utility-based funding source and a mix of private and public investment.  The Town's stormwater program had for some time been in a reactive mode, he said, and getting to a proactive mode would take a commitment of time and financial resources.  It would also take a great deal of planning, measurement and reporting to make the transition in a cost-effective and fiscally responsive way, Mr. Cate explained.  He noted that a comprehensive master plan would be the essential roadmap for developing and managing all aspects the program.  Mr. Cate said that developing this would require substantial time and resources, including the active participation of Town stakeholders.

Mr. Cate emphasized that the first priority should be development of the master plan. Committee members had agreed that the time was right for a stormwater utility in Chapel Hill, he said.  Mr. Cate commented on the importance of stakeholders seeing the utility as a good community investment.  So that it not to be seen as a tax increase, he said, the Town should continue its commitment to using General Funds for stormwater management.  Mr. Cate recommended going through a highly collaborative process to create the master plan, adding that there should be regular reports to stakeholders.  Mr. Cate suggested that the Council appoint a board of directors to oversee the creation, implementation and ongoing business of the utility.

Council Member Strom commented that the Advisory Committee was recommending a lower capital improvement budget than he had expected.  He asked Committee members to explain how, if implemented in this way, the program would meet the Committee's planning ideals.  Council Member Strom added that he had strong policy ideals as well, and he asked if the Committee had been "starved for policy direction" from Council.  Mr. Cate stated that the Town needed a massive effort to identify and prioritize all work that could be done to raise water quality and reduce the chance of flooding.  He did not think property owners would have a problem with the fee, he said, but they would want to see that money was being spent in the smartest way that the smartest people can figure out how to spend it.  Council Member Strom ascertained that Mr. Cate believed the Committee could adequately develop the master plan.

Mayor Foy commented on the "protect and restore natural stream corridors" section on page two of the Committee's report.  He was not clear about what that paragraph meant, he said.  Mr. Cate replied that it meant going out and fixing things that had broken over time.  Committee Co-Chair Phil Berke asked Mayor Foy to read the paragraph in question.  Mayor Foy read: "The health of the aquatic ecosystem is dependent on both quality and quantity management.  The Town's stormwater management program will address both infrastructure concerns and aquatic habitat health."  He understood the meaning in theory, Mayor Foy said, "but not in fact."

AMEC Earth and Environmental Consultant Maureen Hartigan stated that this specific paragraph could mean many different things.  From an operational perspective, she said, it could mean how the Town manages and maintains its physical infrastructure, for example the drainage system itself.

Mayor Foy asked for a more specific example, and Ms. Hartigan replied that it might mean cleaning catch basins or setting a standard of maintenance on open channels.  It also incorporates strategies that are regulatory in a sense, she said, such as determining measures of performance for a drainage system.

Ms. Hartigan explained that the Town would establish performance requirements to be imposed on the development community in a way that would meet the Town's long-term goals for protecting and re-establishing aquatic and vegetative habitats.  This would include infrastructure-related best management practices that could be both publicly and privately constructed to improve the overall health of the stream system, she said.  Ms. Hartigan described this as a multi-pronged approach to developing effective development standards and addressing ongoing system performance.  It addresses the way in which it is managed, rehabilitated, and maintained, she said.

Mayor Foy asked if "restore natural stream corridors" meant restoring water quality, or physical characteristics.  Ms. Hartigan replied that it meant both.  Mayor Foy ascertained that it could mean dredging and also mean putting in buffers to establish greenways.

Council Member Strom described the report as "putting the cart way out in front of the horse."  He argued that policy should be made and the Council should discuss what citizens want before there are recommendations on a rate structure, which, he said, might be dreadfully inadequate.  Ms. Hartigan replied that she did not disagree.  That's why the master plan, which translates the Council's policies into operational strategies, must be in place first, she said.  Ms. Hartigan explained that the master plan would be a financial investment that would give the Council the technical information it needs to understand what it would take to physically accomplish those policies.

Council Member Strom asked how the Town could set rates before knowing what policies the Council wanted.  Ms. Hartigan replied that the rates were typical for the program of service she had been directed to establish.  This was a first step in creating resources to get answers while continuing to maintain a quality of service to the community, she said, adding, "You can't just stop managing stormwater while you get all the answers."  Ms. Hartigan explained that the suggested rate structure acknowledges that this is the beginning.  It also acknowledges that there will be a change in the structure based on what the master plan reveals, and the Town has a major capital improvement program waiting in the wings, she said.

Mr. Horton explained that this would be similar to the process the Town had undertaken to better determine deferred and future maintenance needs.  The Town had developed the 15-year Capital Improvements Program (CIP) that it has been following, with Council guidance, ever since then, he said.  Mr. Horton characterized Ms. Hartigan's comments as meaning that even if the Town had a big pot of money today it would still have to go through the process of engineering and design and getting the Council's and community's guidance on which projects would have priority.

Mr. Small pointed out that the Advisory Committee's recommendation included a three-year cycle of rate review.  If there were no dramatic changes then the program would operate for five years under the proposed rates, he said.  Mr. Small noted that the Committee was proposing a three-year rate review in case the Council wanted to do things differently at that point.  Council Member Strom pointed out that this would differ from an inventory of building maintenance in that there would be a couple hundred thousand dollars of capital projects simultaneously imbedded in it.  Policy decisions could have significant impact on the scope, he said, adding that he was thrilled this was happening but disappointed that the Council had not had policy conversations.  That would have made the work easier and the Council could have had much more confidence moving ahead with the program, Council Member Strom said.

Council Member Harrison described the Committee's body of work as impressive.  But Chapel Hill is a town where things have to be slowed down sometimes to get them right, he pointed out.  Council Member Harrison requested more information on the Committee's views about having a board of directors as well as their thoughts about University participation.  Mr. Berke replied that a creative and visionary oversight advisory board of community stakeholders would lead to a broader based consensus throughout the community.  And, he said, he hoped that the University would be involved because it was doing innovative technical work. 

Advisory Board Member Julie McClintock added that she thought the University wanted to be involved.  She encouraged Council members to advocate for that.

Council Member Harrison asked if it would be unique in the university system if the University did not participate.  Ms. Hartigan replied that it would.  She mentioned several other North Carolina schools that were participating in their regions.  Council Member Harrison inquired about NC State University, but Ms. Hartigan replied that she was not familiar with Raleigh's utility program.

Council Member Greene said that Council Member Strom's questions had helped to clarify the Committee's recommendations in her mind.  She inquired about a stream mitigation program by Tetratech, and Council Member Harrison explained that this was a Morgan Creek/Little Creek Watershed Initiative.  Council Member Greene asked if that program could be integrated into the stream restoration recommendation, and Mr. Small replied that it had been.  Town Stormwater Engineer Fred Royal said that Tetratech was doing a focused study that definitely would be integrated into the program.

Mayor Foy referred to the Committee's suggestion for funding in the coming fiscal year and pointed out that planning, modeling and engineering were being recommended at an aggressive level. He asked about the length and character of the process, and Mr. Small pointed out that the mechanics of stormwater management for the Town would not stop in order for engineers to plan. Town engineers would continue an ongoing program and try to plan a watershed facility while also planning a program for the overall stormwater facility, he said.  Mr. Small explained that the program plan would occur concurrently with programs listed under the aggressive level (item one on page four), and they would begin to implement mechanical parts of the program that are not associated with the planning efforts.  Completion of the watershed model would generate physical work, he stated, such as stream restoration projects or possibly changes in development within the watershed.

Mayor Foy noted the chart on page 15 indicating that the Town was spending almost $900,000 a year and proposing adding a million dollars for the coming fiscal year.  He wondered if it was possible to absorb an extra $1 million worth of activity in Town in such a period of time, given that the Town was doing the planning, modeling and engineering.  Mr. Small replied that the Committee had tried to show how they would approach each of the work elements.  They were not proposing anything that would be throwaway work or money, he said.  Mr. Small explained that the Committee wanted to know if the Council would like them to go further on some things, such as being more aggressive about stream restoration or capital improvements.

Mayor Foy asked if the recommendation for $200,000 per year for capital improvements projects (item #5, page 12) meant that the Town would begin accumulating it and that there would be specific projects identified in the following year.  Mr. Small described this as a modest sum and pointed out that it was listed in the "minimal" category.   That is work that the Town has to do regardless of the funding source, he said.  Mr. Small noted that "minimal" means for modest projects.  Performing the pipe and ditch replacement on Burning Tree Drive would have cost at least $100,000, he said, adding that this was only one of the projects the Town could undertake.

Mayor Foy asked if the Town would accumulate the money and then have the utility issue bonds or CIPs.  Mr. Small replied that they were not expecting that in the first year, but probably around year three.  Then the staff would have identified a higher level of capital improvements programs for the Council to consider, he said.  Mr. Small stated that the Council would have to decide at that point whether to try and pay for those in cash, issue bonds, or borrow money and use utility money revenues to pay debt service.

Council Member Strom said that the Council had discussed, during Land Use Management Ordinance deliberations, whether and how to manage stormwater on a watershed-wide basis.   He asked when the Council would be asked to provide that sort of direction.  And, he continued, if the Committee does a watershed study, for instance, shouldn't the Council's goals be laid out in order to direct that study?  Council Member Strom expressed concern about the prospect of a consultant doing a watershed study without the Council having its concerns addressed.  The Town might end up spending more money to get their questions answered, he said. Council Member Strom emphasized his support for the venture but expressed concern that one public hearing might not be comprehensive enough to start off in the right direction and reach a positive outcome.

Mr. Horton explained that one of the first efforts the utility would undertake would be to bring recommendations to the Council and the community for how to proceed with developing the master plan.  The process would include recommending goals for the Council to consider, Council development of goal statements, community discussion, and so forth.  If the Council decides to move forward with the utility, then the staff would do the mechanical things necessary to begin working on products for Council consideration in the normal kind of process, Mr. Horton said.

Mr. Horton pointed out that the staff had not yet done the work to put forward goals for a study.  And, he continued, they won't do that work without this utility, or they'll do it in a different way with far fewer resources.  Mr. Horton noted that tonight's main recommendation was that Council members consider moving ahead with the utility.  The Council would then have the resources necessary to determine the kind of goals they wish to pursue, he said, adding that the Council would also have a revenue stream with which to pursue those goals.

Mr. Horton emphasized that the staff was not asking the Council to give them blanket approval of the entire program.  He offered to make a more careful estimate of what kind of work could be done in the first year and what a more realistic expenditure might be. Council Member Strom replied that he thought the Council and staff saw each other's concerns and that they had the same general interests.

Mayor Foy ascertained that the public hearing would focus on whether or not the Council should move forward to establish a stormwater management utility to serve the citizens of Chapel Hill.  Mr. Horton said that the mission statement, the Committee's program priorities, the levels of effort, and the general work plan would all be available for discussion.  He recommended that the Council be the governing board for this function.  Mr. Horton said that he agreed with the recommendation for an advisory board but disagreed with the suggestion that it should be like OWASA's.  OWASA is not directly responsible to citizens in the same way that the Council is, Mr. Horton pointed out.  He recommended that the Council retain the governance function with the help of a good advisory board.

Mayor Foy stated, in summary, that the Council could view this report as a concept plan for the utility.  They would hear from citizens regarding the recommendations and then decide whether and how to incorporate a utility into next year's fiscal budget, he said.  Mr. Horton added that the only imperative he had discovered so far was that the best way to arrange billing and collection services is through Orange County's tax billing and collection office.  He suggested that, if the Council wished to move ahead, they allow the staff to have further conversations with the County on having a slot on the tax bill for the coming year.  This would require the Town to spend a little money to reimburse the County for its costs, Mr. Horton said.  He stressed that waiting too long before having that conversation would make it difficult, if not impossible, for the County to accommodate the Town in this way.

Mayor Foy ascertained that there were no objections from Council members to the Manager proceeding with that.

Council Member Harrison verified with Mr. Horton that the Town would discuss this with Durham County as well.

Council Member Hill noted that the Committee's recommendations had been based on the University's participation.  Mr. Horton mentioned Vice Chancellor Nancy Suttenfield’s letter, in which she expressed reluctance to participate but explained that the University might not be able to legally exempt themselves.  However, it was possible that the University could be exempt if they obtained an independent permit, Mr. Horton said.

Council Member Strom pointed out that the tiered rate structure had assumed the University's participation.  He asked how it would look without them.  Council Member Strom also requested a discussion of the pros and cons of a tiered rate.  Ms. Hartigan replied that if UNC did not contribute to the utility there would be an approximate 50-cent per month impact on both the tiered and the flat rate.   Mr. Cate added that the Committee had not had much time to discuss the tiered rate and had not reached consensus on whether or not home size made a difference regarding stormwater runoff.  He did not think it would be fiscally responsible to measure every property in Town, he said, and expressed his preference for addressing social equity in terms of need rather than sizes of homes.

Council Member Kleinschmidt asked how rates would be determined for multi-family dwellings.  Ms. Hartigan explained that the rate structure had been set with a potential for multiple tiers for single-family residences, including duplexes.  Apartment complexes would be looked at as commercial operations, she said, and they would be measured.  Ms Hartigan explained that all properties that are not single-family homes would be measured and that the rate would be established through a billing unit base.  This would mean 2,000 square feet of imperviousness in the multi-tiered approach for single-family and 3,015 square feet in the flat rate, she said.  Ms. Hartigan explained that large properties - such as Wal-Mart, the University, or the Town of Chapel Hill - would be measured through aerial photography and that the rate would be in relation to 2,000 square feet.  For example, if a property has 20,000 square feet of impervious surface, then the Town would divide that by 2,000 square feet and come up with 10.  So the rate would be 10 times the billing unit rate and would be $2.92 or $4.78, depending on which rate is used, she explained.

Council Member Kleinschmidt ascertained that the fee for a condominium or townhouse would be divided equally among all owners of the property rather than on a unit-by-unit basis.

Council Member Harrison remembered that a stormwater consultant to the City of Durham had spoken in favor of having a complicated system.  The one being proposed tonight is "as about as complicated as I can handle," Council Member Harrison said.  He remarked that the Council needed to discuss how complicated they wanted this system to be.  Council Member Harrison also stressed the importance of having Council members discuss the tiered rate.

COUNCIL MEMBERS AGREED BY CONSENSUS TO REFER COMMENTS TO THE PUBLIC HEARING ON FEBRUARY 16, 2004.

In response to an inquiry by Mayor Foy, Mr. Horton explained that the staff would have a better estimate by February 16 of the type and amount of work to expect in the next fiscal year.

The meeting adjourned at 6:35 p.m.