City of Millbrae MSR, 01-15-25

Item 5 January 15, 2025 To: LAFCo Commissioners From: Rob Bartoli, Executive Officer Subject: Consideration of Final Municipal Service Review for the City of Millbrae Summary and Background In 1985, San Mateo LAFCo first prepared comprehensive Sphere of Influence (SOI) studies and adopted SOIs for the County’s cities and special districts. Subsequently, LAFCo reviewed and updated spheres on a three-year cycle. SOI updates focus on changes in service demand within the boundaries of cities and special districts. In 2003, in order to comply with the newly enacted Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (CKH Act), LAFCo began the process of preparing SOI updates in conjunction with or following a Municipal Service Review (MSR). This Circulation Municipal Service Review is the first MSR for the City of Millbrae. The City of Millbrae was incorporated in 1948. As of 2020, the population of Millbrae was 23,216. The City of Millbrae’s SOI includes small portions of unincorporated San Francisco Airport Lands to the northeast of the City’s boundaries and west of Highway 101. Although Capuchino High School is entirely surrounded by the City of Millbrae, it is part of the City of San Bruno. Since 1979, the SOI for the City has also included a recommendation to detach Capuchino High School from the City of San Bruno and annex the property to the City of Millbrae. The High School is connected to San Bruno by a narrow corridor with irregular boundaries and is largely surrounded by the City of Millbrae. Currently, the City of Millbrae provides water and sewer to the property. The City provides the following municipal services: law enforcement, parks and recreation, library, streets, lighting, water, wastewater and storm drain and flood control. COMMISSIONERS: RAY MUELLER, CHAIR, COUNTY ▪ VIRGINIA CHANG KIRALY, SPECIAL DISTRICT, VICE CHAIR ▪ KATI MARTIN, SPECIAL DISTRICT ▪ VACANT, CITY▪ VACANT, CITY ▪ VACANT, COUNTY ▪ ANN DRAPER, PUBLIC ALTERNATES: KATHRYN SLATER-CARTER, SPECIAL DISTRICT ▪ VACANT, CITY ▪ JAMES O’NEILL, PUBLIC ▪ NOELIA CORZO, COUNTY STAFF: ROB BARTOLI, EXECUTIVE OFFICER ▪ SARAH FLAMM, MANAGEMENT ANALYST ▪ TIM FOX, LEGAL COUNSEL▪ DIANE ESTIPONA, CLERK January 15, 2025 Millbrae MSR Page 2 Updates to Final Circulation Municipal Service Review On November 4, 2024, San Mateo LAFCo staff received a letter from the City of Millbrae in response to a request for information. The comments from the letter have been incorporated into the staff report the Final MSR report. Current Key Issues Key issues identified in compiling information on the City of Millbrae include the following: • While LAFCo staff has not identified any issues with the City’s budgeting practices, the City’s enterprise funds for water, sewer, and storm drains are projected to use fund balance to fund capital improvement projects. According to the City, there is sufficient revenue to fund ongoing operation and maintenance costs associated with sewer and water service, but storm drain projects are subsidized by the City’s General Fund. • While the revenue for the City has largely returned to pre-pandemic levels, the City has continued to implement various cost saving measures such as a hiring freeze for non- critical positions, reduction in spending on upgrades and deferred maintenance on City facilities, and limiting General Fund subsidies to fund Capital Improvement Projects only deemed mandatory, necessary and achievable. • The City is making accommodations to incur a nearly 45% increase in its housing stock over the next eight years. The City’s 2040 General Plan, which includes the specific plans and development projects described above, was updated and adopted by the City in 2022. The Environmental Impact Report for the General Plan did not identify any significant impacts to the City’s ability to deliver municipal services to the residents and businesses of Millbrae. Proposed Municipal Service Review Recommendations and Determinations As required by State law, there are seven areas of MSR determination, including local policies as set forth in Section 56430. For the Circulation Draft, LAFCo has the following determinations and recommendations: I. Growth and Population Determination As of 2020, the City of Millbrae is home to 23,216 residents and 8,679 housing units. The City’s adopted Housing Element proposes to increase its housing stock by 22% over the next eight years. The City’s 2020 Urban Water Management Plan, which forecasts water demand and availability through 2045, projects that the City’s population will increase to over 27,000 residents and that water demand in 2045 will exceed the available water supply. Recommendation: 1. LAFCo encourages the City to update the Urban Water Management Plan to align with the projected development in the City’s adopted Housing Element. II. Disadvantaged Unincorporated Communities Determination The City’s sphere and municipal boundaries are nearly contiguous with the exception of the San Francisco International Airport Lands located along the City’s eastern border and west of January 15, 2025 Millbrae MSR Page 3 Highway 101. Although Capuchino High School site is part of the City of San Bruno it is surrounded by the City of Millbrae. There are no disadvantaged unincorporated communities within the City’s SOI. Recommendation: None III. Capacity and Adequacy of Public Facilities and Services Determination LAFCo is not aware of any deficiencies in agency capacity to meet existing service needs for which the agency does not have a plan in place to resolve. The City is anticipated to be able to meet most service demands of foreseeable growth with project infrastructure improvements and other mitigation measures. Recommendations: 2. The City’s UMWP was last updated in 2020. The City should align the growth projections in the UMWP with the RHNA growth projections and the 2023-2031 Housing Element in its next UMWP update. 3. LAFCo encourages the City to continue to review potential revenue increases or the creation of a dedicated revenue source for stormwater projects. 4. LAFCo encourages the City to continue to work with Central County Fire, the City of Burlingame and the Town of Hillsborough regarding the implementation of recommendations from the Community Risk Assessment/Standards of Cover & Deployment Analysis. IV. Financial Ability Determination LAFCo staff has not identified any issues with the City’s budgeting practices regarding process. The City of Millbrae prepares an annual operating and Capital Improvement Program (CIP) budget for the upcoming fiscal year that gets adopted by the City Council at a noticed public hearing before June 30th. The City also produces an Annual Comprehensive Financial Report (ACFR) that is reviewed by City Council. The General Fund has been able to cover budgeted expenditures and the City has projected that the General Fund will continue to cover budgeted expenditures in upcoming years. However, the City has had to implement several cost saving measures including an ongoing hiring freeze for non-critical positions, and deferred maintenance for City facilities. The City has three main enterprise funds, one each for Sewer, Water, and Strom Drain. Each one of these funds for FY 2024-25 is proposing to use fund balance to support on-going capital projects. The Water and Sewer funds have sufficient revenue to fund operational and maintenance expenditures. Budget documents do not differentiate between expenses for capital projects and for ongoing operations and maintenance. Recommendations: 5. LAFCo encourages the City to continue to review potential revenue increases for stormwater projects. 6. LAFCo encourages the City to develop projections for the Sewer, Water, and Storm Drain enterprise funds to provide the City a more complete assessment of these January 15, 2025 Millbrae MSR Page 4 funds. These projections can be used in conjunction with the Capital Improvement Program to help the City to allocate appropriate resources to infrastructure projects. 7. In future budget documents, the City should explore including a detailed breakdown of capital improvement costs versus operation and maintenance expenses for each enterprise fund. This would better illustrate what are ongoing versus one-time costs for each fund. V. Shared Service and Facilities Determination The City of Millbrae partners with several agencies to share resources and reduce costs. Recommendation: 8. LAFCo encourages the City to review potential options regarding fire service, including becoming a member of the Central County Fire Department Joint Powers Agreement. VI. Accountability, Structure, and Efficiencies Determination The City of Millbrae ensures that public meetings are accessible and well-publicized. LAFCo staff is not aware of any failures to comply with disclosure laws or the Brown Act. The City prepares and adopts and annual budget, and annual independent audits are reviewed at a City Council meeting. LAFCo staff does not recommend any changes to the City’s governmental structure or operations that will increase accountability and efficiency. Recommendation: None VII. Other Issues Determination The City of Millbrae is engaged in activities to address hazard mitigation, wildfire prevention, and sea level rise for City residents and businesses. Recommendation: 9. LAFCo encourages the City to continue its work in the areas of natural hazard mitigation and sea level rise, and continue to coordinate with partner agencies. Sphere of Influence Determinations As required by State law, LAFCo is required to make five written determinations when establishing, amending, or updating an SOI for any local agency as set forth in Government Code Section 56425(e) that addresses the following: I. The present and planned land uses in the area, including agricultural and open-space lands. The City of Millbrae’s Sphere of Influence includes small portions of unincorporated San Francisco Airport Lands to the northeast of the City’s boundaries and west of Highway 101. Although Capuchino High School is entirely surrounded by the City of Millbrae, it is part of the City of San Bruno. The City’s land use is primarily residential with some open space, office, commercial, and industrial uses. There is no agricultural land within the City’s SOI. January 15, 2025 Millbrae MSR Page 5 II. The present and probable need for public facilities and services in the area. The City of Millbrae’s facilities and services meet the needs of its residents and businesses, and the City anticipates that it will be able to provide adequate facilities and services for the anticipated growth within its service area. III. The present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide. The City currently provides adequate public services to its residents, including fire and police protection, water, sanitary sewer, and storm water services. In addition, the City routinely adopts a Capital Improvement Program to fund critical repairs, replacements and improvements to the City’s infrastructure and facilities. IV. The existence of any social or economic communities of interest in the area if the Commission determines that they are relevant to the agency. There are no disadvantaged unincorporated communities within the SOI for the City of Millbrae. V. For an update of a SOI of a city or special district that provides public facilities or services related to sewers, municipal and industrial water, or structural fire protection, that occurs pursuant to Section 56425(g) on or after July 1, 2012, the present and probable need for those public facilities and services of any disadvantaged unincorporated communities within the existing sphere of influence. No change to the SOI for the City of Millbrae is proposed at this time. Public/Agency Involvement The primary source of information used in this MSR has been information collected from agency staff and adopted plans, budgets, reports, policies, etc.. San Mateo LAFCo also submitted a request for data to the City. On November 4, 2024, the City provide a response to this request for data. The information from the City’s response has been incorporated into this report. LAFCo staff presented an overview of the draft MSR to the Millbrae City Council at their public meeting on October 22, 2024. Environmental Review/CEQA The MSR is categorically exempt from the environmental review requirements of the California Environmental Quality Act (CEQA) under Section 15303, Class 6, which allows for the basic data collection, research, experimental management, and resource evaluation activities that do not result in a serious or major disturbance to an environmental resource. The MSR collects data for the purpose of evaluating municipal services provided by an agency. There are no land use changes or environmental impacts created by this study. The MSR is also exempt from CEQA under section 15061(b)(3), the commonsense provision, which states that CEQA applies only to projects which have the potential to cause a significant effect on the environment and where it is certain that the activity will have no possible significant effect on the environment, the activity is exempt from CEQA. January 15, 2025 Millbrae MSR Page 6 The MSR and SOI update will not have a significant effect on the environment as there are no land use changes associated with the documents. Staff’s Recommendation to Commission 1. Open the public hearing and accept public comment. 2. Accept the Final Municipal Service Review for the City of Millbrae. 3. Adopt the Municipal Service Review Determinations and Recommendations contained in this report. Attachments A. Final Municipal Service Review for the City of Millbrae B. Resolution No. 1330 for the City of Millbrae Municipal Service Review C. MSR Areas of Determinations and Recommendations for the City of Millbrae Municipal Service Review and Sphere of Influence Review for the City of Millbrae Final Adopted January 15, 2025 Municipal Service Review and Sphere of Influence Review for the City of Millbrae SUBJECT AGENCY: City of Millbrae 621 Magnolia Avenue Millbrae, CA 94030 Contact: Thomas C. Williams, City Manager CONDUCTED BY: San Mateo Local Agency Formation Commission 455 County Center, 2nd Floor Redwood City, CA 94063 (650) 363-4224 Commissioners: Commission Alternates: Ray Muller, Chair, County Member Katheryn Slater-Carter, Special District Member Virginia Chang Kiraly, Vice Chair, Special District Member James O’Neill, Public Member Ann Draper, Public Member Noelia Corzo, County Member Kati Martin, Chair, Special District Member Vacant, City Member Vacant, City Member Vacant, City Member Vacant, County Member Staff: Rob Bartoli, Executive Officer Sarah Flamm, Management Analyst Diane Estipona, Commission Clerk Tim Fox, Legal Counsel Municipal Service Review and Sphere of Influence Update City of Millbrae Table of Contents EXECUTIVE SUMMARY ........................................................................................................... 1 Section 1: Overview ............................................................................................................... 2 San Mateo Local Agency Formation Commission .................................................................................... 2 Local Government in San Mateo County .................................................................................................. 3 Purpose of a Municipal Service Review/Sphere of Influence Update ...................................................... 3 Section 2. Summary of Key Issues ......................................................................................... 4 Section 3: Affected Agencies .................................................................................................. 5 Section 4: City of Millbrae ...................................................................................................... 5 Background & Overview ........................................................................................................................... 5 Section 5: Municipal Service Review…………………………………………………………………………………….. 6 1) Growth and Population .................................................................................................................... 6 2) Disadvantaged Unincorporated Communities ................................................................................ 7 3) Capacity and Adequacy of Public Facilities and Services ............................................................... 11 4) Financial Ability…………………………………………………………………………………………………………………………19 5) Shared Service and Facilities .......................................................................................................... 19 6) Accountability, Structure, and Efficiencies ....................................... Error! Bookmark not defined. 7) Other .............................................................................................................................................. 29 Section 6. Sphere of Influence Review and Update .............................................................. 30 Determinations ....................................................................................................................................... 30 Appendix A. City of Millbrae Fact Sheet ........................................................................... 32 MSR─ City of Millbrae EXECUTIVE SUMMARY Section 1: Overview This report is a Municipal Service Review (MSR) and Sphere of Influence (SOI) study for the City of Millbrae (City). California Government Code Section 56430 requires that the Local Agency Formation Commissions (LAFCOs) complete MSRs and SOI reviews on all cities and special districts. A LAFCo is an independent entity with jurisdiction over the boundaries of cities and special districts. An SOI is a plan for the boundaries of a city or special district. The MSR and SOI update do not represent a proposal1 for reorganization of agencies, but rather a State- mandated study of service provisions of an agency. Once adopted, the service review determinations are considered in reviewing and updating the SOI pursuant to Section 56425. The SOI, which serves as the plan for boundaries of a special district, is discussed in the second part of this report. This State-mandated study is intended to identify municipal service delivery challenges and opportunities and provides an opportunity for the public and affected agencies to comment on city, county, or special district services and finance; and opportunities to share resources prior to LAFCo adoption of required determinations. San Mateo Local Agency Formation Commission San Mateo Local Agency Formation Commission (LAFCo or “the Commission”) is a State- mandated, independent commission with county-wide jurisdiction over the boundaries and organization of cities and special districts including annexations, detachments, incorporations, formations, and dissolutions. LAFCo also has authority over extension of services outside city or district boundaries, and activation or divestiture of special district powers. The purpose of the Commission includes discouraging urban sprawl, preserving open space and prime agricultural lands, planning for the efficient provision of government services, and encouraging the orderly formation and development of local agencies based upon local conditions and circumstances. LAFCo operates pursuant to the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (CKH Act) contained in California Government Code Sections 56000 and 57000. The Commission includes two members of the County Board of Supervisors, two city councilmembers from two of the County’s 20 cities, two special district board members from two of the 21 independent special districts, one member of the public, and four alternate members (county, city, special district, and public). In 1985, San Mateo LAFCo first prepared comprehensive SOI studies and adopted SOIs for the County’s cities and special districts. Subsequently, LAFCo reviewed and updated spheres on a three-year cycle. SOI updates focus on changes in service demand within the boundaries of cities and special districts. In 2003, in order to comply with the newly enacted CKH Act, LAFCo 1 An application for annexation may be submitted by 5 percent of the voters or landowners of territory proposed for annexation or by resolution of the District. 2 MSR─ City of Millbrae began the process of preparing SOI updates in conjunction with or following a Municipal Service Review (MSR). Local Government in San Mateo County Municipal service providers in San Mateo County include the County of San Mateo, 20 cities, 21 independent special districts, six subsidiary districts governed by city councils, and 33 County- governed special districts. Independent special districts provide a limited set of services based on their enabling legislation (i.e. fire, water, sanitation, etc.), while cities generally provide a wider array of basic services including police, recreation programs, planning, street repair, and building inspection. The County, as a subdivision of the State, provides a vast array of services for all residents across its cities, special districts and subsidiary districts, including social services, public health protection, housing programs, property tax assessments, tax collection, elections, and public safety. The County also provides basic municipal services for residents who live in unincorporated areas, who are not part of any city or special district. According to 2020 Census data, 63,205 of the County’s total 765,417 residents live in unincorporated areas. Purpose of a Municipal Service Review/Sphere of Influence Update Study This MSR/SOI study examines the City of Millbrae and represents the first MSR for the City. LAFCo prepared this MSR/SOI study based on Millbrae source documents that include Adopted Budgets, Basic Financial Reports and Audits, Capital Plans, Urban Water Management Plans, and Planning Documents, including the General Plan. Draft MSRs/SOI Updates are first circulated to the District under study, along with interested individuals and groups. The Final MSR/SOI Update study will include comments on the circulation draft as well as LAFCo staff recommended determinations that are presented before the Commission for consideration. MSR determinations must be adopted before the Commission updates or amends a SOI. Per Government Code Section 56430, LAFCo is required to include the following areas in the MSR determinations: 1. Growth and population projections for the affected area. 2. The location and characteristics of any disadvantaged unincorporated communities2 within or contiguous to the SOI. 3. Present and planned capacity of public facilities, adequacy of public services, and infrastructure needs or deficiencies including needs or deficiencies related to sewers, municipal and industrial water, and structural fire protection in any disadvantaged, unincorporated communities within or contiguous to the SOI. 4. Financial ability of agencies to provide services. 5. Status of, and opportunities for, shared facilities. 2 “Disadvantaged community” means a community with an annual median household income that is less than 80 percent of the Statewide annual median household income. This area of determination does not apply to the study area. 3 MSR─ City of Millbrae 6. Accountability for community service needs, including governmental structure and operational efficiencies. 7. Any other matter related to effective or efficient service delivery, as required by LAFCo policy. a. Water Resiliency and Climate Change b. Impact of Natural Hazards and Mitigation Planning Per Government Code Section 56425, LAFCo is required to make five written determinations when establishing, amending, or updating a SOI for any local agency that address the following: 1. The present and planned land uses in the area, including agricultural and open-space lands. 2. The present and probable need for public facilities and services in the area. 3. The present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide. 4. The existence of any social or economic communities of interest in the area if the Commission determines that they are relevant to the agency. 5. For an update of a sphere of influence of a city or special district that provides public facilities or services related to sewers, municipal and industrial water, or structural fire protection, that occurs pursuant to Section 56425(g) on or after July 1, 2012, the present and probable need for those public facilities and services of any disadvantaged unincorporated communities within the existing sphere of influence. Disadvantaged Unincorporated Communities In 2011, SB 244 (Chapter 513, Statutes of 2011) made changes to the CKH Act related to “disadvantaged unincorporated communities,” including the addition of MSR determination #2 and SOI determination #5 listed above. Disadvantaged unincorporated communities, or “DUCs,” are inhabited, unincorporated territories (containing 12 or more registered voters) where the annual median household income is less than 80 percent of the Statewide annual median household income. The City of Millbrae does not have any disadvantaged unincorporated communities within its SOI. Section 2. Summary of Key Issues Key issues identified in compiling information on the City of Millbrae include the following: • While LAFCo staff has not identified any issues with the City’s budgeting practices, the City’s enterprise funds for water, sewer, and storm drains are projected to use fund balance to fund capital improvement projects. Per the City, there is sufficient revenue to fund ongoing operation and maintenance costs associated with sewer and water service, but storm drain projects are subsidized by the City’s General Fund. • While the revenue for the City has largely returned to pre-pandemic levels, the City has continued to implement a number of cost saving measures such as a hiring freeze for 4 MSR─ City of Millbrae non-critical positions, reducing spending on upgrades or deferred maintenance on City facilities, and having General Fund subsidies to Capital Improvement Projects limited to those deemed mandatory, necessary and achievable. • The City of Millbrae is making accommodations to incur a nearly 45% increase in its housing stock over the next eight years. The City’s 2040 General Plan, which includes the specific plans and development projects described above, was updated and adopted by the City in 2022. The Environmental Impact Report for the General Plan did not identify any significant impacts to the City’s ability to deliver municipal services to the residents and businesses of Millbrae. Section 3: Affected Agencies County and Cities: City of Millbrae and San Mateo County School Districts: Millbrae School District and San Mateo Union High School District Independent Special Districts: San Mateo County Harbor District, San Mateo County Mosquito and Vector Control, Peninsula Health Care District Dependent Special Districts: None Section 4: City of Millbrae Background and Overview The City of Millbrae encompasses 3.3 square miles and is bordered by the City of San Bruno and San Francisco Airport (SFO) to the north, SFO and the San Francisco Bay to the east, Highway 280 and unincorporated San Mateo County to the west, and the City of Burlingame and unincorporated San Mateo County to the south. Incorporated in 1948, Millbrae is home to approximately 23,000 residents and remains a primarily residential community with some commercial and industrial uses in the northeast portion of the City near El Camino Real and Highway 101. The City is well served by transit, including BART, SamTrans, Caltrain and SFO. Millbrae operates under a Council-Manager form of government with five Councilmembers that set legislative priorities and who appoint the City Manager who then oversees daily operations of City life. The City of Millbrae’s Sphere of Influence includes small portions of unincorporated San Francisco Airport Lands to the northeast of the City’s boundaries and west of Highway 101. 5 MSR─ City of Millbrae Although Capuchino High School is entirely surrounded by the City of Millbrae, it is part of the City of San Bruno. Municipal Services SERVICE RESPONSIBLE AGENCY Public Safety Police protection County Sheriff’s Office Fire protection Central County Fire Department Emergency Medical Service Central County Fire Department Animal Control Peninsula Humane Society & SPCA Utilities Water distribution City of Millbrae Wastewater collection City of Millbrae Wastewater treatment City of Millbrae Electricity Pacific Gas & Electric Peninsula Clean Energy Natural Gas Pacific Gas & Electric Peninsula Clean Energy Solid Waste Collection & Disposal South San Francisco Scavenger Company (franchise agreement) Stormwater drainage and flood control City of Millbrae Street Maintenance City of Millbrae Street Lighting City of Millbrae Community Services Parks and recreation City of Millbrae Library City of Millbrae Mosquito abatement and vector control San Mateo County Mosquito & Vector Control Public transportation Bay Area Rapid Transit SamTrans Caltrain Section 5: Municipal Service Review The MSR determinations checked below are potentially significant, as indicated by “yes” or “maybe” answers to the key policy questions in the checklist and corresponding discussion on the following pages. If most or all determinations are not significant, as indicated by “no” answers, the Commission may find that an MSR update is not warranted. 6 MSR─ City of Millbrae 1) Growth and Population Growth and population projections for the affected area. Yes Maybe No X a) Is the agency’s territory or surrounding area expected to experience any significant population change or development over the next 5-10 years? X b) Will population changes have an impact on the subject agency’s service needs and demands? X c) Will projected growth require a change in the agency’s service boundary? Discussion a) Is the agency’s territory or surrounding area expected to experience any significant population change or development over the next 5-10 years? As of 2020, the City of Millbrae is home to 23,216 residents and 8,679 housing units. Over the past 20 years, the City’s population has grown by 10%, slightly faster than the overall County’s population growth at 9%. Like other communities in the Bay Area, the number of new homes built in Millbrae has not kept up with demand. Between 2010 and 2020, Millbrae’s housing stock only increased by 3.1%3,4. The City of Millbrae offers a variety of housing options. As of 2020, 64.2% of households were single-family detached, 3.4% were single-family attached, 3.3% were multi-family housing with 2-4 units and 30.5% were 30.5% were multi-family housing with five or more units. The Association of Bay Area Governments (ABAG), the agency responsible for forecasting population, housing and economic trends in the nine Bay Area counties, in coordination with the California Department of Housing and Community Development (HCD) estimates the housing need for the region and allocates a portion of projected need to every jurisdiction. In collaboration with Bay Area partner agencies, non-profit organizations and residents, ABAG developed Plan Bay Area 2050, a long-range regional plan that, among other activities, projects the population growth of each region throughout the Bay Area. Plan Bay Area 2050 anticipates that North San Mateo County, which includes the City of Millbrae, will increase its population by 70%, from 98,000 households in 2015 to 166,000 households in 2050. To accommodate the projected growth, cities and counties throughout the State are updating their housing elements every eight years to accommodate the regional housing need assessment (RHNA) allocation for the upcoming cycle. The County and the cities in San Mateo County are currently in the process of updating their Housing Elements to be consistent with 3 https://data.census.gov/profile/Millbrae_city,_California?g=160XX00US0647486 4 City of Millbrae Draft Housing element 7 MSR─ City of Millbrae the RHNA allocations. The Housing Element is a required component of a city’s or county’s General Plan, and the RHNA allocations for each cycle may require an update to zoning ordinances to demonstrate plans to meet the community’s housing needs. The housing element empowers the City to address constraints that limit more productive housing construction, including amending zoning policies, development impact, and permitting fee processes. Although the City of Millbrae did not meet its housing goals during the 5th RHNA cycle, meeting only 67 percent of its target (see table below), the City had several successes including: • Issuing 447 building permits • Adopting the updated Millbrae Station Area Specific Plan, which zoned for potential development of 1,750 units near transit • Approving the Gateway at Millbrae Station project, which includes 400 new housing units, of which 100 are affordable • Approving the Millbrae Serra Station Transit Oriented Development, which includes 488 units, of which 73 are affordable • Updating the Millbrae 2040 General Plan • Updating the Downtown and El Camino Real Specific Plan, which plans for 3,130 units and hotel, office, commercial and restaurant development. The City expects that the planning efforts it undertook during the 5th RHNA cycle will prepare it to exceed the mandate of the 6th RHNA cycle. In addition to the 1,700 entitled proposed projects and potential creation of 112 accessory dwelling units, the City has identified over 2,000 sites that are available for housing production at a variety of income levels. The City Council adopted the Housing Element on February 27, 2024, and it was certified by HCD on March 1, 2024. City of Millbrae Regional Housing Need Assessment (RHNA) allocation RHNA Permits RHNA Proposal for Income Category 2015-2023 Issued 2023-2031 2023-2031 (5th Cycle) 2014-2022 (6th Cycle) Very low (0-50% Area Median 193 37 (19%) 575 672 (117%) Income [AMI]) Low (51-80% AMI) 101 66 (65%) 331 390 (118%) Moderate (81-120% AMI) 112 32 (29%) 361 464 (120%) Above moderate (Over 120% AMI) 257 312 (121%) 932 2,335 (1,151%) Total 663 447 (67%) 2,199 3,861 (+76%) b) Will the population changes have an impact on the subject agency’s service needs and demands? 8 MSR─ City of Millbrae The City of Millbrae is making accommodations to incur a nearly 45% increase in its housing stock over the next eight years. The City’s 2040 General Plan, which includes the specific plans and development projects described above, was updated and adopted by the City in 2022. The Environmental Impact Report for the General Plan did not identify any significant impacts to the City’s ability to deliver municipal services to the residents and businesses of Millbrae. However, the City’s 2020 Urban Water Management Plan, which forecasts water demand and availability through 2045, projects that the City’s population will increase to over 27,000 residents and that water demand in 2045 will exceed the available water supply. Despite a decrease in the average annual water demand over the past several years due to the successful implementation of water conservation measures, the UWMP projects that the annual water demand will be 1,170 million gallons (MG), whereas the annual water supply from the San Francisco Public Utilities Commission (SFPUC) will be 1,150 MG. The shortage would be exacerbated by a single dry year, resulting in a shortage of as much as 635 MG annually. The City of Millbrae has an adopted a Water Shortage Continency Plan (WSCP), which was updated alongside the 2020 UWMP. The WSCP outlines a six-stage approach to reducing water demand during times of water shortage. In addition, the City uses recycled water from the Water Pollution Control Plant operated by the City. Recycled water usage is currently limited to onsite activities, but the City has identified opportunities for additional recycled water usage that may supplement water supply in future years. Annual Water Supply and Demand Comparison (Million Gallons) 2025 2035 2045 Normal year supply Supply 1,150 1,150 1,150 Demand 835 896 1,170 Difference 315 251 -20 Dry year supply Supply 533 569 635 Demand 835 896 1,170 Difference -302 -327 -535 c) Will projected growth require a change in the agency’s service boundary? The projected growth will occur within the City’s boundaries and will not require a change in the City of Millbrae’s service boundary. Growth and Population MSR Determination As of 2020, the City of Millbrae is home to 23,216 residents and 8,679 housing units. The City’s adopted Housing Element proposes to increase its housing stock by 22% over the next eight years. The City’s 2020 Urban Water Management Plan, which forecasts water demand and availability through 2045, projects that the City’s population will increase to over 27,000 residents and that water demand in 2045 will exceed the available water supply. 9 MSR─ City of Millbrae Recommendations: LAFCo encourages the City to update the Urban Water Management Plan to align with the projected development in the City’s adopted Housing Element. 2) Disadvantaged Unincorporated Communities The location and characteristics of any disadvantaged unincorporated communities within or contiguous to the sphere of influence. Yes Maybe No a) Does the subject agency provide public services related to X sewers, municipal and industrial water, or structural fire protection? b) Are there any “inhabited unincorporated communities” within or adjacent to the subject agency’s sphere of X influence that are considered “disadvantaged” (80% or less of the statewide median household income)? c) If “yes” to both a) and b), it is feasible for the agency to be reorganized such that it can extend service to the X disadvantaged unincorporated community (if “no” to either a) or b), this question may be skipped)? Discussion: a) Does the subject agency provide public services related to sewers, municipal and industrial water, or structural fire protection? The City of Millbrae provides public services related to sewers, municipal and industrial water to its residents and contracts with the Central County Fire Department for structural fire protection. b) Are there any inhabited unincorporated communities within or adjacent to the subject agency’s sphere of influence that are considered disadvantaged (80% or less of the statewide median household income)? There are no disadvantaged unincorporated communities within the City of Millbrae’s SOI. The areas located within the SOI of the City include uninhabited, vacant lands adjacent to Highway 101 and Capuchino High School. The City of Millbrae already provides water and sewer services to Capuchino High School. c) If yes to both, is it feasible for the agency to be reorganized such that it can extend service to the disadvantaged unincorporated community? Not applicable. 10 MSR─ City of Millbrae Disadvantaged Unincorporated Communities MSR Determination The City’s sphere and municipal boundaries are nearly contiguous with the exception of the San Francisco International Airport Lands located along the City’s eastern border and west of Highway 101. Although Capuchino High School site is part of the City of San Bruno it is surrounded by the City of Millbrae. There are no disadvantaged unincorporated communities within the City’s SOI. 3) Capacity and Adequacy of Public Facilities and Services Present and planned capacity of public facilities, adequacy of public services, and infrastructure needs or deficiencies including needs or deficiencies related to sewers, municipal and Yes Maybe No industrial water, and structural fire protection in any disadvantaged, unincorporated communities within or contiguous to the sphere of influence. a) Are there any deficiencies in agency capacity to meet X service needs of existing development within its existing territory? b) Are there any issues regarding the agency’s capacity to X meet the service demand of reasonably foreseeable future growth? c) Are there any concerns regarding public services provided X by the agency being considered adequate? d) Are there any significant infrastructure needs or deficiencies X to be addressed? e) Are there changes in state regulations on the horizon that X will require significant facility and/or infrastructure upgrades? f) Are there any service needs or deficiencies for disadvantaged unincorporated communities related to X sewers, municipal and industrial water, and structural fire protection within or contiguous to the agency’s sphere of influence? 11 MSR─ City of Millbrae Discussion: Water5 The City of Millbrae Public Works Department distributes water purchased from the San Francisco Public Utilities Commission (SFPUC) to its residents and commercial customers. The City’s 2020 UWMP reported that Millbrae has reduced its water demand and usage over the past decade. In 2020, Millbrae’s annual water demand was approximately 685 MG, well under the annual guaranteed supply of 1,150 MG annually. Based on population projections, water demand is projected to rise to 1,170 MG by 2045, which would exceed the guaranteed supply by 1.7%. Demand projections take into account conservation measures such as updated building codes, education and outreach, high efficiency water fixture rebates, water loss control program, and more. The City’s Water Shortage Continency Plan outlines a six-stage approach to reducing water demand during times of water shortage. On July 25, 2023 the City rescinded the State’s 2022 Executive Order to enact water shortage actions and implemented Stage 1 of its Water Contingency Plan. The City is currently under Stage 1 of the WSCP, which calls for voluntary usage reductions and implementation of conservation measures. In 2017, the City adopted a Water Financial Plan and Rate Study conducted by Bartle Wells Associates. Prior to Study adoption, rates had not been increased in two years, and the water utility fund was operating at a deficit and drawing down its reserve fund. The Study noted that the City’s water rates for a typical single-family home were among the lowest in the County and recommended annual rate increases over five years that would bring water rates in the upper range compared to neighboring agencies and help recover the rising cost associated with purchasing water from SFPUC and ongoing operations and maintenance. The City paused the annual rate increases scheduled for Fiscal Year 2020 and Fiscal Year 2021 to alleviate the financial burden its residents faced during the COVID-19 pandemic. The City is in the process of reviewing the water rates and will be conducting an updated water rate study in early 2025. City of Millbrae Water Rates6 Effective Dates July 1, 2019 July 1, 2023 July 1, 2024 Fixed monthly service charge 3/4” $25.00 $28.40 $30.00 1” $31.25 $35.50 $37.50 1.5” $62.50 $71.00 $75.00 2” $100.00 $113.60 $120.00 3” $187.50 $213.00 $225.00 4” $312.50 $355.00 $375.00 6” $625.00 $710.00 $750.00 8” $1,000.00 $1,136.00 $1,200.00 5 2020 Urban Water Management Plan 6 https://www.ci.millbrae.ca.us/400/Water-Sewer-Service 12 MSR─ City of Millbrae 10” $1437.50 $1,633.00 $1,725.00 Quantity charge (billed per hundred cubic feet of metered water use) All water use $10.40 $12.00 $12.80 The Water Utility Fund’s sole revenue source is from water fees collected from customers. The City estimated the Water Utility Fund will earn approximately $11.97M in FY 24-25 and dedicated $9.42M towards CIP projects during the fiscal year, including the Broadway Water Main Replacement, water main replacements on Ahwahnee Drive and Vista Grande, among other streets. Sanitary Sewer Services Sanitary sewer services are provided by the City of Millbrae Public Works Department. The City’s sanitary sewer collection system consists of 55 miles of gravity sewers, 1,600 manholes and 22 miles of publicly owned lower laterals7. The City also owns and maintains a wastewater treatment plant. The City of Millbrae is the only user of this facility. The sanitary system has two Enterprise funds to support operations. The first is the Sanitation Fund, which receives revenue through fees collected by customers. Sanitation Sewer Enterprise fund operations and maintenance associated with treatment and collection of wastewater, the Water Pollution Control Plant and pre-treatment. It is anticipated that the Sewer Fund will bring in $15.89M and expend $28.93M in FY 2024-25. A fund balance of $15 million is anticipated to address the $13.04M deficit for this Enterprise Fund. At the end of the fiscal year, the Enterprise Fund will be reduced to $2 million. City of Millbrae Sewer Rates (Residential)8 Effective Dates July 1, 2022 July 1, 2023 July 1, 2024 July 1, 2025 July 1, 2025 Fixed monthly service charge Per Account or $62.43 $66.18 $70.15 $74.36 $78.82 Dwelling Unit Universal Life $46.82 $49.64 $52.61 $55.77 $59.12 Support Quantity charge (billed per hundred cubic feet of metered water use) All water use $6.62 $6.62 $7.01 $7.43 $7.87 The second Enterprise Fund is the Sewer Modernization Program, which is funded by Clean Bay Charges collected from sewer customers. The Sewer Modernization Program was formed in 2011 in response to a Consent Decree from San Francisco Baykeeper9. In the 2000s and early 2010s, the City’s sewer system was in significant need of repair and rehabilitation, and the system was susceptible to sanitary sewer overflows (SSOs). In 2011, the City entered into a 7 https://www.ci.millbrae.ca.us/583/Sewer-System-Management-Plan 8 https://www.ci.millbrae.ca.us/400/Water-Sewer-Service 9 https://www.ci.millbrae.ca.us/331/Sewer-Modernization-Program 13 MSR─ City of Millbrae Consent Decree with San Francisco BayKeeper that required Millbrae to reduce the number of SSOs by November 2018. The City successfully reduced the number of SSOs by the deadline. Clean Bay Charges for the City’s Sewer Modernization Fund10 Effective July 1, 2020 Single Family Charge per Dwelling Unit $23.71 Multi-Family Charge per Dwelling Unit $14.23 Quantity Charge ($/ccf) $3.89 Min. Monthly Charge $14.23 The sanitary sewer capital improvement projects for FY 2023-24 include the Arroyo Seco Storm Drain Bypass project, annual sewer main replacements at various locations, the bi-annual flow monitoring program, and sewer capacity upgrades at Murchison Avenue, Richmond Drive and Anita Drive. Storm Drain and Flood Control11 The City Public Works Water Pollution Control Division operates and maintains the City’s storm drain infrastructure and implements programs to remove and prevent pollutants from entering the San Francisco Bay, and programs to address issues related to sea level rise. The Storm Drain Fund supports the administration, maintenance, and improvements of the City’s storm drains. The City’s 2018 Storm Drain Master Plan noted that the City’s storm drain system is not equipped to handle 100-year, 24-hour storms and that significant SSOs would be expected under those conditions. The Plan recommended Tier 1, 2 and 3 improvements, where Tiers 1 and 2 prioritized projects where flood hazard risk is more significant. The City has completed storm drain improvements in Landing Lane Bowl and at several locations along Hillcrest and Tioga Drive and continues to prioritize funding toward the Tier 1 improvements. LAFCo staff is unaware of any proposed updates to the Master Plan. The storm drain fund receives fees that are collected as part of property tax, but those fees are insufficient to meet program needs. As a result, transfers from the City’s General Fund have been made to support storm drain and flood control operations and capital improvements. The City has allocated funding in FY 2023-24 for several storm CIP projects at the Arroyo Seco/Vista Grande Vista Grande Bypass project and the Tioga/Helen/Geraldine Drive Storm Drain project and GIS mapping of the stormwater system. Streets and Sidewalks The Millbrae Public Works Department maintains street pavement, sidewalks, traffic signs and signals, street lights and pavement marking. As of 2022, the City’s pavement condition index, as 10 https://www.ci.millbrae.ca.us/400/Water-Sewer-Service 11 FY 2023-24 budget 14 MSR─ City of Millbrae reported by the Association of Bay Area Governments (ABAG),12 is considered “at risk” with a score of 55 out of a maximum score of 100. The City has an Annual Pavement Maintenance Program, as well as a Sidewalk Maintenance Program to replace damaged or broken sidewalks and pavement. The City has allocated $2.32M in CIP funding for street and sidewalk projects and is applying for funding to support additional pavement maintenance as part of the State SB1 Local Streets and Road Program. Police13,14 Since 2012, the San Mateo County Sheriff’s Office operates, via contract with the City, the Millbrae Police Bureau. The Police budget for FY 2024-25 is $10.58M. Contracted police services include a County Sheriff Captain who provides administration and oversight of the department, two deputies, and a supervising sergeant available 24 hours a day, seven days a week. In addition, the Sheriff’s Office provides staffing for traffic enforcement, investigative services, records, administration and school resources, and community policing. Per the contract with the Sheriff’s Office, there are 21.45 full-time employees assigned to the City of Millbrae. Per the City, the City and the County Sheriff’s Department maintain a collaborative partnership and relationship. Fire Protection15,16 Since 2014, fire protection services are provided to the City of Millbrae via a contract with the Central County Fire Department (CCFD), a JPA between the City of Burlingame and Town of Hillsborough. CCFD operates two stations in the City of Millbrae. Fire Station 37, located at 511 Magnolia Ave, was built in 1956 and upgraded in 1997 to meet seismic standards. According to the Community Risk Assessment/Standards of Cover & Deployment Analysis published by CCFD in March 2023, Fire Station 37 is in Poor condition. Fire Station 38, located at 785 Crestview Drive, was built in 1974 and is in Fair condition. Two fire engines are assigned in the City of Millbrae at Fire Stations 37 and 38. CCFD recently was awarded a SAFER grant to hire 12 additional Firefighters that will increase truck staffing from three Firefighters to four Firefighters and re-open Station 36 (the current administration location). Station 36 is located at 1399 Rollins Road and was closed in 2008. Station 36, when open, will help increase Millbrae's Station 37 reliability and will increase the service level to Millbrae as the next closest fire apparatus. Millbrae is responsible for approximately 30% of the CCFD operational budget. In FY 2024-25, the City budgeted $12.63M. In FY 2021-22, CCFD responded to 2,707 calls from the City of Millbrae, representing 32.5% of all calls that fiscal year. On average, CCFD arrived on a structure fire scene within six minutes of 12 ABAG publishes an annual jurisdiction-by-jurisdiction ranking of average pavement conditions index (PCI) scores among the Bay Area’s nine counties and 101 cities. 13 https://www.ci.millbrae.ca.us/370/San-Mateo-County-Sheriffs-Office 14 FY 23-24 budget 15 Central County Fire Department FY 23-24 Budget 16 Central County Fire Department, Community Risk Assessment/Standards of Cover & Deployment Analysis, March 2023, https://ccfd.org/wp-content/uploads/2023/07/Central-County-FD-CRA-SOC-Study-FINAL-2023-0327-optimized.pdf 15 MSR─ City of Millbrae dispatch over 80% of the time and responds to priority 1 (emergency) calls in under five minutes and thirty seconds. The CCFD received an ISO rating of 2 in 2023. CCFD Systemwide performance FY 18-19 FY 19-20 FY 20-21 FY 21-22 Est. FY 22-23* Total calls for service 7,493 7,410 7,004 8,328 4,774 Medical responses 4,548 4,486 4,314 5,141 3,014 Fire suppression responses 144 116 156 153 96 Hazardous conditions responses 214 225 169 238 114 Training hours completed 7,168 18,122 20,491 12,294 4,017 % of time fire engine arrives on structure 100% 83% 86% 73% 76% fire scene within 6 min of dispatch Avg. response time for all calls 6:59 5:17 5:43 5:32 5:29 Avg. response time for priority 1 calls 6:59 5:02 5:30 5:18 5:21 (emergency) Average response time for priority 3 calls 6:59 6:21 6:37 6:38 6:08 (non-emergency) * FY 22-23 YTD data collected as of March 9, 2023 The Community Risk Assessment/Standards of Cover & Deployment Analysis examined the department’s response performance, operations, facilities and apparatus, organizational structure, governance and mutual cooperation. The Assessment made several systemwide recommendations and noted several observations regarding the City of Millbrae, including the lack of representation from the City on the Board, and that Fire Station 37 in the City of Millbrae has historically incurred most of the service demand within the service area. City staff report that they will be considering becoming a member of the CCFD JPA. Parks and Recreation17 The City provides parks and recreation services for Millbrae residents. The Recreation Department operates the Millbrae Recreation Center, the Millbrae Community Youth Center, the Millbrae Library, City Hall Council Chambers, Central Park picnic sites and the David J Chetcuti Community Room. In addition, the Department maintains six playgrounds, nine picnic areas, one skate park and one dog park. All athletic fields are owned by the Millbrae school district and managed by the Recreation Department. The Department provides a variety of programs to Millbrae residents, including adult sports, middle and elementary school sports, senior programs and summer camps. The City’s Recreation Department was significantly impacted by the COVID-19 pandemic due to low program participation and facility use. However, following the June 2022 opening of the Millbrae Recreation Center, located at 477 Lincoln Circle, revenue for the Department has increased substantially. Between FY 2022 and FY 2023, the City saw a 137% increase in senior classes, a 20% increase in summer camp participation, a 39% increase in elementary and middle 17 City of Millbrae FY 23-24 Budget 16 MSR─ City of Millbrae school sports participation, a 133% increase in adult sports participation and a 309% increase in rental revenue. Library18,19 The Millbrae Library is located at 1 Library Avenue in Millbrae’s municipal complex. As a member of the San Mateo County Libraries, the Millbrae Library serves residents throughout the City, mainlining 500,000 volumes and circulating 3.3M items per year. The Millbrae Library offers a variety of services, including access to public computers, printers, copy machines, Wi-Fi and study rooms. The Library’s roof needs to be re-roofed, as it has reached its end of useful life, and the City has programmed $150,000 in the FY 24-25 CIP to complete the roof replacement. Since 1976, the Friends of the Millbrae Library, a non-profit organization, provides support, programming and funding for the Millbrae Library. The non-profit funds events such as the Annual Open House, the Mid-Autumn Festival, and the Tricycle Music Fest and provides support to learning programs20. Contract Services Animal Control Twenty cities in San Mateo County, including the City of Millbrae, contract with the County to operate a countywide animal control program. The County contracts with the Peninsula Humane Society & SPCA to enforce all animal control laws, shelter homeless animals, and to provide a variety of other related services. Garbage/solid waste/recycling/composting The City of Millbrae contracts with the South San Francisco Scavenger Company to collect and dispose non-recyclable garbage, recyclables, and yard trimmings along with food scraps once a week. Rates are adjusted annually in accordance with the franchise agreement with the City. South San Francisco Scavenger Fees for Millbrae Residential Services Quarterly Residential Monthly Rate Rates* Rate (invoice Amount) 20 Gallon $28.68 $86.04 32 Gallon $45.92 $137.76 64 Gallon $91.86 $275.58 96 Gallon $137.77 $413.31 18 https://smcl.org/jpa-governing-board/ 19 https://citylibrary.com/public-libraries/millbrae-library/ 20 https://www.millbraelibraryfriends.org/ 17 MSR─ City of Millbrae *Rates as of November 2024, available on South San Francisco Scavenger web page a) Are there any deficiencies in agency capacity to meet service needs of existing development within its existing territory? LAFCo staff has not identified any deficiencies to meet the needs of existing development within the City of Millbrae. b) Are there any issues regarding the agency’s capacity to meet the service demand of reasonably foreseeable future growth? The City of Millbrae is planning for additional growth over the next eight years and expects to have sufficient water supply during non-drought years and resources to fund sewer, police, fire and emergency response services, as well as administrative services to support administrative and some public works functions. c) Are there any concerns regarding the adequacy of public services provided by the agency? LAFCo staff does not have any concerns regarding the adequacy of the public services being delivered by the City of Millbrae to its residents and businesses. d) Are there any significant infrastructure needs or deficiencies to be addressed? The City continues to implement capital improvements to road, sewer and water systems, and building and park improvements with allocations to capital improvement funds for projects. e) Are there changes in state regulations on the horizon that will require significant facility and/or infrastructure upgrades? The City anticipates that the state may change discharge requirements from the wastewater treatment plant. This may result in improvements to the wastewater treatment plant including the installation of a new filter system. f) Are there any service needs or deficiencies for disadvantaged unincorporated communities related to sewers, municipal and industrial water, and structural fire protection within or contiguous to the agency’s sphere of influence? Not applicable. Capacity and Adequacy of Public Facilities and Services MSR Determination LAFCo is not aware of any deficiencies in agency capacity to meet existing service needs for which the agency does not have a plan in place to resolve. The City is anticipated to be able to meet most service demands of foreseeable growth with project infrastructure improvements and other mitigation measures. Recommendations: 18 MSR─ City of Millbrae 2. The City’s UMWP was last updated in 2020. The City should align the growth projections in the UMWP with the RHNA growth projections and the 2023-2031 Housing Element in its next UMWP update. 3. LAFCo encourages the City to continue to review potential revenue increases or the creation of a dedicated revenue source for stormwater projects. 4. LAFCo encourages the City to continue to work with Central County Fire, the City of Burlingame and the Town of Hillsborough regarding the implementation of recommendations from the Community Risk Assessment/Standards of Cover & Deployment Analysis 4) Financial Ability Financial ability of agencies to provide service Yes Maybe No a) Does the organization routinely engage in budgeting practices that may indicate poor financial management, X such as overspending its revenues, failing to commission independent audits, or adopting its budget late? b) Is the organization lacking adequate reserve to protect X against unexpected events or upcoming significant costs? c) Is the organization’s rate/fee schedule insufficient to fund X an adequate level of service, and/or is the fee inconsistent with the schedules of similar service organizations? d) Is the organization unable to fund necessary infrastructure X maintenance, replacement and/or any needed expansion? e) Is the organization lacking financial policies that ensure its X continued financial accountability and stability? X f) Is the organization’s debt at an unmanageable level? Discussion: a) Does the City routinely engage in budgeting practices that may indicate poor financial management such as overspending its revenue, failing to commission independent audits, or adopted its budget late? LAFCo staff has not identified any issues with the City’s budgeting practices. The City of Millbrae prepares an annual operating and Capital Improvement Program (CIP) budget for the upcoming fiscal year that gets adopted by the City Council at a noticed public hearing before June 30th. 19 MSR─ City of Millbrae The City of Millbrae engages in annual budget process to develop its annual budget. At the start of the calendar year, City staff review mid-year actuals for the current fiscal year and works with the Finance team to prepare estimates for the following year. City Council also holds a goal setting session to identify priorities for the following year. In April, the City holds study sessions on the draft budget to finalize a budget proposal that aligns with Council priorities. In May and June, the draft budget is proposed to City Council and the final budget is adopted prior to the beginning of the fiscal year. The City’s largest portions of revenue for the General Fund are Property Tax, Transit Occupancy Tax, Sales Tax, and Franchise Taxes. Figure 1 - City of Millbrae General Fund Revenues FY 2024-25 (Source - City of Millbrae) 20 MSR─ City of Millbrae City of Millbrae Budget FY2020-2025 FY23-24 (Estimated FY24-25 FY20-21 (Actuals) FY21-22 (Actuals) FY22-23 (Actuals) Actuals) (Projected) In $1,000s Revenues Property Tax 12,676 13,228 16,357 15,823 15,776 Sales Tax 2,621 3,384 3,335 3,395 3,323 Hotel/Motel Tax (TOT) 2,278 4,893 7,960 9,600 9,565 Franchise Tax 1,123 1,264 1,318 1,389 1,513 Other Taxes 606 837 797 711 741 Licenses and Permits 2,186 841 3,497 1,792 2,952 Charges for Services 1,164 1,397 2,085 1,963 1,822 Fines and Forfeitures 929 1,261 884 843 956 Use of Money -101 -1,390 1,723 1,555 1,689 Grants/Intergovernmental 4,114 3,092 257 195 165 Other Revenue 2,292 2,416 2,376 2,768 2,636 Total Revenue 29,887 31,224 40,595 40,035 41,140 Expenditures General Government 4,222 4,689 5,602 5,865 5,212 Police 7,595 8,968 9,845 10,582 Fire 9,287 10,572 10,778 12,117 Public Works 2,412 2,692 3,362 6,101 4,279 Parks 1,310 2,294 2,012 2,674 2,411 Community Development 2,632 3,283 3,702 3,458 4,187 Total Expenditures 28,139 31,723 34,662 38,721 38,788 Transfer to other funds 2,424 2,479 2,784 2,241 2,656 Reserve 4,830 5,028 5,483 5,958 6,171 Fund Balance 14,106 13,166 13,826 12,686 12,480 Total Ending Funding Balance 18,936 16,417 19,565 18,654 18,651 The City has noted that sales tax revenue and Transient Occupancy Tax (TOT) now exceeds pre- pandemic levels. However, the City is continuing to practice caution with spending costs. The City has taken a number of steps in recent fiscal years to control spending including: 21 MSR─ City of Millbrae • A hiring freeze except for critical positions. No new headcount unless approved by the City Council. • Part time and seasonal employee freeze unless cost recovery. • A reduction of purchases of vehicles and equipment unless determined essential; extended amortization schedules for additional five years. • Reduction in IT hardware and software updates. • General Fund subsidies to Capital Improvement Projects limited to those deemed mandatory, necessary and achievable. • Discontinuation or significant reduction in reliance on contract services. • Reduction in spending on upgrades or deferred maintenance on City facilities. The General Fund has been able to cover budgeted expenditures and the City has projected that the General Fund will continue to cover budgeted expenditures in upcoming years. However, there have been recent cost increases for contracted police and fire services. Enterprise funds The City has three Enterprise funds, one each for Sewer, Water, and Storm Drain. In review of budget documents, the Sewer fund consists of two accounts, one for general sanitation costs associated with collection and treatment of wastewater and the other for sewer system modernization. Sanitation Sewer Fund: The Sanitation Fund includes programs associated with collection and treatment of wastewater from City customers. This includes utility billing, engineering, operations, Water Pollution Control Plant (WPCP), and pretreatment. These costs are funded entirely by collection of fees from customers. In 2018, costs related to the Sewer Modernization Program (previously called the Wet Weather Program) were moved into a separate fund described in the next section. Reserves will be set at a similar rate to the General Fund (15% of operating expenditures and transfers out). This fund mainly supports the Public Works Department. This fund also supports various administration and finance positions as well as a small public safety allocation. Budget documents do not differentiate between expenses for capital projects and for ongoing operations and maintenance. Sewer Modernization: In response to a consent decree from Baykeeper requiring the reduction of Sanitary Sewer Overflows (SSO’s) from the City’s sanitary sewer collection system, the City has initiated a capital improvement program to meet the requirements of this consent decree which is focused on Rainfall Dependent Infiltration and Inflow (RDII or I/I). This program is funded by Clean Bay Charges collected from sewer customers. While these costs are considered a part of the sewer program, the City separates this specific program to assure the specified charges are directed at program needs and associated debt service. For Fiscal Year 2024-2025, many capital projects are included in the Capital Improvement Plan (CIP) including a few large 22 MSR─ City of Millbrae capital projects (Lower Hillcrest Subbasin 4 South Sewer Replacement, Sludge Thickener and Digester 2 Rehabilitation, Nearshore Outfall, and the City SCADA Upgrade Project). The combined total revenue for the two Sewer funds for FY 2024-25 is projected to be $15,891,000 and expenditures are $28,930,000. Fund balance is proposed to be reduced to fund on-going capital projects. Per City staff, revenue for the two sewer funds is sufficient to cover operation and maintenance activities. Water Utility: The Water Utility Fund includes programs associated with distribution of water to City customers. This includes utility billing, engineering, operations, and water conservation. These costs are funded entirely by collection of fees from customers For Fiscal Year 2024-2025, a few capital projects are included in the Capital Improvement Plan (CIP) including Millbrae Downtown Specific Plan Improvement and the Highline – Hillsborough Water Transmission Main. Reserves are set at the same rate as the General Fund (15% of operating expenditures and transfers out.) This fund mainly supports the Public Works department. Total revenue for water fund is projected to be $13,211,000 in FY24-25, with expenditures expected to be $17,015,000. Fund balance is proposed to be used to fund on-going capital projects. Per City staff, revenue for the two sewer funds is sufficient to over operation and maintenance activities. However, budget documents do not differentiate between expenses for capital projects and for ongoing operations and maintenance. Storm drain: The Storm Drain Fund is used to account for the administration, maintenance, and improvements of the City’s Storm Drains. The storm drain fund receives fees that are collected as part of property tax, but those fees are insufficient to meet program needs, which is similar to several cities that LAFCo has recently conducted MSRs for. Transfers from the General Fund are made to support operations and capital programs in this Fund. For Fiscal Year 2024-2025, a few capital projects are included in the Capital Improvement Plan (CIP), including the Helen Drive Stormwater Subbasin Improvements, Landing Lane Trash Capture Devices Project and the Anita Drive Drainage Subbasin Stormwater Study. Total revenue for stormwater fund is projected to be $1,452,000 in FY24-25, with expenditures expected to be $1,460,000. The majority of this revenue is a $1,152,000 transfer of funds from the General Fund. To address the revenue shortfall, fund balance is proposed to be used. The current CIP notes that there are $45 million in unfunded stormwater projects compared to just $1 million in funded projects. Fire Assessment Fee Since 2004, the City of Millbrae has maintained a Fire Assessment to fund fire services. The assessment has been renewed in 2009 and 2014, and was scheduled for a reauthorization at a higher rate in the spring of 2024. The rate would have been $299 per single family home which would have run in perpetuity. However, this reauthorization did not pass. The City amended the proposed fire assessment with a lower rate of $199 and set the duration of the assessment to 10 years. This assessment passed in June of 2024. Internal Service Funds The City has several internal funds, include garage operations for costs associated with maintenance of City vehicles and similar equipment, a vehicle replacement fund, workers compensation fund, insurance, unemployment, and OPEB funds. 23 MSR─ City of Millbrae CalPERS Increases: The City’s share of the “normal” retirement rate increased from 16.87% of payroll to 16.94% of payroll for Classic Employees. Employees pay 5.5% of the employer’s cost. The Unfunded Actuarial Liability (UAL) for the City Miscellaneous employees increased from $2.5 million to $2.9 million. The UAL portion is allocated to each department based on employee PERS costs. The transfer to the General Liability Insurance Internal Service Fund has been updated to current rates. Transfers to the Workers Compensation Fund and Unemployment Fund have sufficient balances and will not receive an allocation this year. Staff expect to monitor these Internal Service Funds in future years and restart funding for these funds. b) Is the organization lacking adequate reserves to protect against unexpected events or upcoming significant costs? According to the City’s FY 2024-25 Budget, the City’s Reserve fund will be funded at 15% of budgeted expenditures and transfers out and all uses of the reserve must be approved by City Council and repaid to the Reserve over period to be determined by Council at the time of approval. It is not clear to LAFCo staff whether the City has an adopted a reserve policy. c) Is the City’s rate/fee schedule insufficient to fund an adequate level of service, and/or is the fee inconsistent with the schedules of similar service organizations? LAFCo is not aware of any challenges to raising fees for the City. However, in review of the budgets for the sewer, water, and storm drain funds, each fund has a shortfall in revenue. While fund balance is projected to be utilized to address these shortfalls for each fund, based on publicly available data it is unclear to LAFCo if these funds will have sufficient fund balance and revenue in future years with service change increases or reduced expenditures. d) Is the agency unable to fund necessary infrastructure maintenance, replacement and/or any needed expansion? The City of Millbrae’s Five Year Capital Improvement Plan (CIP) is normally developed and updated with funding allocated every two years. Per the City FY 2024-25 Budget document, despite increases in revenue for impact fees, the CIP remains largely limited to and focused on preservation and maintenance of capital assets, transportation and utility infrastructure, and operations. The budget document also states that the City will continue to face challenges in finding the resources to build and maintain its capital infrastructure. It is noted that the City will review moving back to a biennial (two-year) budget as revenues and expenditures begin to stabilize. e) Is the agency lacking financial policies that ensure its continued financial accountability and stability? Long-term financial planning includes a focus on transit-oriented development, investment in bringing in retail and diversification of revenue sources, including attracting biotech to the City. In addition, the City collects impact fees and focuses on risk management, cash flow management, and Pension and OPEB. 24 MSR─ City of Millbrae f) Is the agency’s debt at an unmanageable level? As of June 30, 2022, Millbrae’s debt amount subject to the limit was $8,033,053, approximately 3.40% of the overall legal debt limit. The City is currently making payments on several bonds including a Pension Obligation Bond, General Obligation Refunding Bond associated with the Millbrae Public Library Project, Wastewater Revenue Bond, and a Wastewater Revenue Bond. Total outstanding debt is $52 million. The city continues to prepay in full the UAL (Unfunded Actuarial Liability) in July of each Fiscal Year, saving on interest with the pre-payments. The city plans to continue to pre- pay the UAL in the future to continue to save on interest costs. Financial Ability MSR Determination LAFCo staff has not identified any issues with the City’s budgeting practices in regards to process. The City of Millbrae prepares an annual operating and capital improvement program (CIP) budget for the upcoming fiscal year that gets adopted by the City Council at a noticed public hearing before June 30th. The City also produces an Annual Comprehensive Financial Report (ACFR) that is reviewed by City Council. The General Fund has been able to cover budgeted expenditures and the City has projected that the General Fund will continue to cover budgeted expenditures in upcoming years. However, the City has had to implement several cost saving measures including a hiring freeze and deferred maintenance to City facilities. The City has three main enterprise funds, for Sewer, Water, and Storm Drain. Each one of these funds for FY 2024-25 is proposing to use fund balance to provide funding for on-going capital projects. The Water and Sewer funds have sufficient revenue to fund operational and maintenance expenditures. Budget documents do not differentiate between expenses for capital projects and for ongoing operations and maintenance. Recommendations: 5. LAFCo encourages the City to continue to review potential revenue increases for stormwater projects. 6. LAFCo encourages the City to develop projections for the Sewer, Water, and Storm Drain enterprise funds to provide the City a more complete assessment of these funds. These projections can be used in conjunction with the Capital Improvement Program to help the City to allocate appropriate resources to infrastructure projects. 7. In future budget documents, the City should explore including a detailed breakdown of capital improvement costs versus operation and maintenance expenses for each enterprise fund. This would better illustrate what are ongoing versus one-time costs for each fund. 25 MSR─ City of Millbrae 5) Shared Service and Facilities Status of, and opportunities for, shared facilities Yes Maybe No a) Is the agency currently sharing services or facilities with X other organizations? If so, describe the status of such efforts. b) Are there any opportunities for the organization to share services or facilities with neighboring or overlapping X organizations that are not currently being utilized? c) Are there governance options to allow appropriate facilities and/or resources to be shared, or making excess X capacity available to others, and avoid construction of extra or unnecessary infrastructure or eliminate duplicative resources? a) Is the agency currently sharing services or facilities with other organizations? Police protection services: The City contracts with the County Sheriff’s Office to operate the Millbrae Police Bureau. Fire protection services: The City contracts with the Central County Fire Department to provide fire protection services. Risk management: The City of Millbrae participates in a Joint Power Agreement (JPA) with other San Mateo County cities to provide excess insurance coverage. Excess coverage provided by the JPA covers claims in excess of $300,000 for workers’ compensation claims and $100,000 for general liability. Solid waste: The City has a franchise agreement with South San Francisco Scavenger Company to provide solid waste removal services. Animal control: Along with nineteen other cities in San Mateo County, the City of Millbrae contracts with the County to operate a countywide animal control program. The County contracts with the Peninsula Humane Society and SPCA to enforce all animal control laws, shelter homeless animals and to provide a variety of other related services. Legal services: Legal services are provided by consultants. b) Are there any opportunities for the organization to share services or facilities with neighboring or overlapping organizations that are not currently being utilized? LAFCo staff has not identified other opportunities that the City could engage in to share costs and/or reduce duplication of resources, facilities or infrastructure. 26 MSR─ City of Millbrae c) Are there governance options to allow appropriate facilities and/or resources to be shared, or making excess capacity available to others, and avoid construction of extra or unnecessary infrastructure or eliminate duplicative resources? As noted in the Community Risk Assessment/Standards of Cover & Deployment Analysis for the Central County Fire Department, the City of Millbrae is not a member agency of the JPA. LAFCo is not aware of efforts for the City to become a member agency, but the City may want to explore potential benefits of doing so. Shared Services MSR Determination The City of Millbrae partners with several agencies to share resources and reduce costs. Recommendations: 8. LAFCo encourages the City to review potential options regarding fire service, including becoming a member of the Central County Fire Department JPA. 6) Accountability, Structure and Efficiencies Accountability for community service needs, including Yes Maybe No governmental structure and operational efficiencies a) Are there any issues with meetings being accessible and well publicized? Any failures to comply with disclosure laws X and the Brown Act? b) Are there any issues with staff turnover or operational X efficiencies? c) Is there a lack of regular audits, adopted budgets and X public access to these documents? d) Are there any recommended changes to the organization’s governance structure that will increase accountability and X efficiency? e) Are there any governance restructure options to enhance X services and/or eliminate deficiencies or redundancies? f) Are there any opportunities to eliminate overlapping boundaries that confuse the public, cause service inefficiencies, unnecessarily increase the cost of X infrastructure, exacerbate rate issues and/or undermine good planning practices? 27 MSR─ City of Millbrae Discussion: The City Council is the elected body that oversees all municipal operations, provides policy leadership, and acts as the legislative arm of the City government. Until recently, councilmembers were elected at-large. However, in 2018, a change to the California Voting Rights Act required the City to switch to District elections. The first District elections were held on November 8, 2022 for Districts 2 and 4. District elections for Districts 1, 3 and 5 occurred in November 2024. Each member of the City Council is provided a stipend in accordance with State law. In addition, Councilmembers and their dependents are eligible for benefits including PERS retirement, health, dental, and vision care coverage. a) Are there any issues with meetings being accessible and well publicized? Any failures to comply with disclosure laws and the Brown Act? The Millbrae City Council meets in person at the Millbrae Council Chambers in City Hall at 621 Magnolia Avenue on the 2nd and 4th Tuesday of every month at 7pm. Regular meetings are also accessible to the public by Zoom and are broadcast live on the Millbrae Community Television Cable Channel 27 or on www.mctv.tv. Agendas, agenda packets and meeting presentations for 2023 and 2024 are posted to the City website at least 72 hours prior to meeting dates. Video recordings of meetings are published on the City website. There do not appear to be any issues with public meetings being accessible and well publicized, nor has LAFCo staff identified any issues regarding the City of Millbrae’s compliance with disclosure laws and the Brown Act. b) Are there issues with staff turnover or operational efficiencies? Staffing levels have been fairly consistent over the past several fiscal years. The City has implemented a hiring freeze except for critical positions for the FY 2023-24 period. This does not appear to have resulted in any operational deficiencies. The City has stated that they have not experienced extraordinary turnover issues. c) Is there a lack of regular audits, adopted budgets, and public access to these documents? The City of Millbrae regularly prepares an annual budget and contracts with an accounting firm to conduct an annual ACFR, both of which are presented to the City Council at a public hearing and are published on the City’s website. d-f) Changes in governance structure: LAFCo staff does not recommend any changes to or restructuring options of the City’s governance structure or service boundaries that would increase accountability and efficiencies, enhance services and/or eliminate deficiencies. 28 MSR─ City of Millbrae Accountability, Structure, and Efficiencies MSR Determination The City of Millbrae ensures that public meetings are accessible and well-publicized. LAFCo staff is not aware of any failure to comply with disclosure laws or the Brown Act. The City prepares and adopts an annual budget, and annual independent audits are reviewed at City Council meetings. LAFCo staff does not recommend any changes to the City’s governmental structure or operations that will increase accountability and efficiency. 7) Other Any other matter related to effective or efficient service Yes Maybe No delivery, as required by commission policy. a) Are there any other service delivery issues that can be X resolved by the MSR/SOI process? b) Water Resiliency and Climate Change i) Does the organization support a governance model that enhances and provides a more robust water supply X capacity? ii) Does the organization support multi-agency collaboration and a governance model that provide risk X reduction solutions that address sea level rise and other measures to adapt to climate change? c) Natural Hazards and Mitigation Planning i) Has the agency planned for how natural hazards may X impact service delivery? ii) Does the organization support multi-agency collaboration and a governance model that provides risk X reduction for all natural hazards? a) Other service delivery issues that can be resolved by the MSR/SOI process. LAFCo staff did not identify any other service delivery issues that can be resolved by the MSR/ SOI Update process. b) Water Resiliency and Climate Change The City of Millbrae is a partner of One Shoreline, an independent government agency that secures and leverages public and private resources to plan for and build solutions to the climate change impacts of sea level rise, flooding and coastal erosion. 29 MSR─ City of Millbrae The City has initiatives including implementing the Climate Action Plan (CAP), which includes measures for water and energy conservation, sustainable landscaping, and encouraging sustainable transportation. In 2005, the City’s emissions estimate was at 150,643 metric tons of carbon dioxide. In 2021, Millbrae successfully reduced emissions by 42.7% to 73,815 metric tons of carbon dioxide. This reduction surpassed the 2025 emission reduction target which was to be 32% below the 2005 levels by over 10%. Millbrae has implemented a commercial and residential Green Building Ordinance as well as a Tree Ordinance, both of which will contribute positively to climate change impacts. c) Natural Hazards and Mitigation Planning Along with the County and other San Mateo County cities, Millbrae participated in the 2021 Local Hazard Mitigation Plan (LHMP) that assessed hazard vulnerabilities and identified opportunities for mitigation to reduce the level of injury, property damage and community disruption that could occur in manmade and natural disasters. Other Issues MSR Determination The City of Millbrae is engaged in activities to address hazard mitigation, wildfire prevention, and sea level rise for City residents and businesses. Recommendation 9. LAFCo encourages the City of Millbrae to continue its work in the areas of natural hazard mitigation and sea level rise and continue to coordinate with partner agencies. Section 6. Sphere of Influence Review and Update Determinations Government Code Section 56425 requires the Commission to make determinations concerning land use, present and probable need for public facilities and services in the area, capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide, and existence of any social or economic communities of interest in the area if the Commission determines that they are relevant to the agency. These include the following determinations: 1. The present and planned land uses in the area, including agricultural and open space lands. The City of Millbrae’s Sphere of Influence includes small portions of unincorporated San Francisco Airport Lands to the northeast of the City’s boundaries and west of Highway 101. Although Capuchino High School is entirely surrounded by the City of Millbrae, it is part of the City of San Bruno. The City’s land use is primarily residential with some open space, office, commercial, and industrial uses. There is no agricultural land within the City’s SOI. 2. The present and probable need for public facilities and services in the area. 30 MSR─ City of Millbrae The City of Millbrae’s facilities and services meet the needs of its residents and businesses, and the City anticipates that it will be able to provide adequate facilities and services for the anticipated growth within its service area. 3. The present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide. The City currently provides adequate public services to its residents, including fire and police protection, water, sanitary sewer, and storm water services. In addition, the City routinely adopts a Capital Improvement Program to fund critical repairs, replacements and improvements to the City’s infrastructure and facilities. 4. The existence of any social or economic communities of interest in the area if the Commission determines that they are relevant to the agency. There are no disadvantaged unincorporated communities within the SOI for the City of Millbrae. 5. For an update of a sphere of influence of a city or special district that provides public facilities or services related to sewers, municipal and industrial water, or structural fire protection, that occurs pursuant to Section 56425(g) on or after July 1, 2012, the present and probable need for those public facilities and services of any disadvantaged unincorporated communities within the existing sphere of influence. No change to the SOI for the City of Millbrae is proposed at this time. On the basis of the Municipal Service Review: Staff has reviewed the agency’s Sphere of Influence and recommends that a SOI Update is NOT NECESSARY in accordance with Government Code Section 56425(g). Therefore, NO CHANGE to the agency’s SOI is recommended and SOI determinations HAVE NOT been made. Staff has reviewed the agency’s Sphere of Influence and recommends that a SOI Update IS NECESSARY in accordance with Government Code Section 56425(g). Therefore, A CHANGE to the agency’s SOI is recommended and SOI determinations HAVE been made and are included in this MSR/SOI study. 31 MSR─ City of Millbrae Appendix A. City of Millbrae Fact Sheet City Manager: Thomas C. Williams Address: 621 Magnolia Avenue, Millbrae, CA 94030 Email Address: twilliams@ci.millbrae.ca.us Phone Number: 650-259-2334 Date of Incorporation: January 14, 1948 City Councilmembers: Councilmember Term Expiration Date Stephen Rainaldi, District 1 December 2028 Sissy Riley, District 2 December 2026 Reuben Holder, District 3 December 2028 Bob Nguyen, District 4 December 2026 Anders Fung (Mayor), District 5 December 2028 Compensation: Councilmembers receive a stipend of $345/month and are eligible for benefits including PERS retirement, health, dental and vision coverage for themselves and their dependents Public Meetings: 2nd and 4th Tuesday of the month at 7:00m in the City Hall Council Chambers Services Provided: Police, Water, Sanitary Sewer, Stormwater Control, Streets & Sidewalks, Lighting, Parks & Recreation Agency staff: 97.75 Full time equivalent employees Area Served: City of Millbrae (3.2 square miles) Population: 23, 216 Sphere of Influence: Boundaries of 1980 less than Capuchino High School plus San Francisco International Airport lands west of Highway 101. 32 « S H E LT E R C R E E K L N E L C A U S H IG SAN BRUNO M IN H W A Y 2 8 0 O R E A L/S A Y 1 0 1 E HI G H W T H W SYT 8 H2W S T AT Y 82 R AIRPORT LANDS E T N I CAPUCHINO HIGH SCHOOL R ID MILLWOOD DR G E W O O D D R BR O AD W U N HELEN DR AY N A M E D MILLBRAE ST H W Y 35 CLEARFIELD DR HI L L C R E S T B LV D MILLBRAE AVE S T H W Y 280 BURLINGAME M U R C H City Boundary S T H W Y 280 S I T S A O T N E D H R IG H W AY 35 ALVA O B R P E O v A P N D P M e H Y I O A T D M r i L O R lE v A O l D b V A C i R N r e V E A T a E S E w Ce T R A I O L R C L L A O O O V L A E V S U A V D A M E N E V B C E S U J O A C O K L S IN U G T D B A V O E V E R A E R N V A E A V L E F A A G A V N D A R E C O R Unincorporated Area in City Sphere R N D R HILLSBOROUGH L D A et F a C ch o C SP ap H u E c R hi E n o R H E i C gh O M Sc M h E oo N l D fr A o T m IO S N an Bruno and Source: Esri A , L TDU R igitalGlobe, GeoEye, i-cubed, E SU a M rt M hITs tDaRr Geographics, Annex to Millbrae C sw N i E ss S to /A p i o rb , u a s n d D S t A h S, e D R U G S I D S A U , s U e S r G C S om , A m E u X n , i t G y etmapping, Aero FO g R ri E d S , T I G VI N EW , I A G V P E , MILLBRAE SPHERE OF INFLUENCE RESOLUTION NO. 1330 RESOLUTION OF THE LOCAL AGENCY FORMATION COMMISSION OF THE COUNTY OF SAN MATEO MAKING DETERMINATIONS PURSUANT TO GOVERNMENT CODE SECTION 56430 FOR THE CITY OF MILLBRAE RESOLVED, by the Local Agency Formation Commission of the County of San Mateo, State of California, that: WHEREAS, the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, set forth in Government Code Section 56000 et seq., governs the organization and reorganization of cities and special districts by local agency formation commissions established in each county, as defined and specified in Government Code Section 56000 et seq., WHEREAS, Government Code Section 56425 et seq. requires the Local Agency Formation Commission (LAFCo or Commission) to develop and determine the sphere of influence of each local governmental agency within the County; and WHEREAS, the Commission conducted a Municipal Service Review pursuant to Government Code Section 56430 for the City of Millbrae; WHEREAS, the Executive Officer prepared a written report of the Municipal Service Review that was provided to the Commission and affected agencies; and WHEREAS, the Executive Officer set a public hearing date for January 15, 2025 for the consideration of the final Municipal Service Review and caused notice thereof to be posted, published and mailed at the times and in the manner required by law at least twenty-one (21) days in advance of the date; and WHEREAS, the Commission heard and fully considered all the evidence presented at a public hearing held on January 15, 2025; and WHEREAS, a public hearing by this Commission was held on the report and at the hearing this Commission heard and received all oral and written protests, objections and evidence which were made, presented or filed, and all persons present were given an opportunity to hear and be heard with respect to the proposal and the Executive Officer's report; and WHEREAS, the Commission is required pursuant to Government Code Section 56430 to make statement of written determinations with regards to certain factors; and Page 2 Resolution No. 1330 WHEREAS, the Commission is required pursuant to Government Code Section 56425 and local Commission policy to make statement of written determinations with regards to the following factors: 1. The present and planned land uses in the area, including agricultural and open-space lands. The City of Millbrae’s land use is primarily residential with some open space, office, commercial, and industrial uses. There is no agricultural land within the City’s SOI. 2. The present and probable need for public facilities and services in the area. The City of Millbrae’s facilities and services meet the needs of its residents and businesses, and the City anticipates that it will be able to provide adequate facilities and services for the anticipated growth within its service area. 3. The present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide. The City currently provides adequate public services to its residents, including fire and police protection, water, sanitary sewer and storm water services. In addition, the City routinely adopts a Capital Improvement Program to fund critical repairs, replacements and improvements to the City’s infrastructure and facilities. 4. The existence of any social or economic communities of interest in the area if the Commission determines that they are relevant to the agency. There are no disadvantaged unincorporated communities within the SOI for the City of Millbrae. 5. For an update of a sphere of influence of a city or special district that provides public facilities or services related to sewers, municipal and industrial water, or structural fire protection, that occurs pursuant to Section 56425(g) on or after July 1, 2012, the present and probable need for those public facilities and services of any disadvantaged unincorporated communities within the existing sphere of influence. No change to the SOI for the City of Millbrae is proposed at this time. WHEREAS, based on the results of the MSR, staff has determined that the SOI for the City of Millbrae does not need to be updated at this time; and WHEREAS, the Municipal Service Review is categorically exempt from the environmental review requirements of the California Environmental Quality Act (CEQA) under Section 15303, Class 6, which allows for basic data collection, research, experimental management, and resource evaluation activities which do not result in a serious or major disturbance to an environmental resource. The Municipal Service Review collects data for the purpose of evaluating municipal services provided by an agency. There are no land use changes or environmental impacts created by this study. The Municipal Service Review also is exempt from CEQA under the section 15061(b)(3), the common-sense provision, which states that CEQA applies only to projects which have the potential for Page 3 Resolution No. 1330 causing a significant effect on the environment and where it is certain that the activity will have no possible significant effect on the environment, the activity is exempt from CEQA; and NOW, THEREFORE, the Local Agency Formation Commission of the County of San Mateo DOES HEREBY RESOLVE, DETERMINE AND ORDER as follows: Section 1. By Resolution, the Commission accepts the Executive Officer’s Report dated January 15, 2025, Final Municipal Service Review for the City of Millbrae, and all written comments and attachments incorporated herein and contained in attached “Exhibit A.” Section 2. By Motion, the Commission adopts the Municipal Service Review determinations set forth in “Exhibit B” which is attached and hereby incorporated by reference. Page 4 Resolution No. 1330 Regularly passed and adopted this __ day of _. Ayes and in favor of said resolution: Commissioners: ________________________________ ________________________________ _______________________________ ________________________________ ________________________________ ________________________________ ________________________________ Noes and against said resolution: ________________________________ ________________________________ Commissioners Absent and/or Abstentions: Commissioners: ________________________________ ______________________________ Chair Local Agency Formation Commission County of San Mateo State of California ATTEST: 1/23/25 ____________________________ Date: ________________________________ Executive Officer Local Agency Formation Commission I certify that this is a true and correct copy of the resolution above set forth. Date: _____________________________ Clerk to the Commission Local Agency Formation Commission Exhibit B Municipal Service Review (MSR) Areas of Determination and Recommendations for the City of Millbrae Areas of Determinations and Recommendations Growth and population projections for the affected area. Determination As of 2020, the City of Millbrae is home to 23,216 residents and 8,679 housing units. The City’s adopted Housing Element proposes to increase its housing stock by 22% over the next eight years. The City’s 2020 Urban Water Management Plan, which forecasts water demand and availability through 2045, projects that the City’s population will increase to over 27,000 residents and that water demand in 2045 will exceed the available water supply. Recommendation 1. LAFCo encourages the City to update the Urban Water Management Plan to align with the projected development in the City’s adopted Housing Element. The location and characteristics of any disadvantaged unincorporated communities within or contiguous to the SOI. Determination There are no disadvantaged unincorporated communities within the City’s SOI. Recommendation: None Present and planned capacity of public facilities, adequacy of public services, and infrastructure needs or deficiencies including needs or deficiencies related to sewers, municipal and industrial water, and structural fire protection in any disadvantaged, unincorporated communities within or contiguous to the SOI. Determination LAFCo is not aware of any deficiencies in agency capacity to meet existing service needs for which the agency does not have a plan in place to resolve. The City is anticipated to be able to meet most service demands of foreseeable growth with project infrastructure improvements and other mitigation measures. Recommendations 2. The City’s UMWP was last updated in 2020. The City should align the growth projections in the UMWP with the RHNA growth projections and the 2023-2031 Housing Element in its next UMWP update. 3. LAFCo encourages the City to continue to review potential revenue increases or the creation of a dedicated revenue source for stormwater projects. 4. LAFCo encourages the City to continue to work with Central County Fire, the City of Burlingame and the Town of Hillsborough regarding the implementation of recommendations from the Community Risk Assessment/Standards of Cover & Deployment Analysis. Financial ability of agency to provide services. Determination LAFCo staff has not identified any issues with the City’s budgeting practices regarding process. The City of Millbrae prepares an annual operating and Capital Improvement Program (CIP) budget for the upcoming fiscal year that gets adopted by the City Council at a noticed public hearing before June 30th. The City also produces an Annual Comprehensive Financial Report (ACFR) that is reviewed by City Council. The General Fund has been able to cover budgeted expenditures and the City has projected that the General Fund will continue to cover budgeted expenditures in upcoming years. However, the City has had to implement several cost saving measures including an ongoing hiring freeze for non-critical positions, and deferred maintenance for City facilities. The City has three main enterprise funds, one each for Sewer, Water, and Strom Drain. Each one of these funds for FY 2024-25 is projected to use fund balance to support on-going capital projects. The Water and Sewer funds have sufficient revenue to fund operational and maintenance expenditures. Budget documents do not differentiate between expenses for capital projects and for ongoing operations and maintenance. Recommendations 5. LAFCo encourages the City to continue to review potential revenue increases for stormwater projects. 6. LAFCo encourages the City to develop projections for the Sewer, Water, and Storm Drain enterprise funds to provide the City a more complete assessment of these funds. These projections can be used in conjunction with the Capital Improvement Program to help the City to allocate appropriate resources to infrastructure projects. 7. In future budget documents, the City should explore including a detailed breakdown of capital improvement costs versus operation and maintenance expenses for each enterprise fund. This would better illustrate what are ongoing versus one-time costs for each fund. Status of, and opportunities for, shared facilities. Determination The City of Millbrae partners with several agencies to share resources and reduce costs. Recommendation 8. LAFCo encourages the City to review potential options regarding fire service, including becoming a member of the Central County Fire Department Joint Powers Agreement. Accountability for community service needs, including governmental structure and operational efficiencies. Determination The City of Millbrae ensures that public meetings are accessible and well-publicized. LAFCo staff is not aware of any failures to comply with disclosure laws or the Brown Act. The City prepares and adopts and annual budget, and annual independent audits are reviewed at a City Council meeting. LAFCo staff does not recommend any changes to the City’s governmental structure or operations that will increase accountability and efficiency. Recommendation: None Any other matter related to effective or efficient service delivery, as required by LAFCo policy including the following: i. Water Resiliency and Climate Change ii. Impact of Natural Hazards and Mitigation Planning Determination The City of Millbrae is engaged in activities to address hazard mitigation, wildfire prevention, and sea level rise for City residents and businesses. Recommendation 9. LAFCo encourages the City to continue its work in the areas of natural hazard mitigation and sea level rise, and continue to coordinate with partner agencies.