Funding Stormwater Management Programs with User Charges –

Experiences and Models in the US

Inter-American Development Bank User Charge Based Funding Mechanisms for Stormwater Management

T. Duncan Rose lllGHD Consulting Inc.Technical Director, Advanced Asset Management

2

Stormwater Management As A

Three Legged Stool

• Stormwater regulation

• Stormwater best management practices

• Funding model

3

Stormwater Management As A

Three Legged Stool

• Stormwater regulation

• Stormwater best management practices

• Funding model

4

Stormwater Management As A

Three Legged Stool

• Stormwater regulation

• Stormwater best management practices

• Funding model

5

Discussion Outline

l. The Rate Model Context• The “User-charge” Concept• Legal Considerations• The Theory of Runoff Burden• “Cost Apportionment”• “Parcel Apportionment”

2. Developing A Rate Structure • Runoff Burden Rate Models• Exemptions• Credit and Adjustment Policies• Services vs. Infrastructure Cost

Recovery3. Fitting the Model to the Community4. Summary

6

The Hydrologi

c Cycle

Lake/Ocean

7

What is Runoff?

TranspirationEvaporation

Percolation RunoffRunoffRunoff

Point vs. Non-Point Sources

TranspirationEvaporation

Percolation RunoffRunoffRunoff

Point vs. Non-Point Sources

8

Impervious Area & Runoff40% EVAPOTRANSPIRATION

30 % RUNOFF

25% SHALLOW INFILTRATION

25% DEEP INFILTRATION

10 % RUNOFF

NATURAL GROUND COVER

21% SHALLOW INFILTRATION

21% DEEP INFILTRATION

20 % RUNOFF

38% EVAPOTRANSPIRATION

10% - 20% IMPERVIOUS SURFACE

20% SHALLOW INFILTRATION

15% DEEP INFILTRATION

35% - 50% IMPERVIOUS SURFACE

35% EVAPOTRANSPIRATION

10% SHALLOW INFILTRATION

5% DEEP INFILTRATION

55 % RUNOFF

30% EVAPOTRANSPIRATION

75% - 100% IMPERVIOUS SURFACE

Changes in Runoff Flows

9

Why is Runoff a Problem?

Flooding/Ponding

Pollution

The Rate Model Context

11

What is a Stormwater Utility?

ACCOUNTING ENTITY SERVICE DELIVERY ENTITY

ACCOUNTABILITY!

12

How Much Stormwater Management?

Private vs Public Burden

Inches of Rainfall

per Storm Event

Time Interval - Years

35 10 25 1001 50

PublicPrivate

13

Basics of Stormwater Utility/User-Charges

• Generates revenues through user-charges - the more the benefit, the greater the charge.

• Two major benefit theories:– “Runoff Burden” Model– “Value of Loss” Model

• Only parcels that are hydrologically connected or otherwise benefited should be charged.

• Good rate structures provide credits for privately maintained facilities and adjustments for unusual site-related characteristics.

14

Legal Parameters

• Clear authority / public purpose

• Rational nexus / special benefit

• Not arbitrary / fair and reasonable

• Equal protection / uniform application

• Fees versus taxes

15

“Runoff Burden” Model

• Accumulated runoff must be managed if owners are to enjoy the use of their property.

• The burden of managing the cumulating runoff falls to the community.

• Each parcel that contributes benefits from the stormwater system.

• The amount of runoff generated and passed to system represents a proportionate share of benefit.

• Impervious area is most common proxy to measure runoff (“fair share”).

16

Managing the “Burden of Runoff”

A parcel (customer) receives service through themanagement of the stormwater passed from the parcel

to the County’s/City’s stormwater system.

Who Gets Charged

and

For What Services?

Cost Apportionment

18

Service Area Definition:Concept of Connection

19

Service Area Definition “Rubber Ducky” test

Technique: Apportion stormwater costs only to those parcels which are hydrologically connected to the jurisdiction’s stormwater system.

20

SERVICE AREASarasota County

O & MServiceArea

Utility- Wide Service Area - County Area Less Cities

“Map & Crayon Drill”

21

Projected Enhancement Program

A n n u a l S to rm w a te r M a n a g e m e n t P ro g ra m E n h a n c e m e n t B u d g e tY e a rs 1 - 4

E s t im a te d P r o g r a m E n h a n c e m e n t C o s ts E n h a n c e m e n t F Y 2 0 0 1 F Y 2 0 0 2 F Y 2 0 0 3 F Y 2 0 0 4 N o te s

E x p a n d e d S tre e t-S w e e p in g O p e ra t io n s $ 2 3 5 ,0 0 0 $ 2 3 5 ,0 0 0 $ 2 3 5 ,0 0 0 $ 2 3 5 ,0 0 0

C o n tra c t o p e ra t io n s to in c re a s e f re q u e n c y b y 5 0 %

B M P p ro to ty p e te s t in g :

1 . C a tc h m e n t S c re e n s $ 7 0 ,0 0 0 $ 7 0 ,0 0 0 $ 7 0 ,0 0 0 $ 7 0 ,0 0 0 T e s t fo u r ty p e s o f s c re e n s a t u p to 5 s ite s e a c h

2 . S e d im e n t T ra p s $ 1 2 5 ,0 0 0 $ 1 2 5 ,0 0 0 $ 1 2 5 ,0 0 0 $ 1 2 5 ,0 0 0 T e s t u p to th re e ty p e s o f t r a p s w ith tw o s ite s e a c h

3 . F ilt r a t io n s w a le s $ 7 0 ,0 0 0 $ 7 0 ,0 0 0 $ 7 0 ,0 0 0 $ 7 0 ,0 0 0 D e s ig n a n d in s ta ll a t th re e s ite sB a s in B M P Im p le m e n ta t io n W o rk P la n s $ 1 5 0 ,0 0 0 $ 1 5 0 ,0 0 0 $ 1 5 0 ,0 0 0 $ 1 5 0 ,0 0 0 1 b a s in e a c h y e a r fo r fo u r y e a rsE n h a n c e d M a in te n a n c e $ 5 0 ,0 0 0 $ 5 0 ,0 0 0 $ 5 0 ,0 0 0 $ 5 0 ,0 0 0 R e s to re a g in g in f r a s t ru c tu reN P D E S P e rm it C o m p lia n c e $ 7 5 ,0 0 0 $ 7 5 ,0 0 0 $ 7 5 ,0 0 0 $ 7 5 ,0 0 0 In c lu d e s e d u c a t io n p ro g ra m T o ta l E s t im a te d C o s ts $ 7 7 5 ,0 0 0 $ 7 7 5 ,0 0 0 $ 7 7 5 ,0 0 0 $ 7 7 5 ,0 0 0

22

Capital Costs & Basins

• Issue is benefit - does a “rational nexus” or “special benefit” exist to a parcel in one basin for improvements in another?

• Conservative Solution - bill only those parcels hydrologically related to the capital project

• Counter-argument - sewer and water utilities bill across gravity basins for improvements

Developing A Rate Structure

24

Basic “Runoff Contribution” (Burden)

Models

Four fundamental models:– Impervious Area– Pervious + Impervious Area– Land Use

• Density• Intensity

– Pollutant Load

Components:– Base billing value– Rate classes– Exemptions– Credits– Adjustments

• “DCIA”• “Drain-To”• “LOS”

25

“Impervious” & “Pervious + Impervious” Area Models

26

Standard Billing Units

(Equivalent Stormwater Units - “ESUs”)

3 “standard”households

Generates same runoff

as

27

What Determines Runoff?

• Impervious Area

• Soil Group

• Vegetative Cover

• Antecedent Moisture Condition

• Connectivity (% DCIA)

• Topography

28

Typical Rate Classes

GeneralResidential CondominiumNon-residential Condominium

Single Family ResidentialDuplexMobile Home

Governmental

Non-BillableExempt

29

Residential Tiers

Small = .55 ESU< 925 sf

Standard = 1.00 ESU< 2260 sf

&> 925 sf

< 3260 sf&

2260 sf

Imp Area Range Class Bill Units

> 3260 sf

= 1.52 ESUsLarge

= Calculated

(Median, General Class)

Very Large

30

Exemptions

• “ Undeveloped”

• Institutional Exempt

• Low Income

• Legal Principle:– Equal Protection – Uniform Application

31

Need for Credits and Adjustments

• “But my parcel (subdivision) does not drain to a City/County system, why should I have to pay?”

• “We have our own private stormwater system which cost a lot of money to build; will we have to pay?”

• “My barn is in the middle of 10 acres; little if any runoff reaches a City/County system. Why should I pay?”

32

“Credits and Adjustments”

CREDIT

Reduction in charge for incorporation on-site of stormwater facilities and private maintenance

ADJUSTMENT

Modification made to billing record to reflect site specific runoff characteristics which are

substantially different from those attributed to the base billing unit.

33

34

ESU Calculation Model

= BILLEDBILLEDESUsESUs

IMPERVIOUSAREA

BASE ESU

VALUE

XSITE

ADJUSTMENT

FACTOR

“DRAIN TO”DCIA

XSITE

MITIGATION

FACTOR*

PRIVATE, ON SITEFACILITIES

< 1.0

35

Land Use Model

36

“Impervious Area Coverage Factors “

This approach imputes impervious

area to a parcel

Coverage FactorsSingle Family 0.35Multi-family 0.65Commercial 0.90Office 0.80Industrial 0.85Institutional 0.62

37

Land Use Model

Step 1: Determine Land Use Class For Parcel

Step 2: Determine Gross Area Of Parcel

Step 3 Multiply:

Step 4: Divide By Base Billing Value = Base Billing Units

Step 5: Bill = $Rate * # (Imputed) Billing Units

“LUC Impervious Area Coverage Factor “

X

Gross Area

38

Pollutant Loading Model

39

Modeled on Wastewater Industrial Surcharge Concept:

1. Identify treatment parameters (sediment, BOD, K, N, “Daily Floating Fish”, etc.)

2. Apportion load to SICs/land use (per square foot)

3. Estimate total load treated by City/County facilities OR aggregate load by total contributing area

4. Allocate portion that exceeds residential load to non-residential uses.

5. Calculate treatment cost per unit per parameter6. Apportion cost to each parcel based on

SIC/Land use

Quality Surcharge Concept

Base Load apportioned to all parcels at

residential load level

Excess load apportioned to

contributors

40

Pollutant Load Table

Dr. Harvey Harper, P.E.Stormwater Chemistry & Water Quality

www.stormwater-resources.com/Library/045PlChemistry.pdf

41

“Pollutant Load” Centered Rate

Baseline load range = all parcels within this range pay a flat fee for this parameter.

Any parcel discharging a “parameter of interest” whose load exceeds, say, 300% of base load, pays the base plus per unit charge above the base for that parameter

Baseline load = point estimate for the single family residence for a given parameter

42

Model 1- “Pollutant Load” Centered Rate

• “Impervious area” is replaced with “# of units of expected discharge” for a designated treatment parameter or parameters (Nitrogen, Phosphorous, Suspended Solids)

• Where “# of units of expected discharge” is based on pollutant load tables

Runoff Generated by Statistical MedianSingle Family Residential Lot

1 ESU = 2,190 SQUARE FEET

OF IMPERVIOUS AREA

EXAMPLE

Pollutant Load Generated by Statistical MedianSingle Family Residential Lot

1 ESU = 1.17 Kg/Acre/Year

Nitrogen

EXAMPLE

Becomes

43

Model 2 - Pollutant Loading Surcharge

QUALITYSURCHARGE

= BILLEDBILLEDESUsESUs

IMPERVIOUSAREA

BASE ESU

VALUE

XSITE

ADJUSTMENT

FACTOR

“DRAIN TO”DCIA

XSITE

MITIGATION

FACTOR*

PRIVATE, ON SITEFACILITIES

< 1.0

Fitting the Model to the Community

45

Which Model?

Impervious Area

Pervious + Impervious

Land Use

Pollutant Load

Integrity Simplicity Data Applicability

Model

A-

A+

B

A

B

C

A

B

Hi

Very Hi

Mod

Hi

Broad

Narrow

Broad

Narrow

46

Collection Options

Fee• Piggyback utility bill

• Cut off water?

• Send own utility bill• Court order?

Legal options to collect delinquencies substantially affects billing strategy, and, consequently, the rate structure itself.

Assessment• Governed by Statutes

• Case Law:•“Fair & Reasonable”• “Special benefit”

47

Billing Issues

• How to generate initial billing data base?• Bill the owner or the resident?• Who will maintain data base?• Fee Based

– How to interface with existing billing/collections system and function?

– How to allocate bill to multiple tenants?– How to cross PINs to billing account numbers?

• Assessment– How to interface w/ Property

Appraiser/Collector?

48

Setting the Rate

1. “Budget Needs” Approach

2. “Politically Feasible Maximum” Approach

FY Budget

# of net billing units

Summary

50

Summary

1 Are built around a carefully defined and conceptually sound rate model that clearly defines benefit provided by the utility to its customers

2. Contain a clearly described credit policy to award reductions for privately maintained site-related attenuation facilities that are at a defined performance level;

3. Contain a clearly described adjustment policy to assign adjustments to those billing accounts where, due to unusual site-related characteristics, impervious area (or some other relevant core billing parameter) simply does not fairly describe the relative burden placed on the community’s stormwater management system by that parcel;

4. Provide for a systematic billing records review procedure that can be initiated by utility customers;

5. Address the distinction between capital charges and service charges;

Contextually savvy (and legally defensible) rate structures:

51

Summary (cont’d)

6. Clearly define exemption classes, if any, consistent with relevant legal issues of consistency and uniform application of law;

7. Address how public infrastructure is to be incorporated into the rate structure;

8. Clearly define the geographic range of the service area according to benefit accorded to the rate payer;

9. Demonstrate reasoned findings by the council/commission relevant to the rate structure that are specific to the community through incorporation of evidentiary findings; and

10. Are implemented with an eye toward utilizing the most practical legally available collection mechanics.

Questions & Discussion