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
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Stormwater Management As A
Three Legged Stool
• Stormwater regulation
• Stormwater best management practices
• Funding model
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Stormwater Management As A
Three Legged Stool
• Stormwater regulation
• Stormwater best management practices
• Funding model
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Stormwater Management As A
Three Legged Stool
• Stormwater regulation
• Stormwater best management practices
• Funding model
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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
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The Hydrologi
c Cycle
Lake/Ocean
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What is Runoff?
TranspirationEvaporation
Percolation RunoffRunoffRunoff
Point vs. Non-Point Sources
TranspirationEvaporation
Percolation RunoffRunoffRunoff
Point vs. Non-Point Sources
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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
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Why is Runoff a Problem?
Flooding/Ponding
Pollution
The Rate Model Context
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What is a Stormwater Utility?
ACCOUNTING ENTITY SERVICE DELIVERY ENTITY
ACCOUNTABILITY!
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How Much Stormwater Management?
Private vs Public Burden
Inches of Rainfall
per Storm Event
Time Interval - Years
35 10 25 1001 50
PublicPrivate
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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.
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Legal Parameters
• Clear authority / public purpose
• Rational nexus / special benefit
• Not arbitrary / fair and reasonable
• Equal protection / uniform application
• Fees versus taxes
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“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”).
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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
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Service Area Definition:Concept of Connection
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Service Area Definition “Rubber Ducky” test
Technique: Apportion stormwater costs only to those parcels which are hydrologically connected to the jurisdiction’s stormwater system.
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SERVICE AREASarasota County
O & MServiceArea
Utility- Wide Service Area - County Area Less Cities
“Map & Crayon Drill”
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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
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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
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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”
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“Impervious” & “Pervious + Impervious” Area Models
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Standard Billing Units
(Equivalent Stormwater Units - “ESUs”)
3 “standard”households
Generates same runoff
as
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What Determines Runoff?
• Impervious Area
• Soil Group
• Vegetative Cover
• Antecedent Moisture Condition
• Connectivity (% DCIA)
• Topography
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Typical Rate Classes
GeneralResidential CondominiumNon-residential Condominium
Single Family ResidentialDuplexMobile Home
Governmental
Non-BillableExempt
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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
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Exemptions
• “ Undeveloped”
• Institutional Exempt
• Low Income
• Legal Principle:– Equal Protection – Uniform Application
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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?”
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“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.
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ESU Calculation Model
= BILLEDBILLEDESUsESUs
IMPERVIOUSAREA
BASE ESU
VALUE
XSITE
ADJUSTMENT
FACTOR
“DRAIN TO”DCIA
XSITE
MITIGATION
FACTOR*
PRIVATE, ON SITEFACILITIES
< 1.0
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Land Use Model
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“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
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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
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Pollutant Loading Model
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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
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Pollutant Load Table
Dr. Harvey Harper, P.E.Stormwater Chemistry & Water Quality
www.stormwater-resources.com/Library/045PlChemistry.pdf
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“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
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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
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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
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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
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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”
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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?
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Setting the Rate
1. “Budget Needs” Approach
2. “Politically Feasible Maximum” Approach
FY Budget
# of net billing units
Summary
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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:
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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