Funding Stormwater Management Programs with User Charges

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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 lll GHD 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 Recovery
• 3. Fitting the Model to the Community
• 4. Summary

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The Hydrologic Cycle
Lake/Ocean
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What is Runoff?
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Impervious Area Runoff
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Why is Runoff a Problem?
Flooding/Ponding
Pollution
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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
3
5
10
25
100
1
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Inches of Rainfall per Storm Event
Public
Private
Time Interval - Years
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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
the management of the stormwater passed from the
parcel to the Countys/Citys stormwater system.
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Cost Apportionment

• Who Gets Charged
• and
• For What Services?

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Service Area DefinitionConcept 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 jurisdictions stormwater system.
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SERVICE AREASarasota County
Map Crayon Drill
Utility- Wide Service Area - County Area Less
Cities
O M Service Area
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Projected Enhancement Program
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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

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Developing A Rate Structure
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Basic Runoff Contribution (Burden) Models

• Components
• Base billing value
• Rate classes
• Exemptions
• Credits
• Adjustments
• DCIA
• Drain-To
• LOS

• Four fundamental models
• Impervious Area
• Pervious Impervious Area
• Land Use
• Density
• Intensity
• Pollutant Load

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Impervious Pervious Impervious Area Models
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Standard Billing Units(Equivalent Stormwater
Units - ESUs)
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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
General Residential Condominium Non-residential
Condominium
Governmental
Single Family Residential Duplex Mobile Home
Non-Billable Exempt
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Residential Tiers
Imp Area Range
Bill Units
Class
gt 3260 sf
lt 3260 sf 2260 sf
lt 2260 sf gt 925 sf
lt 925 sf
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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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(No Transcript)
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ESU Calculation Model
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Land Use Model
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Impervious Area Coverage Factors
This approach imputes impervious area to a parcel
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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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Quality Surcharge Concept

• 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
  parameter
• 6. Apportion cost to each parcel based on
  SIC/Land use

Excess load apportioned to contributors
Base Load apportioned to all parcels at
residential load level
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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
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 range all parcels within this
range pay a flat fee for this 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

Becomes
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Model 2 - Pollutant Loading Surcharge
QUALITY SURCHARGE
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Fitting the Model to the Community
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Which Model?
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Collection Options

• Fee
• Piggyback utility bill
• Cut off water?
• Send own utility bill
• Court order?

• Assessment
• Governed by Statutes
• Case Law
• Fair Reasonable
• Special benefit

Legal options to collect delinquencies
substantially affects billing strategy, and,
consequently, the rate structure itself.
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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
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Summary
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Summary
Contextually savvy (and legally defensible) rate
structures
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
communitys 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
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Summary (contd)
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. Clearl
y 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.
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Questions Discussion