http://efc.sog.unc.edu

Innovative Financial Strategies

for Stormwater Green

Infrastructure

Southeastern Stormwater Association - webinar

05/29/14

Stacey Isaac Berahzer, Senior Project Director

Jeff Hughes, Director

Outline

• Introduction

• Challenges with GI implementation

• Overview of finance options with focus on credits

• Case studies

– Philadelphia, PA

– District of Columbia

– Durham, NC

– Ramsey-Washington Metro Watershed District, MN

Dedicated to enhancing the ability of governments and

other organizations to provide environmental programs

and services in fair, effective and financially sustainable

ways.

How you pay for it matters!

efc.sog.unc.edu

Evolution of Water Quality

Management in the US

4

Point source pollution management

Examples:

Wastewater treatments plants

Factory outfalls

Evolution of Water Quality

Management in the US

5

Point source pollution management

Examples:

Wastewater treatments plants

Factory outfalls

Non-point source pollution (of larger, single-site projects)

Examples:

Detention ponds

Constructed wetlands Examples:

Rain gardens

Permeable pavement

Evolution of Water Quality

Management in the US

6

Point source pollution management

Examples:

Wastewater treatments plants

Factory outfalls

Non-point source pollution (of larger, single-site projects)

Examples:

Detention ponds

Constructed wetlands

Non-point source pollution (of smaller, distributed sites)

Examples:

Rain gardens

Permeable pavement

Cisterns

Photo by Stacey Isaac Berahzer: Cistern

from 1980s, Grand Riviere, Trinidad

Green Infrastructure (GI)

“An array of products, technologies and practices that use natural systems – or engineered systems that mimic natural processes – to enhance overall environmental quality and provide utility services.”

- EPA

Photo by Erin Weeks: Two cisterns

located at the NC Botanical Gardens

in Chapel Hill, NC

Challenges

• GI BMPs are by nature scattered across a

jurisdiction

• Local governments have the main

regulatory burden of addressing

stormwater issues like CSOs, but …

• Many of the most ideal sites for GI will be

on PRIVATE property

Private Investment Necessary

• U.S. communities are facing a total of

$106 billion in needed stormwater

management and combined sewer

correction upgrades or improvements Source: American Rivers et al. 2012. Banking on Green: A Look at How Green

Infrastructure Can Save Municipalities Money and Provide Economic Benefits

Community-Wide.

Evolving Stormwater Finance

1. General government uses tax revenue to pay what it can to manage stormwater on public land

2. Regulations drive private property projects

3. Off-set fee programs/impact fees

4. Governments establish enterprises and stormwater fees to generate revenue

5. Rebates/cost share programs

6. Fees increase to level where crediting fees for on-site improvements becomes viable incentive

7. Loans

8. Tax incentives

9. Trading

10. Property Assessment Backed (e.g. PACE like)

Does Your Utility Offer Any of the

Following Incentive Programs?

Source: 2012 Stormwater

Utility Survey, Black and

Veatch

Stormwater Credits

What is the first thing you think of

when you hear stormwater fee?

1. An unfair disguised tax

2. An essential method of allocating

stormwater costs

3. A device for encouraging private

investment

4. Time to look for a new job

Credit/Discount on Stormwater

Utility Fees • A reduction in (monthly) fee due to installation of

BMPs

BENEFITS:

• Allow rate payers to control and reduce their service fee

• Improve legality of a stormwater utility fee

• Encourage private property owner participation in both water quality and flood relief improvements

• Reduce public expenditures on the stormwater management program

Does Your Utility Have a

Stormwater Credit Program?

Source: (National) 2012

Stormwater Utility Survey,

Black and Veatch

Yes, 69%

No, 31%

Source: EFC at UNC, 2012 Georgia

Stormwater Survey;

http://www.efc.sog.unc.edu/reslib/item/ga-

stormwater-utility-dashboard

Credit Programs: Subscription

Rates

• Question: Of the total number of

stormwater utility accounts, how many

receive credits?

• Conservative interpretation of the

results: 0.03% - 0.37% of the accounts

take advantage of credit programs

Source: 2013 Southeast Stormwater Utility,

2013; SESWA

QUESTIONS?

CASE STUDIES

PHILADELPHIA

Stormwater Management Incentives Program Grant

Philadelphia - Suite of Programs

• Stormwater Management Incentives

Program Grant

• Stormwater Management Credits

• Green Roof Tax Credit

Philadelphia - Stormwater Management

Incentives Program (SMIP) Grant

• Effort of City, Water Department, and Industrial development Corporation

• Eligibility: non-residential, non governmental property owners who are customers of Water Department

• Project must be designed to capture at least the first inch of runoff

• No grant request minimum or maximum, but to be COMPETITIVE, $100,000 per impervious acre or less is recommended

• PWD anticipates that there will be $5 million available for SMIP Grants

Philadelphia - Stormwater

Management Incentives Program

(SMIP) Grant • Grantees eligible for stormwater credits

after installation

• Must complete Economic Opportunity Plan

with the City of Philadelphia’s Office of

Economic Opportunity

• Will not pay for standard stormwater

management requirements, only for

portion that goes above requirements

Philadelphia - Stormwater Management

Incentives Program (SMIP) Grant

Water Commissioner Howard Neukrug:

“By working with customers who can

manage stormwater from many acres of

hard surfaces – and ideally public runoff

from streets – we can transform pockets of

our combined sewer areas into green acres

in a cost effective way. This is the best

example of a public/private partnership.”

http://efc.sog.unc.edu

Loan Program

Philadelphia - Hypothetical Parking

Lot Commercial Customer

Characteristics

• 20,000 square feet of

impervious area

• Installing BMPs that

retain 10,362 gallons

• Installation cost is

$50,000

• O&M costs between

$1,000 and $3,000 per

year

Benefits

• Current stormwater monthly fee = $204.43

• $38,000 in installation funded by a SMIP grant; Parking lot owner pays $12,000

• New fee after credits = $72.95

• Annual avoided fee cost of $1,578 each year

Stormwater Charges

Billing Class Non-Residential

Meter Info

Meter Size R 5/8"

Number of Accounts 1

Parcel Info

Gross Area 20,000.00 sq ft

Gross Area Credit (estimated) 13296 sq ft

Billed Gross Area 7,000 sq ft

Impervious Area 20,000.00 sq ft

Impervious Area Credit (estimated) 13296 sq ft

Billed Impervious Area 7,000 sq ft

Start Date 7/1/2009 7/1/2010 7/1/2011 7/1/2012 1/1/2013 7/1/2013 7/1/2014

Fiscal Year FY10 FY11 FY12 FY13 FY13 FY14 FY15

Meter-Based

- Full Meter Charge 10.8 10.99 11.06 11.06 10.51 11.8 12.46

- Billing and Collection 2.42 2.49 2.6 2.6 1.78 0 0

- Total Meter-Based 13.22 13.48 13.66 13.66 12.29 11.8 12.46

- Meter-Based Weighting 100% 75% 50% 25% 25% 0% 0%

- Weighted Meter-Based Charge 13.22 10.11 6.83 3.42 3.07 0.00 0.00

Parcel-Based

- Full Parcel Charge 0.00 65.39 65.76 65.76 63.01 70.80 74.70

- Minimum Charge Applies No No No No No No No

- Account Parcel Charge 0.00 65.39 65.76 65.76 63.01 70.80 74.70

- Parcel-Billing Charge 0.00 2.53 2.65 2.65 1.98 2.15 2.19

- Total Parcel-Based 0.00 67.92 68.41 68.41 64.99 72.95 76.89

- Parcel-Based Weighting 0% 25% 50% 75% 75% 100% 100%

- Weighted Parcel-Based Charge 0.00 16.98 34.20 51.31 48.75 72.95 76.89

Total Stormwater Charge $13.22 $27.09 $41.03 $54.72 $51.82 $72.95 $76.89

Excel Models like this one

from Philadelphia help

customers weigh the benefits.

http://efc.sog.unc.edu

Green Roof Tax Credit

• Green roof must cover at least 50% of

building

• Provides City of Philadelphia tax credit of

25% of installation cost

• Up to $100,000 per building

DISTRICT OF COLUMBIA

Suite of District Department of the

Environment Programs

• Riversmart Homes

• River Smart Communities

• DDOE Stormwater Fee Discount

(RiverSmart Rewards)

• Green roof rebate program ($7 to $10 per

sf of green roof)

• Stormwater Retention Credit (SRC)

Trading Program

RiverSmart Rewards DDOE Stormwater Fee Discount Program

• Up to 55% off DDOE stormwater fee

• Non-residential/multi-family

• Residential (simplified application)

• Reapplication every 3 years

http://efc.sog.unc.edu

DC - Hypothetical Customer

• 20,000 Sf Property

• Billed 20 ERUs = $53.40

• BMPs on site retain 10,362 gallons

(equivalent to 14.6 ERUs)

• Credit 14.6 *.55 = 8.1 ERUs ($21.63)

• Net cost $31.77 per month

• Avoided expenses $260 per year

Stormwater Retention Credit (SRC)

Trading Program

Through the Stormwater Retention Credit (SRC) trading program, projects that trigger stormwater regulations may buy and use SRCs or pay an in-lieu fee to meet their requirements for retaining stormwater. Other District properties generate SRCs by exceeding their own regulatory requirements or voluntarily installing retention practices such as green roofs and rain gardens. The SRC market provides flexible and cost-effective compliance options for the regulated community as well as financial incentives to voluntarily increase stormwater retention in the District.

Other Program Examples

• Property Assessments/Liens (modeled

after energy PACE programs

• Reverse auction (Durham)

• Multi-prong (Minnesota)

http://efc.sog.unc.edu

Durham

Slide Source: Laura Webb-Smith, City

of Durham

Slide Source: Laura Webb-Smith, City

of Durham

Slide Source: Laura Webb-Smith, City

of Durham

Questions/Comments

Stacey Isaac Berahzer

Senior Project Director

EFC at UNC

(770) 509-3887

berahzer@unc.edu

efc.sog.unc.edu

Jeff Hughes

Director

EFC at UNC

(919) 843-4956

jhughes@sog.unc.edu

efc.sog.unc.edu

Related information on www.efc.sog.unc.edu – search

for “innovative finance for green infrastructure”

Acknowledgements

EFC Project Team: Jeff

Hughes, Stacey Isaac

Berahzer

Input from staff of: DC Water,

RWMWD, City of Durham,

Philadelphia RiverSmart

programs

Funding: EPA

Hosting today’s webinar:

SESWA

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