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IS A STORMWATER UTILITY THE RIGHT FIT FOR YOUR COMMUNITY?PRESENTED BY ERIC THOMPSON, PE, CFM

Webinar hosted March 26, 2015

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WHAT IS A STORMWATER UTILITY?HOW IS A STORMWATER UTILITY DEVELOPED?WHAT ARE ALTERNATIVES TO AN ERU SYSTEM?WHAT ARE CRITICAL ELEMENTS FOR SUCCESS?STORMWATER UTILITY CREDITSWHAT ARE OTHER COMMUNITIES DOING?

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WHAT IS A STORMWATER UTILITY?OVERVIEW

A Stormwater Utility, like other utilities, provides a service to the public supported by charging fees to its customers.

Service – Stormwater Management

• Drainage

• Flood Damage Prevention

• Water Quality Management

• Erosion and Sediment Control

Fee – Runoff Volume

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WHAT IS A STORMWATER UTILITY?A STEP IN THE EVOLUTION OF PUBLIC SERVICES

» Water Utility – 1950s

» Waste Water Utility – 1970s

» Solid Waste Utility – 1980s

» Stormwater Utility – Now

Need for expanded services with improved quality, provided by an aging system = increased cost.

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WHAT IS A STORMWATER UTILITY?UTILITIES FUNDED THROUGH USER FEES

User fees are directly related to contribution to problem and/or benefit received from program.

Water Utility – Volume of Water Used

Waste Water Utility – Volume of Water Used

Solid Waste Utility – Weight of Refuse

Stormwater Utility - Stormwater Runoff

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WHAT IS A STORMWATER UTILITY?BASIS OF STORMWATER UTILITY USER FEES

Impervious Area Dominates Runoff

Roofs

Driveways

Streets

Landscaped Areas

100

50

0

0 0.01 0.1 1.0 4.0

Perc

enta

ge o

f Con

trib

utio

n

Inches of Rain

Source: Pitt

90% of events

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WHAT IS A STORMWATER UTILITY?ERU SYSTEM

* Sometimes a reduced value is applied

• Flat Fee = 1 ERU per Living Unit

- Single Family

• Flat Fee = 1 ERU per Living Unit*

- Duplex- Multi-Family

• Parcel Impervious Area ERU Size (square feet)

- Commercial - Industrial

- Tax ExemptX Charge Rate

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WHAT IS A STORMWATER UTILITY?HOW IS A STORMWATER UTILITY DEVELOPED?WHAT ARE ALTERNATIVES TO AN ERU SYSTEM?WHAT ARE CRITICAL ELEMENTS FOR SUCCESS?STORMWATER UTILITY CREDITSWHAT ARE OTHER COMMUNITIES DOING?

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HOW IS A STORMWATER UTILITY DEVELOPED?DEVELOPMENT STEPS

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HOW IS A STORMWATER UTILITY DEVELOPED?FEASIBILITY STUDY

A Stormwater Utility Feasibility Study will answer the following questions……….

1. What is the ERU size in your City?2. Approximately how many ERUs are there Citywide?3. How will the stormwater program cost distribution

among users differ between a stormwater utility and property-tax system?

4. What ERU charge would be needed to support the proposed stormwater program utility budget?

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HOW IS A STORMWATER UTILITY DEVELOPED?FEASIBILITY STUDY – ERU SIZE

Statistically Significant Random Sample

Multi-Family

All parcels >1 living unit

Single Family

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HOW IS A STORMWATER UTILITY DEVELOPED?FEASIBILITY STUDY – ERU SIZE

Impervious Area Associated with Single Family Residential Parcels

<1000

1000-1499

1500-1999

2000-2499

2500-2999

3000-3499

3500-3999

4000-4499

4500-4999

5000-5499

5000-5999>6000

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

1.3% 2.0%

7.9%

13.2%

27.2%

23.8%

9.9%

6.0%4.0%

2.0% 1.3% 1.3%

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HOW IS A STORMWATER UTILITY DEVELOPED?FEASIBILITY STUDY – IMPERVIOUS AREA ESTIMATION

Non-Residential impervious areas are estimated using aerial photos and zoning/land-use maps

~64.7 impervious acres ÷ 3605 ft2 = 782 Non-Residential ERUs

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HOW IS A STORMWATER UTILITY DEVELOPED?FEASIBILITY STUDY – CHARGE DISTRIBUTION

17%

83%

Property Tax SystemNon-Residential Residential

39%

51%

10%

Revised Stormwater Utility Rate StructureNon-Residential Residential Tax-Exempt

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HOW IS A STORMWATER UTILITY DEVELOPED?FEASIBILITY STUDY – CHARGE DISTRIBUTION

Residential Stormwater Charges

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

$0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250Charge per year

Sto

rmw

ater

Pro

gra

m R

even

ue

Per Residential Unit, UserFee System

Per $85,000 AssessedValuation Property Tax

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HOW IS A STORMWATER UTILITY DEVELOPED?FEASIBILITY STUDY – CHARGE DISTRIBUTION

Non-Residential Stormwater Charges

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

$0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000

Charge per year

Sto

rmw

ate

r P

rog

ram

Re

ve

nu

e

Per acre non-res parcel, User FeeSystem

Per $200K of Assessed ValuationProperty Tax

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WHAT IS A STORMWATER UTILITY?HOW IS A STORMWATER UTILITY DEVELOPED?WHAT ARE ALTERNATIVES TO AN ERU SYSTEM?WHAT ARE CRITICAL ELEMENTS FOR SUCCESS?STORMWATER UTILITY CREDITSWHAT ARE OTHER COMMUNITIES DOING?

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WHAT ARE ALTERNATIVES TO AN ERU SYSTEM?STORMWATER RATE STRUCTURES

Non-Area Based

Flat Fee

Tiered Fee by Land Use

Area Based

Impervious Area Only

ERU- Based

Flat SFR Parcel Fee

Tiered SFR Parcel Fee

Non-ERU Based

Pervious and Impervious Area

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WHAT IS A STORMWATER UTILITY?HOW IS A STORMWATER UTILITY DEVELOPED?WHAT ARE ALTERNATIVES TO AN ERU SYSTEM?WHAT ARE CRITICAL ELEMENTS FOR SUCCESS?STORMWATER UTILITY CREDITSWHAT ARE OTHER COMMUNITIES DOING?

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CRITICAL ELEMENTS OF SUCCESS1. PREPARATION OF A CLEAR STATEMENT OF NEED

The Community must document that the implementation of the utility will result In an increased level of service proportional to the stormwater utility fee.

Without an easily definable problem statement such as a need to provide flooding or drainage relief to a large portion of the City or a need to satisfy new unfunded water quality standards (such as the new Phase II storm water rules) a storm water utility can appear to be a shell game where money is switched from one pot to another to simply free up funds from the general tax levy for other non-storm water programs.

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CRITICAL ELEMENTS OF SUCCESS2. COMPLETE AND TRANSPARENT ACCOUNTING

The argument for implementing a utility is often based only on the fact that costs will be shifted away from residential properties towards non-residential properties (including tax-exempt properties) and will be fairer since this fee structure is proportional to the stormwater generated by each parcel. This is a valid argument; however, if insufficient detail is provided to support this general statement strong resistance from community businesses may develop.

In practice, comparatively few businesses will be severely impacted annually by a utility. Usually less than 5% of the customers can be expected to have storm water utility bills over $100 per month.

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CRITICAL ELEMENTS OF SUCCESS3. SENSE OF CONTROL FOR CUSTOMERS

• Stormwater Utility Credits provide a sense of control for customers; since they can reduce their storm water charges through a reduction in their ‘usage’ of the storm water management service provided by the municipality.

• In common practice the implementation of credits affect the overall utility revenue generation potential by less than 5%; a small concession for greater public acceptance of a utility.

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WHAT IS A STORMWATER UTILITY?HOW IS A STORMWATER UTILITY DEVELOPED?WHAT ARE ALTERNATIVES TO AN ERU SYSTEM?WHAT ARE CRITICAL ELEMENTS FOR SUCCESS?STORMWATER UTILITY CREDITSWHAT ARE OTHER COMMUNITIES DOING?

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STORMWATER UTILITY CREDITS

Possible Credit-Eligible Customers

Non-Residential

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STORMWATER UTILITY CREDITS

Single-Family Residential

Rate and Volume Water Quality Direct Discharge Industrial NPDES Other0%

25%

50%

75%

100%

Credit Types

% C

omm

uniti

es S

urve

yed

*

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WHAT IS A STORMWATER UTILITY?HOW IS A STORMWATER UTILITY DEVELOPED?WHAT ARE ALTERNATIVES TO AN ERU SYSTEM?WHAT ARE CRITICAL ELEMENTS FOR SUCCESS?STORMWATER UTILITY CREDITSWHAT ARE OTHER COMMUNITIES DOING?

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WHAT ARE OTHER COMMUNITIES DOING?IOWA75 Utilities, Ave = $45/ yr

ILLINOIS# Unknown, Ave ~ $50/yr

MINNESOTA71 Utilities, Ave = $32/yr

WISCONSIN120 Utilities, Ave = $62/yr

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STORMWATER UTILITY REVENUE POTENTIAL

Population – 5,000

Residential ERUs =1 ERU per 2.7 people

=1,851

Non-Res. ERUs =65% of Total ERUs

=3,438

Total ERUs =5,289

State Average ERU Rate = $50/yr

City Revenue Potential = $264,450

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QUESTIONS?

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IS A STORMWATER UTILITY THE RIGHT FIT FOR YOUR COMMUNITY?PRESENTED BY ERIC THOMPSON, PE, CFM

Webinar hosted March 26, 2016