Stormwater Utilities 101: Getting Started on Financing your Stormwater Management Plan

Transcription

1 Stormwater Utilities 101: Getting Started on Financing your Stormwater Management Plan Joanne Throwe Environmental Finance Center University of Maryland Martinsburg, WV July 17, 2013

2 The Environmental Finance Center: Who are we? One of 10 University-based centers across the country Provide innovative solutions to managing the costs of environmental protection and improvement by assisting communities: Address internal capacity Develop organizational capacity Assess, recommend, and implement watershed protection financing programs Identify funding and financing opportunities Address the issue of how to pay by working across sectors

3 Elements of a Comprehensive Stormwater Program 1. Administration 2. Billing and Finance 3. Public Education and Involvement 4. Technical Support 5. Engineering and Planning 6. Operation and Maintenance 7. Capital Improvements 8. Regulation and Enforcement

4 Stormwater Today: The Impact on WV Municipalities Many new MS4 Phase II More attention to Phase II communities than ever before Additional responsibility to meet TMDL All this at a time when too few resources and limited capacity available to properly manage stormwater 7/21/13 4

5 You are Not Alone: Stormwater Financing Around the Country Stormwater Utilities 2012 Source: Western Kentucky University Stormwater Utility Survey 2012; report surveys 1,314 stormwater utilities across 39 states and DC

6 Where Does It All Begin? It starts with a comprehensive strategy Estimate annually but plan for the long term Make program transparent and cost effective Get to know your system above and below the ground Engage public early and often

7 No Time like the Present to get Started Know what you are responsible for Get more familiar with your permit Develop a strategy short and long term Better organize your stormwater department Build a communication strategy Write, record, and document EVERYTHING! Create your Stormwater Champion(s) locally 7/21/13 7

8 Minimum Control Measures 1. Public Education and Outreach: Written plan, list of targeted audiences 2. Public Involvement and Participation: Promoting, tracking and soliciting feedback 3. IDD&E: Tracking inspections/complaints 4. Construction Site SW Runoff Control: Track progress 5. Post Construction SW Management: Procedures, written O&M schedule 6. Good Housekeeping/Pollution Prevention: Cleaning schedule, training 8

9 Technical Steps to Take Now Step 1: Conduct assessment of current stormwater program through data gathering Step 2: Evaluate existing program structure; evaluate current capacity; identify trends in funding Step 3: Identify gaps in existing program and evaluate future needs Step 4: Determine where current program fits into LOS; evaluate exact costs Step 5: Develop and finalize proposed stormwater program budget for year 1; project out budget

10 Funding Options for Stormwater Funding Mechanisms What Costs they Cover Funding Source Capital O&M Grants Yes No Loan Programs Yes No Bond Financing Yes Yes General Fund Yes Yes Permit Review Fees No Yes Inspection Fees No Yes Utility Rates Yes Yes

11 Case Study #1: Berlin, MD Relevant Findings Current level of funding dedicated to stormwater management in Berlin is drastically under budgeted compared to the demonstrated need 10-year revenue stream totaling ~$8.3 million, broken down into three categories: personnel costs, capital improvement costs, and operations & maintenance costs

12 Proposed Stormwater Budget, Years 1-10 $3,400,000 $3,200,000 $3,000,000 $2,800,000 $2,600,000 $2,400,000 $2,200,000 $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $- Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Personnel Costs Capital Improvement Costs O&M Costs Total Costs

13 Personnel Costs Year 1 Personnel Costs Description Cost Comments Cleaning (inlets, ditches, drains) staff $90,000 2 $30,000 plus $15,000 fringe benefits Comprehensive trash No staff needed, will utilize volunteers and $0 collection staff electric company Green infrastructure plan staff $0 No staff needed IDD&E staff $0 No staff needed Public outreach & education staff $0 No staff needed, will utilize NGOs and volunteer groups GIS management intern $0 Will utilize current staff and 1 intern Personnel Costs, Years 1-10 Year 1: $90,000 Year 6: $101,827 Year 2: $92,250 Year 7: $104,372 Year 3: $94,556 Year 8: $106,982 Year 4: $96,920 Year 9: $109,656 Year 5: $99,343 Year 10: $112,398

14 Capital Improvement Costs Year 1 Capital Improvement Costs Description Cost Comments Engineering study indicates that Area 2 and 3 should be completed first; will take 12 Area 2 & 3 Upgrades months to design Area 2 and 18 months for $1,414,199 Area 3; both are estimated to take 3 months of construction work; cost includes design and planning and 30% contingency WWTP Truck $30,000 Funds will be set aside each year towards the purchase of a new truck at the end of a 10 year period; calculated at 10% of $300,000 truck purchase price Capital Improvement Costs, Years 1-10 Year 1: $1,444,199 Year 6: $33,942 Year 2: $3,058,857 Year 7: $34,791 Year 3: $714,019 Year 8: $35,661 Year 4: $32,307 Year 9: $36,552 Year 5: $33,114 Year 10: $37,466

15 Identifying Highest Priority Projects Report prepared by town engineer to identify highest priority stormwater management projects Analyzed feedback from public outreach and the US Army Corps of Engineers stormwater improvement study Identified top 6 projects to mitigate flooding and improve water quality and quantity issues

16 Years 1-3 Priority Stormwater Projects Project Year to Start Location Driver Total Cost to Implement Area 2 - Cedar, Pine, Maple, Franklin, Grice, and Nelson 1 District 1 Frequency & water quantity concerns from flooding $1,018,582 Area 3 Williams Street near Electrical Plant Area 5 Henry s Green/ Henry s Mill Area 1 West Street near Abbey Lane 1 District 2 Flooding concerns $395,617 2 District 2 Flooding concerns $1,114,293 2 District 2 Flooding concerns $1,913,814 Area 6 Hudson Branch at Flower Street and Showell Street 3 Districts 3 & 4 Flooding concerns $570,000 Area 16 Decatur Farms Development 3 District 4 Flooding concerns $112,500

17 Operations & Maintenance Costs Year 1 Operations & Maintenance Costs Description Cost Comments Cleaning (inlets, ditches, drains) $5,000 Gas, insurance, routine maintenance of existing WWTP truck Comprehensive trash collection $500 Promotional materials for waste collection events Green infrastructure plan BMP erosion control measures (includes design $100,000 services) IDD&E $3,000 Equipment and analysis expenses General Fund budgets $10,000 for environmental Public outreach & education $10,000 projects. These funds will be put toward outreach and education as needed. Redevelopment projects $45,000 Annual operating expenses Operations & Maintenance Costs, Years 1-10 Year 1: $163,500 Year 6: $184,985 Year 2: $167,588 Year 7: $189,610 Year 3: $171,777 Year 8: $195,350 Year 4: $176,072 Year 9: $199,209 Year 5: $180,473 Year 10: $204,189

18 Utility Billing Recommendation Billing options Advantages Disadvantages 1. Separate line on tax bill 2. Line item on water & sewer bill Less likely to be contested Extra processing - $ goes to County first Easier for Berlin to collect Much more visible to community, greater chance to be contested Recommendation: The town apply the stormwater utility fee billing to the water and sewer bill as a separate line on the bill that would indicate exactly how much is being applied towards stormwater.

19 Recommended Rate Structure for Residential Properties Flat Rate Stormwater Utility Fees Pros ü Requires less internal capacity ü Reduces administrative burden ü Much less risk of billing errors Cons Does not account for variance in property size Recommendation: A flat rate fee structure should be adopted for townhome properties and single family residences (residential properties) since there is not a large enough spread among the sizes of residential units to justify a parcel-specific fee structure.

20 Residential Flat Rate Fee Structure Residential properties yield $70,000 per year Based on fixed yearly rate of $50 for 1,400 properties Monthly rate = $4.17; quarterly rate = $12.50 Residential fee based on the average impervious surface of a single family home = 2,100 square feet (1 ERU)

21 Recommended Rate Structure for Non- Residential Properties ERU-based Stormwater Utility Fees Pros ü Accounts for variance in size and nature of properties ü Fairest method ü Feasible ü Practical ü Appropriate Cons Greatest administrative burden Requires GIS capacity Recommendation: Since the size and nature of units vary widely, an ERU-based fee structure should be adopted for multi-family, commercial, and industrial properties (non-residential properties) which will base the fee on a property s actual impervious surface.

22 Additional Recommendation: Invest in GIS Recommendation: Berlin should invest in GIS software and training prior to issuing its first utility bill. Although the size of many properties may be significant, the total number of properties being assessed would not prove difficult for town staff compared to that of assessing residential properties.

23 Site-specific Examples of Non-Residential Utility Fee Property name Total lot size (acres) Impervious Cover (ft 2 ) Impervious area (as % of total area) Annual stormwater utility fee (impervious cover/2,100ft 2 x $45) Atlantic General Hospital , $9, Stephen Decatur High School , $11, Stephen Decatur Middle School , $4, Buckingham Elementary School , $4, Berlin Intermediate School , $5, Worcester Preparatory School , $6, St. Paul s Episcopal Church , $ St. Paul s Methodist Church , $ Rite Aid , $1, Sav-A Lot Shopping Center , $7,364.74

24 Non-Residential Utility Fee: Atlantic General Hospital 23.9 acres, 40.4% impervious area 421,225 sq. ft. impervious cover Calculate the fee 421,225 sq. ft./2,100 sq. ft. = ERUs ERUs x $45 = $9,026 yearly fee ($2, quarterly fee; $ monthly fee)

25 Non-Residential Utility Fee: St. Paul s Episcopal Church 2.74 acres, 22.2% impervious area 26,571 sq. ft. impervious cover Calculate the fee 26,571 sq. ft./2,100 sq. ft. = ERUs ERUs x $45 = $ yearly fee ($ quarterly fee; $47.45 monthly fee)

26 Case Study #2: Salisbury, Maryland

27 Who is included in the MS4 Permit? Source: A User s Guide to Watershed Planning in Maryland, December 2005, Prepared by Center for Watershed Protection for the Maryland Department of Natural Resources

28 Goal of the Salisbury Stormwater Program Chesapeake Bay communities are facing: More stringent MS4 permits Significant nutrient reduction expectations from TMDL and WIP activities EFC s Goal Enhance Salisbury s existing program, raising the level of service in a way that enables the City to meet permit requirements more thoroughly, address community water quality priorities, and prepare for future nutrient reduction expectations.

29 Salisbury Stormwater Program Funding Needs Relevant Findings Budgeting practices currently significantly underfund the stormwater program in order to meet the City s MS4 Permit 10-year revenue stream totaling ~$23.2 million is needed to fully support required MS4 Permit activities A comprehensive program will include additional costs associated with the City s WIP activities

30 Designing a Level of Service OPERATIONS AND MAINTENANCE Maintain, inspect, and evaluate the effectiveness of BMPs owned or maintained by the City, as well as those which are privately owned. (General Permit) Level of Service Options Program Gap Additional Staff Additional Operating Costs Yearly/One Time Expense Capital Cost Minimal Continue to perform maintenance on BMPs as resources become available. Medium Systematically address backlog of City s BMP s maintenance by adding additional crew. 1 FTE to inspect a minimum of 1/3 of all facilities annually $30,000 - $35,000 salary with and additional $4,500 - $5,250 in benefits; yearly Cell phone, camera, laptop; $40,000 for truck $5,000 annually for vehicle maintenance High Address all backlogs and add new BMPs around city.

31 Proposed Stormwater Budget, Years 1-10 $3,750,000 $3,500,000 $3,250,000 $3,000,000 $2,750,000 $2,500,000 $2,250,000 $2,000,000 $1,750,000 $1,500,000 $1,250,000 $1,000,000 $750,000 $500,000 $250,000 $0 FY 2013 (Year 1) FY 2014 (Year 2) FY 2015 (Year 3) FY 2016 (Year 4) FY 2017 (Year 5) FY 2018 (Year 6) FY 2019 (Year 7) FY 2020 (Year 8) FY 2021 (Year 9) FY 2022 (Year 10) Personnel Costs Capital Improvement Costs Operations & Maintenance Costs Total Costs

32 Residential Flat Rate Fee Structure Not a large spread among sizes of residential units Based on fixed yearly rate for 7,995 properties Residential fee based on the average impervious surface of residential properties Year Flat Rate Fee Yearly Revenue Generated Years 1-4 $40 Years 5-7 $45 Years 8-10 $50 $40 x 7,995 = $319,960 $45 x 7,995 = $359,955 $50 x 7,995 = $399,950

33 Non-Residential ERU-Based Rate Fee Structure Based on ERU-based rate calculated for 2,464 properties Utilize a tiered rate structure in years 1-2 Begin to utilize parcel data beginning in year 3 Year ERU-based Rate Yearly Revenue Generated Years 1-2 $40 $1,742,280 Years 3-4 $40 $1,982,173 Years 5-7 $45 $2,229,945 Years 8-10 $50 $2,477,716

34 Non-Residential Tiered Rate Fee Structure, Years 1-2 Non-residential properties yield $1,742,280 per year Based on lot area and national impervious surface estimates Non-residential Property Tiered Rate Structure, Years 1 & 2 Lot Area (ft 2 ) Annual Fee Lot Area (ft 2 ) Annual Fee <20,000 $200 <280,000 $2,840 <40,000 $400 <300,000 $3,040 <60,000 $600 <320,000 $3,240 <80,000 $800 <340,000 $3,440 <100,00 $1,000 <360,000 $3,680 <120,000 $1,240 <380,000 $3,880 <140,000 $1,440 <400,000 $4,080 <160,000 $1,640 <420,000 $4,280 <180,000 $1,840 <440,000 $4,480 <200,000 $2,040 <460,000 $4,680 <220,000 $2,240 <480,000 $4,880 <240,000 $2,440 <500,000 $5,080 <260,000 $2,640 >500,000 $5,280

35 Proposed Stormwater Budget vs. Total Revenue $3,500,000 begin impervious-based fee ($40/ERU) increase to $45/ERU increase to $50/ERU $3,000,000 $2,500,000 tiered system $2,000,000 $1,500,000 $1,000,000 $500,000 $- FY 2013 (Year 1) FY 2014 (Year 2) FY 2015 (Year 3) FY 2016 (Year 4) FY 2017 (Year 5) FY 2018 (Year 6) FY 2019 (Year 7) FY 2020 (Year 8) FY 2021 (Year 9) FY 2022 (Year 10) Proposed Stormwater Program Budget Total Revenue

36 Getting at True Costs is Important Current Operating Expenditures $376,600 Current Capital Expenditures $186,250 Sub- Total Capital Expen True Costs for what is needed in 1 year is: Current* (2013) $1,638,945 Year 1 (2014) Year 2 (2015) Year 3 (2016) Year 4 (2017) Year 5 (2018) $186,250 $736,250 $302,250 $352,250 $579,750 $202,250 $186,250 $766,250 $317,250 $352,250 $579,750 $202,250 Total Expend $562,850 $1,638,945 $1,211,762 $1,269,125 $1,519,547 $1,165,542 36

37 Document, Track, and Record! 7/21/13 37

38 Have a Staffing Plan 38

39 Output Flows into Budget 39

40 Project Approach: Technical Process Ø Conduct an assessment of current stormwater management program through data gathering Ø Evaluate existing stormwater management program Ø Identify gaps in program and evaluate future needs Ø Develop proposed stormwater program budget Ø Estimate revenue needs for short and long term Ø Recommendations on supporting a sustainable stormwater program find ways to pay for it!

41 Project Approach: Outreach Process One of the most important ways to achieve a high degree of accuracy in our recommendations is to engage local businesses and residents throughout the process Leveraged community partnerships Created an outreach and marketing plan Conducted outreach activities Collect and share information about stormwater with the community as a whole

42 Local Examples of Outreach for Stormwater 42

43 Storm Drain Graffiti

44 Highlighting Stormwater at Local Events

45 Stormwater Education Made Fun

46 Engaging the Public Gives Them a Voice

47 Public Engagement is Essential 7/21/13 47

48 Thank you! Questions and Comments? Joanne Throwe University of Maryland Environmental Finance Center