Picking the Right Stormwater Utility Fee Structure for Today, Tomorrow and the Next Decade

Transcription

1 9 th Annual Regional Stormwater Management Conference Picking the Right Stormwater Utility Fee Structure for Today, Tomorrow and the Next Decade Stephen R. Lienhart, PE Water Quality Market Segment Leader

2 Agenda 1. Algorithms to Date 2. Evolving Algorithms 3. Meeting Long-Term Needs 4. A Few Insights 5. Questions 2 Picking the Right Stormwater Utility Algorithm October 92014

3 1,500± SWUs Identified in 2012 Source: Western Kentucky University Stormwater Utility Survey Picking the Right Stormwater Utility Algorithm October 9, 2014

4 ALGORITHMS TO DATE Algorithms Requirements Change Over Time Meeting Municipal Obligations Services Mandated by Regulatory Programs Expanding Services Delivery Solvency through Cost Recovery Meeting Public Expectations Transparency Control of Annual Costs Provision of Advanced/Non-uniform Services 4 Picking the Right Stormwater Utility Algorithm October 9, 2014

5 Eight Common Utility Concepts 1. Nexus Between the Cost of Services and Fees 2. One or More Base Units 3. Costs Recovery/Allocation 4. Periodic Billing 5. Stepped Rate Structures Based on Benefits 6. Exemptions 7. Use of Credits/Surcharges 8. Connection/Impact Fees 5 Picking the Right Stormwater Utility Algorithm October 9, 2014

6 Unit Rate Cost Recovery Principle Unit Rate = Allocated Cost per Month/Number of Units Receiving Benefits = $xx.xx /ERU for a Service = $xx.xx /lb. for a pollutant 6 Picking the Right Stormwater Utility Algorithm October 9, 2014

7 Generation 1 Algorithms Time Frame: 1970s to 2000 Driver: Focus: Data Needs: Complexity: Public Grasp: Flooding Runoff Low Low High User Equity: Minimal Transparency: Very Low Gen 1 Algorithm Icon Adjustments: Very Limited If Any 7 Picking the Right Stormwater Utility Algorithm October 9, 2014

8 Typical Gen 1 Charge Algorithms Cx = (BUSWM) (RSWM) Where: Cx = Annual Charge for Parcel X BUSWM = Number of billings assigned to Parcel X for stormwater management services RSWM = Rate established for the stormwater management services 8 Picking the Right Stormwater Utility Algorithm October 9, 2014

9 Monthly Charge per ERU Average Charge Rate $16.00 $14.00 $12.00 $10.00 Original Average $3.00 ± Monthly Current Average $5.68 Monthly $8.00 $6.00 $4.00 $2.00 $ (Average Excludes Village of Indian Creek $38.82 per Month) Source: Florida Stormwater Association 2014 Stormwater Utility Survey 9 Picking the Right Stormwater Utility Algorithm October 9, 2014

10 Gen 1 Cost Allocation EXISTING SERVICES Being Provided to the Community Cost of Services Master Account File Allocation of Costs Adopted Unit Charges Stormwater Fee Administrative Service Fee Billing Entity Basic Drainage (and O&M) Flood Control Drainage CIP Projects Environmental Restoration 10 Picking the Right Stormwater Utility Algorithm October 9, 2014

11 Generation 2 Algorithms Time Frame: Driver: Focus: Data Needs: Complexity: Public Grasp: User Equity: 1990s to Today Flooding + Initial MS4 Runoff + Basic NPDES Compliance Medium Medium Medium Medium Transparency: Low Gen 2 Algorithm Icon Adjustments: On-site Runoff Attenuation 11 Picking the Right Stormwater Utility Algorithm October 9, 2014

12 Typical Gen 2 Algorithms Cx = (BUSWM)(RSWM) + (BUNPDES)(RNPDES) - ASMC + ASF Where: Cx = Annual Charge for Parcel X BUSWM = Number of Basic billings assigned to Parcel X for stormwater management services RSWM = Rate established for stormwater management services BUNPDES = Number of billings assigned to Parcel X for NPDES services RNPDES = Rate established for NPDES services ASMC = Authorized Stormwater Management Credits ASF = Administrative Service Fee 12 Picking the Right Stormwater Utility Algorithm October 9, 2014

13 Gen 2 Cost Allocation EXISTING SERVICES Being Provided to the Community Cost of Services Allocation of Costs NEW NPDES SERVICES Being Provided to the Community Adopted Unit Charges Stormwater Fee Administrative Service Fee Billing Entity Basic Drainage (and O&M) Drainage CIP Projects Basic NPDES Compliance Water Quality CIP Projects Flood Control Environmental Restoration Drainage CIP Projects System Inspections 13 Picking the Right Stormwater Utility Algorithm October 9, 2014

14 Just the Facts Significant new regulatory drivers (NPDES, TMDLs, NNC) have materially altered a funding mechanism that was initially intended to fund flood control activities 78% of the existing SWU algorithms were developed exclusively for cities, 10% were exclusively for counties Similar simple algorithms were used for many reasons Most cities and counties are still using their original algorithm, 20% have modified their rate structure/rates to address water quality, and 42% are considering modifications Approximately 10% of SWUs have been challenged legally, about 50% have been sustained, and the litigation is expensive. 14 Picking the Right Stormwater Utility Algorithm October 9, 2014

15 EVOLVING ALGORITHMS Algorithms Requirements Change Over Time Meeting Municipal Obligations Services Mandated by Regulatory Programs Expanding Services Delivery Solvency Through Effective Cost Recovery Meeting Public Expectations Transparency Control of Annual Cost Adjustments Inclusion of Advanced/Non-uniform Services 15 Picking the Right Stormwater Utility Algorithm October 9, 2014

16 Generation 3 Algorithms Time Frame: 2010 to 2030 Driver: Flooding + MS4 + TMDLs + NNC Focus: Runoff + MS4 + Nutrients + Sediment Data Needs: High Complexity: High Public Grasp: Low User Equity: Medium-High Transparency: Medium Gen 3 Algorithm Icon Adjustments: Parcel Runoff Attenuation and WQ Treatment 16 Picking the Right Stormwater Utility Algorithm October 9, 2014

17 Evolving Gen 3 Algorithms Cx = (BUSWM)(RSWM) + (BUNPDES)(RNPDES) + (BUTP)(RTP) + (BUTN)(RTN) - ASMC + ASF Where: Cx = Annual Charge for Parcel X BUSWM = Number of billings assigned to Parcel X for basic stormwater management services RSWM = Rate established for the stormwater management services BUNPDES = Number of billings assigned to Parcel X for NPDES RNPDES = Rate established for the NPDES Compliance services BUTP = Number of billings assigned to Parcel X for TP RTP = Rate established for TP Reduction services BUTN = Number of billings assigned to Parcel X for TN RTN = Rate established for TN Reduction services ISS = Imposed Stormwater Surcharges ASMC = Authorized Stormwater Management Credits ASF = Administrative Service Fee 17 Picking the Right Stormwater Utility Algorithm October 9, 2014

18 Gen 3 Cost Allocation EXISTING SERVICES Being Provided to the Community Cost of Services NEW SERVICES Being Provided to the Community Allocation of Costs Adopted Unit Charges for Adopted /Implemented Services Basic Drainage Flood Control Basic NPDES Compliance Administrative Service Fee Drainage CIP Projects System Inspection Water Quality CIP Projects Treatment On-Site Credit Monitoring & Sampling System Assessment TMDL Compliance Attenuation On-Site Credit 18 Picking the Right Stormwater Utility Algorithm October 9, 2014

19 Generation 4 Algorithms Time Frame: 2010 to 2030 Drivers: Focus: Data Needs: Complexity: Public Grasp: Flooding + MS4 + TMDLs + NNC Runoff + MS4 + Specific Pollutants + Fairness and Billing Transparency High High Low User Equity: Transparency: Medium to High Medium Gen 4 Algorithm Icon Adjustments: Parcel runoff attenuation, WQ treatment and GW recharge 19 Picking the Right Stormwater Utility Algorithm October 9, 2014

20 Gen 4 Charge Algorithms Cx = (RDSS)(BUDSS) + (RNPDES)( BUNPDES) + (RRPR)( BURPR) + ISS - ASMC + ASF Where: Cx = Annual Charge for Parcel X BUSWM = Number of billings assigned to Parcel X for drainage system services RSWM = Rate established for the drainage system services BUNPDES = Number of billings assigned to Parcel X for NPDES RNPDES = Rate established for the NPDES Compliance services BURPR = Number of billings assigned to Parcel X for Regulated Pollution Reduction services RRPR = Rate established for Regulated Pollution Reduction services ISS = Imposed Stormwater Surcharges ASMC = Authorized Stormwater Management Credits ASF = Administrative Service Fee 20 Picking the Right Stormwater Utility Algorithm October 9, 2014

21 Gen 4 Cost Allocation EXISTING SERVICES Being Provided to the Community Cost of Services NEW SERVICES Being Provided to the Community Allocation Allocation of Costs Adopted Unit Charges for of Adopted Costs /Implemented Services Basic Drainage Flood Control Basic NPDES Compliance Administrative Service Fee Drainage CIP Projects System Inspection Water Quality CIP Projects Treatment On-Site Credit Monitoring & Sampling System Assessment TMDL Compliance Attenuation On-Site Credit MSBU Fee for HOA Services Excessive Volume Fee NNC Compliance Retention On-Site Credit Environmental Restoration 21 Picking the Right Stormwater Utility Algorithm October 9, 2014

22 MODEST 1970s NEW HOME 1970s Conditions Parcel (0.30 ac): 13,000 sq.ft House Footprint: 1,664 sq.ft. Sidewalk: 100 sq.ft. Driveway: 480 sq.ft. Impervious Area: 2,244 sq.ft. 17% Greenspace: 10,756 sq.ft. 83% 22 Picking the Right Stormwater Utility Algorithm October 9, 2014

23 MODEST 1970s HOME WITH NUMEROUS IMPROVEMENTS 1970s Conditions Parcel (0.30 ac): 13,000 sq.ft House Footprint: 1,664 sq.ft. Sidewalk: 100 sq.ft. Driveway: 480 sq.ft. Impervious Area: 2,244 sq.ft. 17% Greenspace: 10,756 sq.ft. 83% Current Conditions Second Garage: 384 sq.ft. Second Driveway: 720 sq.ft. Second Sidewalk: 150 sq.ft. Pool & Party Deck: 4,000 sq.ft Ʃ New Impervious Area: 5,254 sq.ft + Initial Construction 2,244 sq.ft Impervious Area: 7,798 sq.ft. 60% Greenspace: 5,222 sq.ft. 40% 23 Picking the Right Stormwater Utility Algorithm October 9, 2014

24 Older vs. Newer Properties Paradigm If You Use OLDER PROPERTIES to Set Unit Rates Don t Require On-Site Stormwater Attenuation Larger System Flow Rates Elevated Flood Levels Increased Flooding You Need to Provide Credits Based on NEWER PROPERTY CHARACTERISTICS Provide Credit for Development for On-site Attenuation to Lower Off-Site Peak Discharge Rates Lower Off-Site Discharge Volumes Don t Require On-Site Stormwater Treatment Larger Pollutant Loads Bigger BMAP Obligations Provide a Credit for Development for On-Site Treatment to Reduced Off-Site Pollutant Annual Pollutant Load Discharges 24 Picking the Right Stormwater Utility Algorithm October 9, 2014

25 Older vs. Newer Properties Paradigm If You Use NEWER PROPERTIES to Set Unit Rates Require On-Site Stormwater Runoff Attenuation Smaller System Flow Rates Reduced Flood Levels Decreased Flooding Require On-Site Stormwater Treatment Smaller Pollutant Loads Reduced BMAP Obligations You Need to Provide Credits Based on NEWER PROPERTY CHARACTERISTICS Implement a Surcharge on Older Properties to Compensate for Higher Off-Site Peak Discharge Rates Compensate for Higher Off-Site Discharge Volumes Implement a Surcharge on Older Properties to Compensate for Higher Annual Off-Site Pollutant Loads 25 Picking the Right Stormwater Utility Algorithm October 9, 2014

26 MEETING LONG-TERM NEEDS What Does the Future Hold? 1. Significantly different climate conditions 2. Additional regulatory mandates 3. Better parcel characterization data 4. Enhanced portfolio of SWU service 5. Linking of functions with other utilities 6. Enhanced public interaction efforts How Will Algorithms Change 1. More charge rate components 2. Better computational abilities 3. Improved fairness and transparency 26 Picking the Right Stormwater Utility Algorithm October 9, 2014

27 Donald Rumsfeld on Uncertainty There s what we know and what we don t know. And in the area of what we don t know, there s what we know we don t know, and what we don t know we don t know. 27 Picking the Right Stormwater Utility Algorithm October 9, 2014

28 Nth Generation Algorithms Time Frame: 2025 Onward Drivers: Flooding + MS4 + TMDLs + NNC + MFLs +??? Focus: Data Needs: Complexity: Public Grasp: User Equity: Runoff + MS4 + Specific Nutrients + Pollutant Discharge Control + GW Recharge Stormwater Infrastructure R&R + Ecosystem System Health + Climate Adaptation +??? High High Negligible High Transparency: High Gen 5 Algorithm Icon 28 Picking the Right Stormwater Utility Algorithm October 9, 2014

29 Nth Gen Cost Allocation EXISTING SERVICES Being Provided to the Community Cost of Services NEW SERVICES Being Provided to the Community Allocation of Costs Adopted Unit Charges for Adopted /Implemented Services Basic Drainage Flood Control Basic NPDES Compliance System Inspection System Assessment Drainage CIP Projects Stormwater Impact Fee Water Quality CIP Projects TMDL Compliance Integrated SWM Plans MSBU Fee for HOA Services Excessive Volume Fee Monitoring & Sampling Attenuation On-Site Credit Treatment On-Site Credit Strength Surcharge Enhanced Services Fees NNC Compliance Retention On-Site Credit Third Party Treatment Cr. Environmental Restoration LID/GI Compliance Stormwater Recharge MFL Compliance Watershed Unit Rates New Data Technologies New Surcharges New Credits Potable Water Recharge Administrative Service Fee 29 Picking the Right Stormwater Utility Algorithm October 9, 2014

30 Nth Gen Charge Algorithms Cx = (BUx 1 )( BR 1 ) + (BUx 2 )( BR 2 ) + (BUx 3 )( BR 3 ) (BUx N )( BR N ) +(SUx 1 )( SR 1 ) + (SUx 2 )( SR 2 ) + (SUx 3 )( SR 3 ) (SUx N )( SR N ) - (CUx 1 )( CR 1 ) - (CUx 2 )( CR 2 ) - (CUx 3 )( CR 3 ) (CUx N )( CR N ) + ASF = Base Charges + Surcharges + Credits + Admin Fees Where: Cx = Charge for Parcel X BUx N = Number of Billing Units for Factor 1 assigned to Parcel X BR 1 = Unit Rate established for Factor 1 services SUx N = Number of Surcharge Units for Factor 1 assigned to Parcel X SR 1 = Surcharge Unit Rate established for Factor 1 services CUx N = Number of Credit Units for Factor 1 assigned to Parcel X CR 1 = Credit Unit Rates established for Factor 1 services ASF = Administrative Service Fee 30 Picking the Right Stormwater Utility Algorithm October 9, 2014

31 A FEW INSIGHTS To improve the chances of success it is important to take the time to develop the right initial algorithm SWU algorithms should evolve as the community s stormwater management program evolves SWU algorithm changes require insight, time, additional data, public education and patience Public involvement programs, when done well, are a key to successful SWU rate and algorithm change campaigns Failed SWU launches usually require a 7-10 year interval before the next attempt, algorithm changes 3-5 years 31 Picking the Right Stormwater Utility Algorithm October 9, 2014

32 A FEW INSIGHTS Average 2013 Florida annual SWU revenue generation rate was $3,630,000, down 8% from 2011 Yet, just a few SWUs are able to produce adequate revenue to meet all current administration, operations, maintenance and CIP needs Review of progressive, forward looking and successful SWUs suggest that communities carefully consider the following success elements when adjusting their algorithms and unit rates: Sound Plan for Algorithm Change Effective Internal Communication Involvement of Multiple Departments Plan for Effective Public Outreach Proper Timing and Good Luck Don t Hurt Either 32 Picking the Right Stormwater Utility Algorithm October 9, 2014

33 33 Picking the Right Stormwater Utility Algorithm October 9, 2014 Steve Lienhart, PE

34 34 Picking the Right Stormwater Utility Algorithm to Meet Community Needs July 30, 2014

35 SWU Focus Historical SWU Trivia Quiz When? Why? Primary Focus Components to Date Major Flooding Reduction Nuisance Flooding Elimination Stormwater System O&M NPDES Compliance Other Community Concerns 35 Picking the Right Stormwater Utility Algorithm October 9, 2014

36 SWU Focus New Focus Components NPDES Compliance TMDLs Compliance WQ Monitoring Flooding Reduction Nuisance Flooding Future Focus Components NNC Compliance Augmenting Water Supply Fighting Sea Level Rise New Regulatory Programs Other Community Concerns 36 Picking the Right Stormwater Utility Algorithm to Meet Community Needs July 30, 2014

37 Potential SWU Funded Services Flooding Reduction Water Quality Modeling and Nutrient Management GIS and Database and Tools Development Watershed Planning and Management Wetland, Stream and Lake Restoration Environmental Impact Analysis Stormwater Management and NPDES Phase II Compliance LEED, Low Impact Development and Green Infrastructure Water Supply Planning and Management Hydrologic and Hydraulic Modeling and Engineering Toxicology and Risk Assessment Natural Resources Surveys and Restoration Best Management Practices Implementation Total Maximum Daily Load (TMDL) Determinations Environmental Engineering and Construction Municipal / Public Works Support Services MS4 POLICE 37 Picking the Right Stormwater Utility Algorithm October 9, 2014

38 Allocation of Costs EXISTING SERVICES Being Provided to the Community Cost of Services NEW SERVICES Being Provided to the Community Allocation of Stormwater Utility Costs (Adopted Unit Charges for Adopted /Implemented Services) Basic Drainage Flood Control Basic NPDES Compliance System Inspection System Assessment Drainage CIP Projects Stormwater Impact Fee Water Quality CIP Projects TMDL Compliance Integrated SWM Plans MSBU Fee for HOA Services Excessive Volume Fee Monitoring & Sampling Attenuation On-Site Credit Treatment On-Site Credit Strength Surcharge Enhanced Services Fees NNC Compliance Retention On-Site Credit Third Party Treatment Cr. Environmental Restoration LID/GI Compliance Stormwater Recharge MFL Compliance Watershed Unit Rates New Data Technologies New Surcharges New Credits??? Periodic Admin Fees 38 Picking the Right Stormwater Utility Algorithm to Meet Community Needs July 30, 2014

39 Levels of Service Drivers Community Expectation Regulatory Mandates Moderators External Funding SWU Capacity Regulatory Mandates Community Priorities A Balancing Act Funding vs. Schedule Wishes vs. Reality 39 Picking the Right Stormwater Utility Algorithm to Meet Community Needs July 30, 2014

40 Cost of SWU Services Direct Costs Annual Operations Operations Capital Investments Indirect Costs Allocated Services Out Sourcing Unexpected Costs 40 Picking the Right Stormwater Utility Algorithm October 9, 2014

41 Assessment of Customer Base Basis of the Master Account File Parcel Characteristics Information Ownership and Address Size and Land Use Imperviousness Pollutant Sources Special Issues Aggregate Characteristics General User Classes Residential vs. Non-Residential Mix Governmental Uses and Holdings Percentage and Similarities How Many ERUs 41 Picking the Right Stormwater Utility Algorithm October 9, 2014

42 Base Billing Units The Equivalent Residential Unit (ERU), defined as the as the average single-family residential parcel and imperviousness, is the basis of most SWU billing systems and algorithms Pollutant Loading Charges are generally based on estimated pounds of pollutant discharged Other Fees have a bracketed fees structure Credits relate to benefits and can be based on a percentage of the charge or measured reductions 42 Picking the Right Stormwater Utility Algorithm to Meet Community Needs July 30, 2014

43 ERU Size Distribution 12,000 10,000 8,000 6,000 4,000 2, , , , , , , , , , ,534-2% Average 2,534 sq-ft 0 Source: Florida Stormwater Association 2014 Stormwater Utility Survey Respondents 43 Picking the Right Stormwater Utility Algorithm October 9, 2014

44 Base Billing Units ERU Varibility (sq.ft of IA) FSA SESWA WKU Minimum 10,000 5,000 - Average 2,534 2,940 2,970 Maximum 1, Picking the Right Stormwater Utility Algorithm October 9, 2014

45 Average Distribution of Accounts 70% Residential Average Number of Accounts = 36,817 78% Single Family 22% Multi-Family 25% Non-Residential Average Number of Accounts = 4,926 18% Business 15% Institutional 10% Commercial Industrial 25% Other Parcels Agriculture and Silviculture Undeveloped and Conservation Lands 45 Pic Picking the Right Stormwater Utility Algorithm October 9, 2014

46 Adjustments Credits Owner must apply for credits Credit amount based on benefit to the community Considers all obligations A strategy for new development and redevelopment parcels Florida SWU Credit Background 82% of the SWUs require private treatment ponds in all new development Credits available to owners who have and maintain onsite ponds from 54% of SWUs Surcharges Typically charged against owners which high strength runoff A strategy for older development 46 Picking the Right Stormwater Utility Algorithm October 9, 2014

47 Adjustments Exemptions FSA SESWA B&V Streets and Highways 72% 76% 22% Undeveloped Land (Non-Agricultural) 53% 63% 48% Railroad ROW 53% 59% 22% Undeveloped Land (Agricultural) 48% 63% 48% Public Parks 37% 16% 0% Government Properties 23% 9% 19% Airport Runways and Taxiways 20% 13% 0% Other 16% 21% 0% Non-Discharging Properties 11% 12% 0% None 8% 11% 19% Waterfront 4% 3% 0% Cemetaries % School Districts % Colleges and Universities % Source: Florida Stormwater Association 2014 Stormwater Utility Survey 47 Picking the Right Stormwater Utility Algorithm October 9, 2014

48 Adjustments Exemptions Exempt Functionally Exempt Properties Bill and Collect Bill But Don't Collect Not billed Federal State County City School District Special District Increasing Decreasing Source: Florida Stormwater Association 2014 Stormwater Utility Survey 48 Picking the Right Stormwater Utility Algorithm October 9, 2014

49 Number of SWUs by State Source: Western Kentucky University Stormwater Utility Survey Picking the Right Stormwater Utility Algorithm October 9, 2014