Economics and Alluvial Fans Presentation by: Dr. W. Bowman (Bo) Cutter, Ph.D. Autumn DeWoody Alluvial Fan Task Force Plenary Meeting 4 March 14, 2008 Economics/Water Resource Management University of California Riverside (951) 787-2088 Bowman.Cutter@ucr.edu Technical Consultant to the Alluvial Fan Task Force
What Key Services Do Alluvial Fans Potentially Provide? Housing Open Space Ecological Flood Control Recharge Water Quality Remaining open land, good views. Increases housing values. Recreational values. Preservation of habitat and migration. Safe areas for routing flood water. Groundwater recharge. Infiltration of runoff.
Fans Can Be Important to Groundwater Recharge. Mountain Runoff Large area exposed hard rock. Alluvial Soils Existing recharge of natural runoff. Opportunity for spreading imported or recycled water.
Groundwater Storage is Like a Savings Account. Variable Flows Storage Demand Storage, like savings, is more valuable with more uncertainty. Climate change, Delta issues add to uncertainty.
Open space values are found across many areas and studies. Measuring Open Space Benefits Residential real estate Nearby open space increases value. Parks, wetlands, lakes, rivers, etc. Recreation Value= time and expense dedicated to activity.
Open Space Benefits Real Estate Benefits Are Often Large. Living within 1500 ft of natural area Living within 1500 ft of urban park Wetlands: Open water/seasonally flooded + 16.1% + 1.8% +2.6% (within 1 mile) Forested wetland -1.9 % (within 1 mile) Real estate benefits depend on the type of open space.
Counting Natural Disaster Economic Impacts. Losses All direct and indirect effects. Costs Direct losses Losses that are reimbursed. Cost of physical damage (to structures/people) from event. Will exceed the costs. Indirect Temporary unemployment and Losses business disruption. Ex. Loss of recharge capacity. Indirect losses likely to have a large impact on local economy because they are usually not reimbursed
Significant Direct Costs From Floods. Flood damage counting Cannot separate out types and geographic area of floods. Property damages and debris removal costs. San Bernardino Greater than $900 million and Riverside cost. Counties High proportion of fan Report flooding. Greater than $1.3 billion for Southern California. Indirect costs of floods are not included and are likely large.
Historical Flood Direct Costs: San Bernardino and Riverside Counties. 10 8 10 7 10 6 10 5 10 4 10 3 10 2 10 1 1916 1927 1957 1965 1969 1983 1993 1997 2007 Dollars using ENR Construction Cost Index 1998 1999 2001 2003 2004 2005
Flood Control Revenues Limited. Property taxes State and Federal aid Capital, maintenance and operations. Volatile. Often restricted to capital costs. Developer fees Developers pay portion of fees. Usually covers capital costs. Maintenance costs of an increasing infrastructure stock are a key concern.
Property Taxes Have Risen Little Relative to Construction Costs. San Bernardino and Riverside Property Tax Flood Control Revenues. 45 Adjusted for Construction Cost Price Index. $ Millions 40 35 30 25 20 1989 1990 1991 San Bernardino Property Tax 1992 1993 1994 1995 1996 1997 1998 Year 1999 2000 2001 2002 2003 2004 2005 Riverside Property Tax
State and Federal Aid is Volatile. San Bernardino County State/Federal Flood Contro Revenue Adjusted for Construction Cost Price Index. $ Millions 0 10 20 30 40 50 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year
0 20,000 40,000 60,000 80,000100,000120,000140,000160,000180,000 Number of Houses Maintenance Costs are Likely To Increase. Number of Houses by Year Built San Bernardino County 1999-2000 1995-1998 1940-1949 Before 1940 (Census 2000 Data) 1990-1994 1970-1979 1960-1969 1950-1959 1980-1989
Maintenance Costs are Likely To Increase. Number of Houses by Year Built- Riverside County (Census 2000 Data) 1999-2000 1940-1949 Before 1940 1995-1998 1950-1959 1990-1994 1960-1969 1970-1979 1980-1989 0 20,000 40,000 60,000 80,000 100,000120,000 140,000 160,000 180,00 0 Number of Houses
Local alternatives Additional Funding Mechanisms. Developers pay stormwater fee to support infrastructure. Assessment Districts, Mello- Roos, Geologic Hazard Abatement Districts (GHADs). Stormwater bond State funding Water supply agencies $500 million for Los Angeles Proposition O. Voter Approved Prop 1E funds. Investments in infiltration capacity.
Developer Fees Can Be A Significant Revenue Source..15 Riverside County Area Drainage Fees. Proportion of Flood Control Revenue..1 Proportion.05 0 1996 1997 1998 1999 2000 2001 Year 2002 2003 2004 2005 2006
Local Alternatives: Similarities Across Funding Structures. (Assessment Districts, GHADs, Mello-Roos.) Funding Dollar (not percentage) fee/tax. Some cost of living increase built in. Governance Contracting Formation City council or county supervisors. May contract with local agency for flood control services. Best formed at time of development with single landowner.
Eligible Projects or Programs Assessment District Funding linked to property benefits. Mello-Roos GHAD Special tax for properties that benefit from community facilities. Properties that benefit from geologic hazard mitigation. Erosion, flood control, seismic, water quality.
Legal Status. GHAD State agency. Exempt local ordinances. Can own property. Eminent domain. Assessment/ Mello-Roos Fund raising mechanisms.
Science or Engineering Requirements. GHAD Plan of Control certified by geologic engineer. Assessment Certification that assessment amount is related to benefits. Mello-Roos No science/engineering requirement.
Local Bond Funding: Los Angeles Proposition O. Amount $500 million. Objectives Approval Water quality, flood prevention, water conservation, open space. 2/3 approval needed. Vote 75.8% Yes.
State Bond Funding: Proposition 1 E. $300 million stormwater outside of Central Valley. $290 million flood protection corridors: bypasses, setbacks. Could be used to set aside key flood channels and open space.
Funding and Vision Work Together. Vision: Set aside flood channels, habitat, high infiltration areas. Flood control facilities. Maintenance funds. Recovery funds. Additional Funding: Local bonds State bonds Water supply agencies Developer fees Local funding district. Local funding district
Takeaway. 1.Multiple benefits can be provided by alluvial fans. 2.Flood control agency funding alone will not support multiple benefits. 3.Local funding districts and developer fees can provide more funding at the local level. 4.Regional and state bonds can provide funding for capital costs. 5.Water supply agencies could provide funding to preserve or enhance infiltration and groundwater recharge.