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Exhibit MSD 76 - Proposed Stormwater Small Grant ProgramSt. Louis Metropolitan Sewer District. 2350 Market Street, St. Louis, MO 63103 – 2555. 314-768-6200 Memo To: MSD Rate Commission From: Brian L. Hoelscher, P.E. Executive Director and CEO MSD Re: Enhanced Credit Program for Stormwater Rate – Alternative Proposal Date: July 2, 2018 ____________________________________________________________________________________ The Rate Commission has discussed the need for an enhanced credit program for the proposed Stormwater Rate Proposal currently under consideration. MSD sees issues with the options being discussed so far: 1. The credit programs being discussed focus on addressing water quality instead of flooding and erosion. It has been noted in testimony, that there is an overall Stormwater benefit to the use of green infrastructure practices. Stormwater water quality issues are currently funded through MSD’s two-cent Regulatory Stormwater Tax and are not part of the current Rate Proposal. 2. As noted, it will be very difficult and in MSD’s opinion - not possible, to develop an enhanced stormwater credit program, as part of the proposed Stormwater Rate, that does not require an increase in rates to pay for the program or offers results in a benefit equal to the value of the credit. Thus reducing the revenue needed for the development of infrastructure to address flooding and erosion. As an alternative, we have addressed what we believe is the main focus of the Rate Commission comments below: 1. MSD will develop a Stormwater Grant Program to address water quality issues in the separate sewer system, similar to the program currently used in the Combined Sewer System as part of the Consent Decree (see general details below). This program will be paid for out of the revenues currently generated by the two-cent Regulatory Stormwater property tax. 2. MSD will commit to proposing this program to its Board of Trustees upon a successful vote on the proposed Stormwater Rate, currently in front of the Rate Commission. 2. MSD staff will consider proposing this program to its Board of Trustees, even if the current Stormwater Rate proposal vote is not successful. The consideration will require an evaluation of our Stormwater financing position after the vote of the public. Stormwater Grant Program details: MSD proposes to dedicate $300,000 of expenditures from the MSD two-cent regulatory property tax for an additional “Rainscaping Small Grant Program” to incentivize green infrastructure projects within the separate storm sewer system. The program will be similar to other initiatives within the District, such as the wastewater funded CSO Green Infrastructure “Rainscaping Small Grant Program” and the 319 grant funded “Deer Creek Water Quality Initiative Grant Program”. St. Louis Metropolitan Sewer District. 2350 Market Street, St. Louis, MO 63103 – 2555. 314-768-6200 MSD’s main objective for the grant program is to encourage the use of simple green infrastructure or “rainscaping” techniques by individual landowners for the primary purpose of helping the public to understand how stormwater impacts the sewer system and the environment and how the public can be a part of the solution through the use of rainscaping on their properties. With the $300,000 funding amount, we anticipate funding the construction of approximately 75-100 projects, as well as, cover costs for homeowner workshops, technical assistance, final inspection and maintenance workshops. A portion of the funding would be used for third party administration of the program and the method for administration currently being utilized. The cost of the program was determined by the general interest from the public the District has received from our other programs and an evaluation of available funding balance within the Stormwater Regulatory Fund. This type of Rainscaping Small Grant Program allows MSD to allocate funds, expendable to the separate sewer system, to encourage these types of projects. Creating another small grants program now allows us to take advantage of the momentum we are seeing for “rainscaping” projects. Once this program is available, literally every property owner within MSD will have access to a Rainscaping Small Grants Program, whether in the Bissell combined sewer area, the Lemay combined sewer area or the rest of the District served by a separate storm sewer system. Thank you for the opportunity to make this proposal. The District looks forward to further discussion as we proceed with Rate Proposal deliberations.