Loading...
HomeMy Public PortalAboutExhibit MSD 19 - 2016 Stormwater Utility SurveyA Black & Veatch Report Prepared by Black & Veatch Management Consulting, LLC 2016 Stormwater Utility Survey Table of Contents 1 | Welcome 1 Welcome to Our 2016 Stormwater Utility Survey 1 2 | About this Report 2 Company Overview 2 Survey Design 2 Survey Team 3 3 | Report Highlights 4 Profile of Respondents 4 4 | Nexus 5 Program Cost-Fee-Customer Nexus 5 5 | Organizational Information 8 6 | Planning 11 7 | Finance and Accounting 15 8 | Stormwater User Fees and Billing 19 9 | Stormwater Credits and Incentives 27 10 | Public Information/Education 31 Black & Veatch Management Consulting, LLC i 1 Welcome WELCOME TO OUR 2016 STORMWATER UTILITY SURVEY In 1991, we launched our first biennial survey of stormwater utilities to assess and share insights on stormwater management and financing, when the concept of “stormwater utility” was still a nascent phenomenon Over the last 25 years, the phenomenon has continued to evolve with paradigm shifts in stormwater program planning, best practices, governance, and regulatory requirements To reflect these changing dynamics, we have continued the tradition of capturing and sharing insights through our biennial stormwater utility surveys This report, our eleventh stormwater utility survey, presents information on the key industry priorities and investment drivers, stormwater management and user fee practices, and comparative data on typical residential stormwater user fees The responses to issues of increasing regulatory requirements, adequacy of funding, and cost recovery continues to indicate an “alignment gap” among program needs, costs of service, level of fees, and customer buy-in Hence, going beyond presenting the survey findings, this report also includes a special feature discussion on “Program-Cost-Fee-Benefit Nexus ” The special feature highlights the compelling need for nexus among four key factors: the level of service (Program), the costs to deliver the level of service (Cost), the approach to recovering the cost of providing service (Fee), and the customer’s understanding of value (Benefit) If you have any questions regarding the contents of this report and/or Black & Veatch services, please do not hesitate to contact us at: ManagementConsulting@bv com Sincerely, Ralph Eberts | Executive Vice President Black & Veatch Management Consulting, LLC 2016 Stormwater Utility Survey 1 2 About this Report COMPANY OVERVIEW Black & Veatch Management Consulting, LLC is a wholly owned subsidiary of Black & Veatch Holding Company and provides integrated strategy, business operations, and technology solutions for water, wastewater, stormwater, power, oil and gas, and renewables utility sectors Our seasoned executives and consultants combine subject expertise, advanced analytics and practical business sense with extensive technology and engineering capabilities to deliver solutions that work best for your program needs, organization, assets and customers SURVEY DESIGN This 2016 stormwater utility survey was conducted online, within the United States, during March and April 2016 The results are presented under the following key sections: Section 1: Organization and Operations Provides a general profile of the respondents including population, size and characteristics of service area, and utility governance Section 2: Planning Provides insights in to what utility managers perceive to be the most important industry issues and stormwater infrastructure investment drivers This section also highlights the types of permit requirements that utilities have to comply with and the planning utilities have engaged in to address stormwater management Section 3: Finance and Accounting Reviews stormwater utility revenues, expenditures, sources of funding, and the adequacy of stormwater funding to meet utility obligations Section 4: Stormwater Rate Structure and Billing Presents the types of costs recovered through user fees, the fee methodology used in setting rates, the rate structures, and the average monthly residential rate of each utility that participated in the survey Information on the billing frequency and types of exemptions and discounts that utilities offer, and insights on legal challenges are also provided Calculated bills reflect rates in effect as of March 1, 2016 Section 5: Stormwater Credits and Incentives Offers insights in to the types of credits, criteria used in offering credits, credits for “green initiatives”, and any innovative credit programs Section 6: Public Information/Education Assesses the level of importance respondents attribute to public information/education and the methods of education and multi-media sources used in educating and in disseminating information BLACK & VEATCH HEADQUARTERS Overland Park, KS 2016 Stormwater Utility Survey 2 SURVEY TEAM RUPA JHA Manager Ms Jha is experienced in utility rate study, business process optimization and change management for water, wastewater and stormwater utilities She has participated in a wide range of utility management services including fund review studies, infrastructure asset management, change management, AWWA water audits and financial modeling BRIAN MERRITT Manager Mr Merritt has experience in the engineering and consulting industry specializing in stormwater utility development and implementation He has extensive experience in engineering design, permitting, compliance, public outreach, program evaluations and planning, and funding strategies His stormwater related work has included watershed planning, stormwater infrastructure design and construction including green infrastructure, floodplain and water quality management planning, flood protection/resiliency system assessments and evaluations In addition, Mr Merritt is skilled in operations management, business development, client management, contract negotiations, employee recruitment, multi-disciplinary staff management and proposal writing PRABHA KUMAR Director Ms Kumar leads the stormwater utility consulting practice She specializes in stormwater utility feasibility studies and utility development, implementation, and utility metering and billing operations optimization Ms Kumar’s comprehensive utility consulting expertise also includes resource analysis, financial planning, cost of service, and rate design studies, wholesale pricing studies and in providing expert witness services in utility litigation matters Ms Kumar has also managed technology projects that involve the entire software development life cycle of needs assessment, system requirements specification, system design, development, implementation and training ANNA WHITE Principal Consultant Ms White has served as a Project Manager on projects involving cost of service and rate determination, revenue bond determination and financial reviews of operations for water, wastewater and stormwater utilities in the public sector Her economics background and experience with computer modeling and software applications have been utilized in developing financial analyses of municipal water and wastewater utilities Black & Veatch Management Consulting, LLC 3 PROFILE OF RESPONDENTS A total of 74 participants from 24 states completed the online questionnaire y All of these participants fund stormwater management in whole or in part through stormwater user fees y This year’s participants include 16 first time participants and 58 repeat participants y Eighty eight percent of the respondents serve a city, rather than a county or a region y The population served by the respondents ranges from 86 (Indian Creek Village, FL) to 1 4 million people (San Diego, CA); the areas served varies from 3 to 1,080 square miles y Among the utilities that participated in the survey, the median number of stormwater customers is 31,000 y For those utilities that base charges on gross property area, an Equivalent Residential Unit (ERU) ranged from 2,266 square feet to 20,000 square feet of total parcel area, with a median of 8,000 square feet y For those utilities that base charges on impervious area, an ERU ranged from 35 square feet to 5,000 square feet of impervious area, with a median of 2,550 square feet 3 Report Highlights 2016 Stormwater Utility Survey 4 PROGRAM-COST-FEE-CUSTOMER NEXUS 4 Nexus The new norm in the utility industry is to proactively plan for and build “resilience ” Resilience is no longer a buzz word but rather a critical necessity for utilities to be agile and effectively manage known and unforeseen challenges and changing environments Financial and operational resilience can only be achieved when there is a clear nexus between Program, Cost of Service, User Fees, and Customer Benefit The nexus addresses the following critical questions: y What infrastructure, regulatory, operational, and community needs are we trying to address (Program or Level of Service)? y What does it cost to deliver the desired level of service (Cost of Service)? y How do we equitably recover the full cost of service (Fee)? y What benefits do our customers gain and perceive (Customer Benefit)? Survey Results on User Fee-Cost of Service Nexus In our stomwater survey, we find a significant range in the magnitude of typical monthly residential stormwater charge, among the participating utilities This is a continuing trend over the last several surveys In analyzing the results, we find that the wide range in the charges is largely due to user fees not reflecting the full “cost of service,” and not necessarily due to significant cost of service differences among comparable utilities This phenomenon of user fees not reflecting the full cost of service is more pronounced in the stormwater sector than in the water/sewer sector From a benchmarking perspective, when all the participating utilities do not set their fees to recover the full cost of service, it impacts the ability to truly compare the stormwater charges across utilities, even when the utilities may be comparable in terms of system characteristics and programs Program User Fees Benefits Costs 2016 Stormwater Utility Survey 5 So, why should utilities strive to recover their full cost of service through user fees rather than recover costs through a combination of “user fees,” and other “non- user fees” such as taxes Here are a few key reasons: y Equity of Cost Recovery. Stormwater user fees are based typically on the level of imperviousness (commonly referred to as impervious area), which more reasonably correlates to the demand a property places on the stormwater system However, taxes are based on aspects such as a property’s value or the level of sales, which have no direct correlation to the stormwater contributed to the system In addition, in the case of tax based cost recovery, many properties that have tax exemptions would not pay anything towards stormwater costs Hence, recovering the full cost of service through user fees provides for a more equitable recovery of costs among the customers y Customer Perception. When the fee is designed to reflect the full cost of service, customers can better understand the true costs a utility incurs in providing service User fees being set to only recover a portion of the stormwater costs can potentially lead to a misperception on the true magnitude of a utility’s costs y Onsite Stormwater Management. If the user fees are set to fully correlate with cost of service, utilities will have the ability to offer appropriate stormwater fee credits for private stormwater management practices that reduce the stormwater contribution to the system However, recovering a portion of the stormwater costs through tax revenues would impact a utility’s ability to provide stormwater credits on taxes, as taxes have no correlation to a property’s stormwater contribution To explain the difference between utilities that set user fees to recover the full cost of service and those that recover the cost of service through a mix of “user fees” and “non-user fees,” we present the following examples Example: Cost of Service Recovered Fully Through User Fees Seattle Public Utilities (SPU), Washington which has both combined sewer system and separate storm sewer systems, has defined a cost allocation approach that consistently and fairly allocates all operational and capital costs between the sanitary sewer and drainage business lines Beginning 2008, through a phased approach, SPU has been allocating a portion of the combined sewer system costs to the stormwater utility, recognizing that a portion of the combined sewer system and combined sewer overflow (“CSO”) structures support the drainage system SPU has not only done the due diligence of defining the full cost of service but also recovers 97% of the stormwater costs of service through stormwater user fees, and the remaining through grants and other sources Such an approach enhances the equity of cost recovery as (i) costs are aligned with the service demands (wastewater versus drainage), and (ii) the Black & Veatch Management Consulting, LLC 6 stormwater fees are aligned to recover 97% of the drainage costs While such an approach strengthens the nexus between system needs, cost, and fees, it also results in SPU’s charges appearing to be the highest among the survey participants Philadelphia Water Department (PWD), Pennsylvania, which also has a mix of combined sewer and separate storm sewer systems, has adopted a very similar due diligence of clearly delineating direct stormwater management costs and allocating a portion of the combined sewer operating and capital costs to the stormwater utility, so as to derive the stormwater utility’s annual full cost of service To meet its Long Term Control Plan (LTCP) consent order agreement (“COA”) requirements, PWD is leading with green solutions To effectively support its COA, PWD offers robust stormwater credits and incentives programs, the costs of which are proportionally funded through both wastewater rates and stormwater rates The City of Bellevue, Washington, which only has a separate storm sewer system, also appears to have established a nexus between its stormwater full cost of service and the stormwater user fees, with 93% of its cost of service being recovered by stormwater user fees, and 6% from miscellaneous stormwater fees When utilities such as SPU, PWD, and Bellevue delineate full stormwater cost of service and then set user fees to appropriately recover those costs, their fees tend to be higher, but also reflect a more equitable approach to cost recovery Example: Cost of Service Recovered Through a Combination of User Fees and Taxes Partial Cost of Service: The survey also indicates that many utilities do not set rates to adequately recover the full cost of service Kansas City, Missouri has a mix of combined sewer and separate storm sewer systems, and currently has a consent order for CSOs Kansas City’s stormwater user fee only recovers a portion of the cost of service Based on a 1998 voter referendum on user fees, the stormwater user fee is designed to recover only the stormwater “operating costs ” The stormwater related capital costs are recovered not through user fees but through taxes Sean Hennessy, the CFO for Kansas City also points out that the “Missouri Supreme court ruled that an impervious surface ‘fee’ applied to property owners is a tax and not a fee”; therefore all tax exempt entities are exempt from the stormwater user fee Similarly, City of San Diego, California, recovers approximately 50% of its stormwater revenues from user fees and the remaining stormwater revenues are generated primarily from general taxes (e g , sales tax, property tax) and parking citation revenue Further, San Diego has never increased its stormwater user fees since 1996 Consequently, in the case of these two utilities, the stormwater user fees for a typical residential property are significantly lower when compared with other stormwater utilities such as Seattle, WA or Philadelphia, PA Establishing user fees to recover only a portion of the stormwater costs can have equity of cost recovery implications, as the magnitude of costs recovered from a user from taxes may not be fully aligned with the level of demand the user places on the system In summary, with respect to establishing an effective nexus between program, cost, fees, and customer engagement, stormwater utilities are continuing to evolve very slowly and are yet to reach even the level of maturity that we see in the municipal water and wastewater sectors While municipalities that have established a user fee funding mechanism are ahead of the curve relative to those that have not, to plan for and build resilience, it is time that municipal leaders and communities transitioned to more collaborative, needs driven, and holistic approaches to policy making, delineating cost of service, and stormwater funding We extend our appreciation to the City of Philadelphia, PA; Seattle, WA; Bellevue WA; Kansas City, MO; and City of San Diego, CA for consenting to highlight their stormwater user fee programs as examples. 2016 Stormwater Utility Survey 7 Stormwater issues such as surface water quality; habitat degradation; downstream flooding, protection of stormwater as a valuable water resource, and public awareness and support are all universal and do not strictly follow jurisdictional boundaries Yet municipalities continue to manage stormwater issues only within their geographical jurisdictional authority, without being able to transition to a broader watershed level collaboration, management, and funding FIGURE 1 ———————————————————————————————— FOR MS4 PERMITTING PURPOSES, ARE YOU CLASSIFIED AS: (Select One) Phase I (100,000 population and over) Phase II (under 100,000 population) 42%58% FIGURE 2 ———————————————————————————————— WHAT JURISDICTIONAL AREA IS YOUR STORMWATER UTILITY RESPONSIBLE FOR? (Select One) County 3% Multiple Municipalities (Regional Authority) City Only 8% 89%3 5 Organizational Information The survey indicates that individual municipally governed stormwater utilities are more prevalent than regional stormwater authorities Eighty nine percent of the participants reported serving a city jurisdictional area, with just two participants representing a regional authority These trends have remained fairly consistent since 2007 Municipalities that have a mix of combined sewer and separate storm sewer systems have a greater challenge in complying with water quality regulatory requirements Out of the 9 municipalities that have a combined sewer system and own a wastewater treatment facility, 8 of them indicated having a consent order for Combined Sewer Overflows (CSOs) In contrast, only 2 out of the 74 participants had a consent order for MS4 requirements 2016 Stormwater Utility Survey 8 FIGURE 3 ———————————————————————————————— WHAT IS THE CHARACTERISTIC OF YOUR SERVICE AREA? (Select One) Mix of Combined Sewer and Separate Storm Sewer Systems 0% Combined Sewer System Separate Storm Sewer System 15% 85% FIGURE 5 ———————————————————————————————— IF YOU SELECTED “MIX OF COMBINED SEWER AND SEPARATE STORM SEWER SYSTEM” OR “COMBINED SEWER SYSTEM” IN QUESTION 3, DOES YOUR UTILITY OWN ITS OWN WASTEWATER TREATMENT FACILITY OR DOES IT CONTRACT OUT FOR THESE SERVICES TO ANOTHER JURISDICTION/ENTITY? Contract Out to Another Jurisdiction/Entity Owns Own Wastewater Treatment Facility 18% 82% FIGURE 6 ———————————————————————————————— IS YOUR UTILITY UNDER CONSENT ORDER FOR COMBINED SEWER OVERFLOW (CSO) ISSUES? Yes No 11% 89% FIGURE 4 ———————————————————————————————— IF YOU SELECTED “MIX OF COMBINED SEWER AND SEPARATE STORM SEWER SYSTEMS” IN THE PREVIOUS QUESTION, INDICATE THE PERCENTAGE* OF COMBINED SEWER VERSUS SEPARATE STORM SEWER SERVICE. Less Than 25% Combined Sewer & Over 75% Separate Storm Sewer 25-50% Combined Sewer & 50-75% Separate Storm Sewer 50-75% Combined Sewer & 25%-50% Separate Storm Sewer Over 75% Combined Sewer & Less Than 25% Separate Storm Sewer 0 20 40 60 80 100 46% 27% 18% 9% *Based on number of utilities that selected “Mix of Combined Sewer and Separate Storm Sewer Systems” in the previous question. Black & Veatch Management Consulting, LLC 9 FIGURE 7 ———————————————————————————————— IS YOUR UTILITY UNDER CONSENT ORDER FOR MS4 ISSUES? 3% Yes No 97% FIGURE 8 ———————————————————————————————— PLEASE INDICATE HOW YOUR CURRENT STORMWATER OPERATIONS ARE GOVERNED. (Select One) Divided Between Utilities and Non-UtilitiesCombined with Department of Public Works (Non Water/ Wastewater Utility) Combined with Water and/or Wastewater Utility Stand Alone Stormwater Utility 38%32% 25% 5% 2016 Stormwater Utility Survey 10 Stormwater Priorities While the stormwater sector faces these same challenges, it also faces the significant pressure of expanding water quality regulations This survey validates this challenge Utility leaders continue to indicate the following three issues as their top three challenges: (i) availability of adequate funding, (ii) enhancing public awareness and support for stormwater management, and (iii) management of the expanding regulatory requirements Water Quality Poses a Greater Challenge In the 2016 Strategic Directions: Water Industry Report that we recently published, water utility leaders cited aging infrastructure as their most important challenge; in stark contrast, in this year’s stormwater survey, utility leaders have ranked nutrient/TMDL regulatory requirements as a higher priority issue than even infrastructure management The water 6 Planning IT SHOULD COME AS NO SURPRISE THAT IN THE WATER AND WASTEWATER UTILITY SECTOR, THE TOP CHALLENGES FOR UTILITY LEADERS CONTINUE TO BE ISSUES RELATING TO: ASSET MANAGEMENT STABLE FUNDING FOR CAPITAL AND OPERATIONAL PROGRAMS ADEQUACY OF RATES TO RECOVER COST OF SERVICE GAINING PUBLIC SUPPORT FOR FUNDING quality regulatory requirement poses a more acute challenge for those municipalities with combined sewer systems, as evidenced by the fact that of the 11 municipalities that indicated having a combined sewer system, 82% currently are under a consent decree Infrastructure Investment Drivers Consistent with water quality and regulatory requirements being high priority issues, utility leaders also indicate that their infrastructure investments are driven primarily by Regulatory Compliance, followed by Flood Control Planning for Resilience To enhance economic, environmental and social resilience, regardless of their size, municipalities, have to increasingly focus on becoming a smart city with “smart utilities ” Smart utilities will require integrated frameworks that involve comprehensive assessment of needs and initiatives, multi-benefit outcomes, consistent technical standards and policies, coordinated governance and execution, public-private partnerships, innovative funding, and enhanced stakeholder engagement However, this survey finds that even when utilities have both wastewater and stormwater responsibilities and permit requirements, nearly two-thirds of them continue to adopt a more traditional planning approach of developing individual master plans rather than integrated management plans 2016 Stormwater Utility Survey 11 FIGURE 9 ———————————————————————————————— WHAT REGULATORY PERMIT REQUIREMENTS DO YOU CURRENTLY HAVE TO COMPLY WITH? (Select All That Apply) MS4 Permit/ Industrial Stormwater Total Maximum daily Load (TMDL) NPDES Permit CSO Program Other /Special Permits 99% 49% 45% 15% 5% 0 20 40 60 80 100 FIGURE 10 ———————————————————————————————— WHAT TYPES OF PLANS HAS YOUR UTILITY DEVELOPED? (Select All That Apply) 0 20 40 60 80 100 Stormwater Master Plan Stormwater/Watershed Management Plan Stormwater Asset Management Plan Long Term Control Plan (LTCP) Integrated Wet Weather Management Plan* *To Support Wastewater and Stormwater Requirements Integrated Water Resources Plan Resiliency Plan Other (Please Specify) 77% 58% 25% 20% 8% 7% 3% 0% Black & Veatch Management Consulting, LLC 12 FIGURE 11 —————————————————————————————————————————————————————————————————— PLEASE RANK THE IMPORTANCE OF EACH OF THE ISSUES LISTED BELOW TO THE STORMWATER INDUSTRY. (1 = Least Important; 5 = Most Important) Funding or Availability of Capital Increasing or Expanding Regulations Nutrient/TMDL Requirements Aging Combined Sewer and Stormwater Infrastructure Green Infrastructure Needs Integrated Water Supply Planning that includes Stormwater Capture Coastal Resiliency Information Systems Integrated Wet Weather Planning 4.5 3.8 Public Awareness and Support for Stormwater Management 4.4 3.8 3.5 3.5 3.5 3.0 2.8 Aging Workforce 2.9 2.1 0 1 2 3 4 5 2016 Stormwater Utility Survey 13 FIGURE 12 —————————————————————————————————————————————————————————————————— PLEASE RANK ON A SCALE OF 1 TO 5, HOW THE FOLLOWING ISSUES DRIVE INFRASTRUCTURE INVESTMENT PLANNING AND DECISIONS WITHIN YOUR STORMWATER UTILITY. (1 = Very Weak; 5 = Very Strong) 0 1 2 3 4 5 Regulatory Compliance Flood Control Community Expectations Safety and Reliability Critical Emergency Resilience Waterways/Habitat Restoration Grants and Incentives 4.3 4.0 4.1 4.0 3.5 3.2 3.2 Black & Veatch Management Consulting, LLC 14 A user fee funded stormwater program has a greater potential to build fiscal and operational resilience through revenue stability, dedicated funding stream, and a stronger nexus between stormwater management costs and user fees However, for user fee funding to be effective and equitable, timely level of service assessments, financial planning and rate adjustments are necessary Funding Adequacy Consistent with the last survey, only 32% of the participants indicate funding is adequate for meeting most needs However, the survey also indicates that user fee funding framework is providing some level of funding as the percentage of participants that still do not have funds to meet even their most urgent needs, has decreased from 17% (in the 2014 survey) to 8% Capital Program Financing For capital financing, utilities continue to rely heavily on cash financing than debt financing Based on our last three stormwater surveys, we find that reliance on debt financing seems to be declining The decrease in debt financing could be due to multiple reasons including municipalities being over leveraged, lack of long range capital planning and capital financing policies, and stormwater utilities operating with a lower level of fiscal planning maturity relative to water/sewer utilities 7 Finance & Accounting 2016 Stormwater Utility Survey 15 FIGURE 13 —————————————————————————————————————————————————————————————————— PLEASE PROVIDE THE APPROXIMATE PERCENTAGE OF REVENUE THAT YOUR UTILITY RECEIVED FROM EACH SOURCE LISTED. OVER 75%50%-75%25%-50%LESS THAN 25% Stormwater User Fees 88%9%3%0% Impact Fees 0%0%0%100% Miscellaneous Stormwater Fees 0%0%0%100% Taxes 14%14%29%43% Grants 0%0%18%82% Other 0%7%7%86% FIGURE 14 —————————————————————————————————————————————————————————————————— PLEASE INDICATE THE PERCENTAGE OF YOUR STORMWATER BUDGET THAT IS ATTRIBUTABLE TO COMBINED SEWER OVERFLOW (CSO) MITIGATION ISSUES. (Select One) 0%1% - 10%11% - 20%21% - 30%31% - 50%OVER 50% Percentage of budget that is attributable to Combined Sewer Overflow (CSO) mitigation issues 27%27%9%9%9%19% FIGURE 15 ——————————————————————————————— WHAT IS THE ESTIMATED 2016 ANNUAL STORMWATER CAPITAL IMPROVEMENT PROGRAM BUDGET? Minimum $60,000 Maximum $59,700,000 Average $4,461,801 FIGURE 16 ——————————————————————————————— PLEASE PROVIDE AN APPROXIMATE PERCENTAGE OF FUNDING FROM EACH SOURCE. Majority Debt Financed Majority Cash Financed 88% 12% Black & Veatch Management Consulting, LLC 16 FIGURE 19 ————————————————————————————————————————————————————————————————— PLEASE INDICATE THE LEVEL OF ADEQUACY OF AVAILABLE STORMWATER FUNDING. (Select One) 2016 2014 2012 2010 Adequate to Meet All Needs 12%6%18%7% Adequate to Meet Most Needs 32%32%31%36% Adequate to Meet Most Urgent Needs 48%45%40%47% Not Adequate to Meet Urgent Needs 8%17%11%10% FIGURE 18 ——————————————————————————————— CASH VERSUS DEBT FINANCING 2012-2016 2012 2014 2016 0 20 40 60 80 100 76%24% 85%15% 88% 12% Debt Cash Cash Cash Debt Debt DEBIT FINANCED 12% General Obligation (tax) Bonds 8% Stormwater Revenue Bonds 12% Sales Tax Bonds 0% Combined Stormwater/Other Bonds 4% Benefit District Bonds 0% Other Debt 5% CASH FINANCED 88% Stormwater User Fees 89% Ad Valorem Taxes 5% Permitting and Other Taxes 5% Sales Taxes 3% Special Tax Districts 4% New Development Impact Fees 8% Grants 24% Other Cash 5% FIGURE 17 —————————————————————————————————————————————————————————————————— PLEASE PROVIDE AN APPROXIMATE PERCENTAGE OF FUNDING FROM ONE OR MORE OF THE FOLLOWING SOURCES THAT ARE USED TO FINANCE YOUR UTILITY’S STORMWATER CAPITAL IMPROVEMENT PROGRAM (CIP). 2016 Stormwater Utility Survey 17 FIGURE 20 ——————————————————————————————— DOES YOUR STATE HAVE ENABLING LEGISLATION THAT AUTHORIZES MUNICIPALITIES TO CHARGE A STORMWATER USER FEE? No Yes 8% 92% FIGURE 21 ——————————————————————————————— DOES YOUR STATE HAVE ENABLING LEGISLATION THAT AUTHORIZES INDEPENDENT PUBLIC UTILITIES SUCH AS AUTHORITIES, BOARDS, AND COMMISSIONS, TO CHARGE A STORMWATER USER FEE? No Yes 31% 69% FIGURE 22 ——————————————————————————————— WHAT IS THE GOVERNING AUTHORITY THAT APPROVES YOUR RATES? 25% 3 Tiers Mayor County Council/ Commission Other Regional Council/Authority Regulatory Board 0 20 40 60 80 100 89% 15% 8% 4% 3% 1% City Council Black & Veatch Management Consulting, LLC 18 FIGURE 23 ——————————————————————————————— PLEASE INDICATE THE YEAR WHEN YOUR UTILITY’S CURRENT STORMWATER USER RATE SCHEDULE BECAME EFFECTIVE. Over 10 Years Last 5 Years6-10 Years 25% 18%57% FIGURE 24 ——————————————————————————————— WHAT WAS THE MAGNITUDE OF THE LAST CHANGE IN FEES? (Select One) Increase Between 25%-50% Decrease of Less Than 25% Increase of More Than 50% Decrease Between 25%-50% 25% 0 10 20 30 40 50 60 70 80 74% 13% 3% 2% 2% Increase of Less Than 25% User Fee Basis A user fee needs to reflect a reasonable nexus between the costs incurred in providing services and the magnitude of charges that are defined for the rate payer As it is not practical to measure stormwater runoff, an estimate of a property’s level of imperviousness (that restricts infiltration) continues to provide a defensible basis for determining the runoff contribution This survey validates this approach as 89 of the participants indicate that they use actual and/or effective impervious area as the basis of charges Parcel Data Management Parcel attributes such as impervious area can be fairly dynamic as changes can occur due to development and redevelopment, consolidation and subdivision of parcels, and other such factors Yet, 59% of the participants indicate that they do not update their parcel data on any defined frequency To affirm billing accuracy and effective generation of revenues, it would be prudent for utilities to establish the best practice of at least an annual review and update of parcel impervious area data Fiscal Planning This survey continues to indicate that lack of timely rate adjustments could be one of the contributing factors to a funding gap While costs and utility needs for service levels and regulatory requirements continue to increase, 26% of the participants indicate that they have not adjusted the stormwater rates in over 10 years Establishing a best practice of consistent and timely rate adjustments along with the implementation of customer assistance programs to help with affordability will provide an effective path to financial resiliency 8 Stormwater User Fees and Billing 2016 Stormwater Utility Survey 19 FIGURE 25 ——————————————————————————————— DOES YOUR UTILITY TYPICALLY ADOPT NEW STORMWATER FEES ANNUALLY OR FOR MULTIPLE YEARS? IF FOR MULTIPLE YEARS, HOW LONG IS YOUR TYPICAL RATE PERIOD? Multiple Years Annually 39% 61% FIGURE 27 ————————————————————————————————————————————————————————————————— WHAT IS THE BASIS FOR CALCULATING YOUR PARCEL AREA BASED STORMWATER USER FEES? IF A COMBINATION OF METHODS IS USED, PLEASE CHECK ALL APPLICABLE METHODS. (Select All That Apply) 25% Gross Area with Intensity of Development Factor Gross Area with Runoff Factor Gross Area Only Pollutant Loadings Other (Please Specify) 0 10 20 30 40 50 60 70 80 77% 14% 11% 8% 0% 0% Impervious Area Utilities That Use 1 Method Utilities That Use 2 Methods 2% Utilities That Use 3 Methods 11% 92% 6% FIGURE 26 ——————————————————————————————— IS YOUR STORMWATER USER FEE BASED ON SOME FORM OF PARCEL AREA SUCH AS GROSS AND/OR IMPERVIOUS AREA? No Yes 11% 89% Black & Veatch Management Consulting, LLC 20 FIGURE 29 ——————————————————————————————— WHAT TYPE OF RATE STRUCTURE DOES YOUR UTILITY HAVE FOR THE SINGLE FAMILY RESIDENTIAL PARCELS? PLEASE ALSO PROVIDE THE AVERAGE MONTHLY RATE FOR EACH RATE STRUCTURE YOU SELECT. (Complete All That Apply) Tiered Rates Uniform Flat Fee Individually Calculated 27% 19% 58% FIGURE 28 —————————————————————————————————————————————————————————————————— WHAT IS YOUR UTILITY’S AVERAGE SINGLE FAMILY RESIDENTIAL PARCEL SQUARE FOOTAGE? (Include attached residential up to four dwelling units) AVERAGE GROSS AREA SQUARE FEET AVERAGE IMPERVIOUS AREA SQUARE FEET Minimum 2,266 Minimum 35 Maximum 20,000 Maximum 5,000 Median 8,000 Median 2,550 2016 Stormwater Utility Survey 21 FIGURE 30 —————————————————————————————————————————————————————————————————— CITY/COUNTY STATE 2016 AVERAGE MONTHLY RESIDENTIAL CHARGE Jupiter FL 4 55 Haines City FL 4 52 Mesquite TX 4 50 Arvada CO 4 50 Great Falls MT 4 27 Topeka KS 4 25 Doral FL 4 00 Miami Gardens FL 4 00 Lawrence KS 4 00 Indian Creek Village FL 4 00 Irving TX 4 00 Lynchburg VA 4 00 Raleigh NC 4 00 Ellicott City MD 4 00 Stuart FL 3 95 Fayetteville NC 3 75 Richmond VA 3 75 Billings MT 3 62 Charlottesville VA 3 60 Wichita Falls TX 3 55 Cincinnati OH 3 54 Frisco TX 3 45 Murfreesboro TN 3 25 Kansas City MO 3 00 McKinney TX 3 00 Melbourne Beach FL 3 00 Contra Costa County CA 2 92 Modesto CA 2 73 Littleton CO 2 58 West Miami FL 2 50 Wichita KS 2 00 Moline IL 1 94 Santa Clarita CA 1 92 Spokane Valley WA 1 75 Shelby County TN 1 50 Columbia MO 1 44 San Diego CA 0 95 Omaha NE 0 71 AVERAGE MONTHLY SINGLE-FAMILY RATE CITY/COUNTY STATE 2016 AVERAGE MONTHLY RESIDENTIAL CHARGE Seattle WA 32 50 Bellevue WA 22 00 Everett WA 17 44 Lubbock TX 16 23 Fort Collins CO 14 26 Philadelphia*PA 14 12 Palo Alto CA 12 63 Bremerton WA 11 54 Loveland CO 10 93 Gresham OR 10 00 Orlando FL 9 99 Charlotte NC 9 95 Pierce County WA 9 67 Gainesville FL 9 00 Satellite Beach FL 8 67 Cocoa Beach FL 8 00 Thurston County WA 7 58 Meadville PA 7 50 Oakland Park FL 7 50 Southeast Metro SW Authority CO 7 38 Wilmington DE 7 00 Brighton CO 6 91 Duluth MN 6 75 Tulsa OK 6 45 Bloomington MN 6 37 Woodbury MN 6 10 Roseburg OR 6 05 Killeen TX 6 00 Lakeland FL 6 00 Charleston SC 6 00 Olathe KS 5 66 Fort Worth TX 5 40 Northern Kentucky Sanitation District No 1 KY 5 04 Cedar Rapids IA 5 02 Mount Pleasant SC 5 00 Wilton Manors FL 4 82 Griffin GA 4 79 *Philadelphia did not participate in this year’s stormwater survey but has provided its residential stormwater charge for inclusion in this report. Black & Veatch Management Consulting, LLC 22 FIGURE 31 ——————————————————————————————— IF YOU HAVE A TIERED RESIDENTIAL RATE STRUCTURE, PLEASE INDICATE THE TOTAL NUMBER OF TIERS. 25% 3 Tiers 4 Tiers 5 Tiers More Than 6 Tiers 2 Tiers 6 Tiers 0 20 40 60 80 100 30% 25% 25% 10% 5% 5% FIGURE 33 ——————————————————————————————— DOES YOUR STORMWATER RATE STRUCTURE INCLUDE A SEPARATE BILLING/COLLECTION OR SERVICE CHARGE? Yes No 6% 94% FIGURE 32 ——————————————————————————————— IF YOU HAVE A TIERED RESIDENTIAL RATE STRUCTURE, WHAT IS THE BASIS OF THE TIERS? (Select One) Gross Area Tiers Only 0% Tiers for Impervious Area and Gross Area Impervious Area Tiers Only 40%60% FIGURE 34 ——————————————————————————————— IN YOUR STORMWATER RATE STRUCTURE, DO YOU HAVE RATES THAT DIFFER BY SERVICE AREAS/ZONE OR WATERSHEDS? Yes No 93% 7% 2016 Stormwater Utility Survey 23 FIGURE 35 ——————————————————————————————— ARE ONE-TIME IMPACT/CAPITAL RECOVERY FEES APPLIED TO NEW STORMWATER UTILITY CUSTOMERS OR NEW DEVELOPMENT? Yes No 90% 10% FIGURE 37 ——————————————————————————————— HOW ARE THE STORMWATER USER FEES BILLED? (Select One) 25% Included with Tax Bills Separate Stormwater Bill 0 20 40 60 80 100 4% 71% 25% Included with Other Utility Bill (Water/ Sewer/Electric/Gas) FIGURE 36 ——————————————————————————————— HOW FREQUENTLY DOES YOUR UTILITY UPDATE CUSTOMER PARCEL INFORMATION, SUCH AS CUSTOMER CLASSES AND GROSS AND IMPERVIOUS AREAS SPECIFIC TO STORMWATER BILLING? (Select One) 25% 3 Tiers Annual Monthly Quarterly Semi-Annual 0 20 40 60 80 100 59% 23% 10% 7% 1% No Specified Frequency/As Needed FIGURE 38 ——————————————————————————————— DOES YOUR UTILITY OFFER ANY OF THE FOLLOWING STORMWATER DISCOUNTS? STORMWATER DISCOUNTS ARE NOT THE SAME AS STORMWATER CREDITS, INCENTIVES, OR EXEMPTIONS. (Select All That Apply) 25% Elderly / Senior Citizens Discount Low Income Discount Educational Institutions Discount Religious Organization Disabled Discount 0 20 40 60 80 100 76% 13% 9% 7% 4% 1% No Assistance/ Discounts Offered Black & Veatch Management Consulting, LLC 24 FIGURE 39 ——————————————————————————————— HOW DO YOU FUND CUSTOMER ASSISTANCE PROGRAMS (DISCOUNTS OR OTHER ASSISTANCE)? General Fund Stormwater Rates and Charges 94% 0% Private Funding 6% FIGURE 41 ——————————————————————————————— WHO IS RESPONSIBLE FOR PAYMENT OF THE STORMWATER USER FEES? (Select One) Resident/Tenant Property Owner 67% 29% 4% Other FIGURE 40 ——————————————————————————————— WHAT OF THE FOLLOWING CLASSES OF PROPERTIES ARE CURRENTLY EXEMPT FROM STORMWATER USER FEES? (Select All That Apply) Undeveloped Land Rail Rights-of-Way Public Parks Agricultural Land School Districts Colleges/Universities Cemeteries Airports Other, Please specify Direct Discharge to Water Body Religious Organizations Government, Please Specify 0 20 40 60 80 100 90% 64% 51% 32% 29% 22% 18%18% 13% 11%8% 8% 6% 6% No Properties are Exempt Public Street/Roads/ Median/Public Right-of-Way 2016 Stormwater Utility Survey 25 FIGURE 42 ——————————————————————————————— HOW IS PAYMENT ENFORCED? (Select All That Apply) Water/Electric Service Shutoff Collection Agency Other Sheriff’s Sale 0 20 40 60 80 100 63% 49% 21% 7% 3% Lien on Property FIGURE 44 ——————————————————————————————— PLEASE INDICATE THE CUSTOMER/CLASS THAT CHALLENGED YOUR STORMWATER USER FEE. (Select All That Apply) RESIDENTIAL CUSTOMER/CLASS NON-RESIDENTIAL CUSTOMER/CLASS 20%95% FIGURE 43 ——————————————————————————————— HAS YOUR UTILITY’S STORMWATER USER FEES EVER FACED A LEGAL CHALLENGE? (Select All That Apply) Yes No 73% 27% FIGURE 45 ——————————————————————————————— WHAT WAS THE BASIS OF THE CHALLENGE? (Select All That Apply) Lack of Authority to Assess Stormwater Fees Equity and Fairness Constitutionality Rational Nexus between Costs and User Fees Rate Methodology Other 0 20 40 60 80 100 60% 30% 15% 10% 5% 5% 5% Tax and Not a User Fee Black & Veatch Management Consulting, LLC 26 FIGURE 46 ——————————————————————————————— DOES YOUR UTILITY HAVE A STORMWATER CREDIT PROGRAM? No Yes 49% 51% Stormwater incentives are one-time monetary or other non-monetary assistance that municipalities offer to property owners and/or other entities such as developers primarily to foster private onsite stormwater management Incentives can provide an effective mechanism to leverage public-private partnerships in stormwater management and thereby enhance green solutions beyond the traditional public Right-of-Way Stormwater credits are ongoing reductions in stormwater charges that properties can achieve for reducing demand on the stormwater system and/or reducing the utility’s cost of service through onsite stormwater Best Management Practices (BMPs) Stormwater credits also offer the added benefit of enhancing the validity of “user fees” by providing customers the opportunity for voluntary control of their fees Adoption of Stormwater Credits and Incentives The trend with respect to offering stormwater credits on user fees is increasing, but at a slower pace Incentives are less common than stormwater credits as only 25% of the survey participants indicated offering some type of incentives to encourage private stormwater management The challenge of recovering the potential revenue loss due to credits and the funding adequacy issue that utilities face are factors that likely contribute to the lower adoption of stormwater credits and incentives programs, among municipalities that have a stormwater user fee 9Stormwater Credits & Incentives 2016 Stormwater Utility Survey 27 FIGURE 47 ——————————————————————————————— PLEASE INDICATE THE CLASSES OF PARCELS THAT ARE OFFERED STORMWATER CREDITS? (Select One) Non-Residential Only (Includes Multi-Family and Condos) Both Residential and Non-Residential 45% 55% FIGURE 48 ——————————————————————————————— DO YOU OFFER CREDITS FOR ANY OF THE FOLLOWING STORMWATER MANAGEMENT ACTIONS? 0 20 40 60 80 100 25% Water Quality Control Peak Flow Reduction Direct Discharge to a Surface Water Body (without using a municipal stormwater system) Education Good Housekeeping Practices (Sweeping, Oil Separation, etc.) Undeveloped/ Zero Discharge NPDES Permit Compliance 69% 50% 42% 25% 22% 14% 11% 8% Volume Reduction FIGURE 49 —————————————————————————————————————————————————————————————————— PLEASE INDICATE THE MAXIMUM ALLOWABLE CREDIT FOR EACH ACTION SELECTED. (Select All That Apply) MAXIMUM ALLOWANCE CREDIT OVER 75% 50% - 75%25% - 50%LESS THAN 25% Volume Reduction 24%28%32%16% Peak Flow Reduction 33%7%33%27% Water Quality Control 6%28%33%33% NPDES Permit Compliance 0%0%38%62% Education 0%40%20%40% Direct Discharge to a Surface Water Body (without using a municipal stormwater system)67%0%11%22% Good Housekeeping Practices (Sweeping, Oil Separation, etc)0%0%50%50% Undeveloped/Zero Discharge 0%0%67%33% Black & Veatch Management Consulting, LLC 28 FIGURE 50 ——————————————————————————————— IS THERE A CAP FOR THE TOTAL AMOUNT OF CREDITS THAT ARE OFFERED? Yes No 82% 18% FIGURE 52 ——————————————————————————————— DO YOU OFFER CREDITS FOR ANY OF THE FOLLOWING TO ENCOURAGE “GREEN” OR LOW IMPACT DEVELOPMENT (LID) STORMWATER MANAGEMENT PRACTICES? (Select All That Apply) 0 20 40 60 80 100 25% Rain Gardens/ Bio-Retention Porous/Permeable Surfaces Do Not Offer These Credits Green Roofs Cisterns/Rain Barrels Other Tree Canopy 53% 50% 44% 41% 28% 6% 6% FIGURE 51 ——————————————————————————————— IF YES, WHAT IS THE MAXIMUM STORMWATER FEE REDUCTION? 0 20 40 60 80 100 25% Over 75% 50% - 75% 25% - 50% Less Than 25% 39% 32% 22% 7% FIGURE 53 ——————————————————————————————— DO YOU OFFER CREDITS FOR RUNOFF MANAGEMENT FROM PERVIOUS AREA? Yes No 64% 36% 2016 Stormwater Utility Survey 29 FIGURE 54 ——————————————————————————————— DO YOU CURRENTLY OFFER ANY TYPE OF STORMWATER CREDITS ‘TRADING / BANKING’ PROGRAM? (Select One) No 3% Yes 97% FIGURE 55 ——————————————————————————————— DO YOU OFFER ANY OF THE FOLLOWING INCENTIVE PROGRAMS? (Select All That Apply) 0 20 40 60 80 100 25% Cost Sharing Site Assessment/BMP Design Assistance BMP Installation Cost Rebates Stormwater Grants Low interest loans 17% 14% 14% 8% 0% Black & Veatch Management Consulting, LLC 30 The water/sewer sector has finally realized that national dialogue and focused campaigns are necessary to educate the public and the decision/ policy makers on the value of water This realization has helped launch initiatives such as the “Value of Water Coalition ” Similarly, in the stormwater sector, public education and outreach cannot be an afterthought but rather an integral best practice in stormwater management While public education and outreach is one of the MS4 permit requirements that utilities have to comply with, it is intriguing that only 51% of the survey participants deem organized public education as “essential ” Even municipalities that have successfully established user fees, need to engage in continuous public education to build financial and operational resilience in stormwater management 10 Public Information/ Education FIGURE 56 ——————————————————————————————— HOW IMPORTANT IS AN ORGANIZED ONGOING PUBLIC INFORMATION/EDUCATION EFFORT TO THE CONTINUING SUCCESS OF A USER FEE FUNDED STORMWATER UTILITY? (Select One) Essential Helpful 4% Not Necessary 51%45% In terms of the effectiveness of public education forums, consistent with the previous survey, direct interface with customers through community events/presentations continues to rank the highest However, this year, utility managers have also rated utility websites and workshops for elected officials/ boards as highly important in ensuring effective public education 2016 Stormwater Utility Survey 31 FIGURE 57 ——————————————————————————————— PLEASE RANK THE EFFECTIVENESS OF THE SPECIFIC ACTIVITIES YOU HAVE UNDERTAKEN TO SECURE STAKEHOLDER APPROVAL AND SUPPORT FOR STORMWATER USER FEES. PLEASE RATE ONLY THE ACTIVITIES YOU HAVE UNDERTAKEN. (1 = Least Effective; 5 = Most Effective) 0 1 2 3 4 5 3.72 Community/Event Presentations 3.58 Stormwater Utility Website 3.52 Public Meetings 3.42 Periodic workshops for elected officials/boards/commissions 3.32 Schools 3.30 Print/TV Media Releases 3.23 Newsletters/ Fliers/Brochures 3.23 Social Media 3.14 Citizens Advisory Committee Black & Veatch Management Consulting, LLC 32 © Black & Veatch Management Consulting, LLC 2016. All Rights Reserved. The Black & Veatch name and logo are registered trademarks of Black & Veatch Holding Company. BLACK & VEATCH 11401 Lamar Avenue, Overland Park, KS 66211 P +1 913-458-2000 | W bv.com PRABHA KUMAR | DIRECTOR P +1 913-458-1538 | E KumarPN@bv.com ANNA WHITE | PRINCIPAL P +1 913-458-3025 | E WhiteAM@bv.com BUILDING A WORLD OF DIFFERENCE® Black & Veatch is an employee-owned, global leader in building critical human infrastructure in Power, Oil & Gas, Water, Telecommunications and Government Services. Since 1915, we have helped our clients improve the lives of people in over 100 countries through consulting, engineering, construction, operations and program management. Our revenues in 2015 were US $3 billion. Follow us on www.bv.com and in social media.