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Home My Public Portal AboutExhibit HBA 124C - Memorandum of Considerations for the CommissionExhibit HBA 124C Wastewater and Stormwater Rate Change Proceeding — 2015 HOME BUILDERS ASSOCIATION OF ST. LOUIS & EASTERN MISSOURI'S MEMORANDUM OF CONSIDERATIONS FOR THE COMMISSION RATE DESIGN CONSIDERATIONS PROPERTY TAXES V. SERVICE USER FEES (IMPERVIOUS AREA BASIS) The Home Builders Association of St. Louis and Eastern Missouri ("HBA") has expressed concerns throughout the 2015 Rate Change Proceedings regarding whether the funding methodology proposed in the Stormwater Rate Change Proposal submitted by the Metropolitan St. Louis Sewer District ("MSD" or "District") satisfies the requirements of the District's Charter for establishing a new rate plan because the proposed Stormwater Rate Change Proposal does not appear to satisfy the Charter requirements that the proposed rate provide a fair and equitable taxing methodology for all rate payers. The HBA is specifically concerned with whether the concept of an ad valorem property tax can be implemented in a manner that is fair and equitable when there is seemingly no nexus between property value and the stormwater services provided by the District. Further, the proposed Stormwater Rate Change Proposal provides no credit for those rate payers who install stormwater remediation and quality control devices, all of which may reduce Operations & Maintenance costs for the District, and certainly further the objectives of the EPA consent decree by reducing the quantity, and improving the quality, of stormwater runoff within the District. The HBA's concerns with the current structure of the proposed Stormwater Rate Change Proposal are reflective of those raised by the District itself in the Zweig case. In that case, the District insisted that "a tax based on the assessed valuation of a property has no relation to stormwater services, but a stormwater user charge directed at the landowners who, collectively, create the need for stormwater services is much fairer and more easily understood."' In these proceedings, the District has tried to argue that the tax challenged in Zweig was not tax but an impervious fee and thus by avoiding any association with impervious calculations or credits in the current proposal, the District is somehow avoiding the deficiencies of the process associated with the previous tax structure. Nothing could be further from the truth. As noted by the Supreme Court while striking down the "fee" in Zweig, "a tax by any other name remains a tax."2 The Court in Zweig could not reach the holding that an election was required without first concluding that the "fee" was in fact a tax. The United States Environmental Protection Agency (EPA), in a recurring publication titled Funding Stormwater Programs, illustrated the primary concern with ' Zweig v. Metropolitan St. Louis Sewer District, 412 S.W.3d 223, 227 (Mo. banc 2013). Attached hereto. 2 Id. at 226. funding stormwater services through property taxes, stating that there is no nexus between property taxes and stormwater services because property taxes are based solely on assessed property value. The cost of stormwater service to individual properties bears no relationship to the assessed value of the property. Therefore, this method of recovering stormwater management costs is not equitable. The inequity of the current proposal is further illustrated by the disparate impact that the proposed tax will have upon residential District rate payers. The current proposal raises taxes in the City of St. Louis (See Exhibit MSD - 1, page 5-4 shown in yellow; See also Customer Rate Impacts "City and Near County", p. 6-7), whose population is least able to sustain a tax increase, while reducing taxes in that part of St. Louis County lying east of I-270, an area including Ladue, Huntleigh, Country Life Acres, Des Peres, Kirkwood, Webster Groves and other affluent communities that are most able to pay a tax increase (See See Exhibit MSD - 1, page 5-4 shown in green; See also Customer Rate Impacts "OMCI Districts", p. 6-7). The District, like other sewer districts, possesses the capability and in fact calculates the storm water generated from various properties. No new project may be built without the District reviewing and approving the storm water flow currently being generated and anticipated to be generated by a project. As set forth more fully below, ninety-two percent of sewer districts that impose storm water taxes do so by using an impervious surface calculation as part of the determination of the tax; the imposition of the tax through the use of some form of impervious surface calculation most directly and clearly imposes the tax upon the party generating the need for the storm water management and treatment. The District has attempted to argue throughout these proceedings that a tax containing an impervious component to calculate the tax might result in certain classes of property avoiding being fully captured by an impervious tax, an example of such scenario are properties that shed stormwater through or across other properties. This argument is a red herring and ignores the fact that the current proposal, by lacking any nexus between stormwater generation and tax, most definitely over taxes certain properties at the expense of others. Finally, the absence of any tax credit program not only undermines the fairness of the tax as those who must install and maintain BMPs also pay a full tax, but undercuts the mission of the stormwater tax program. By granting credits against the installation of MSD-approved BMPs, the District not only will encourage the growth of better stormwater management throughout the District at its source, but reduce 0 & M costs overall by the corresponding reduction in storm water flow and improvement in storm water quality resulting from the increase in BMPs throughout the District. It is for these reasons that the HBA urges the Commission to consider recommending an alternative funding methodology that considers stormwater generation 3 EPA Funding Stormwater Programs, January 2008 (Doc. EPA 833-F-07-012). Attached hereto, and available at: http://water.epa.aov/infrastructure/greeninfrastructure/upload/region3 factsheet funding.pdf 2 and impact and incorporates a credit program to will enhance customer perception of the rate change, and further the objectives of the consent decree. STORMWATER USER FEES IMPERVIOUS AREA: A FAIR(ER) AND EASILY UNDERSTOOD ALTERNATIVE The District itself illuminated the concerns with the implementation of an ad valorem property tax during the Zweig proceedings, but has nonetheless fallen back to this methodology arguing that a funding methodology based on impervious area would be cost prohibitive.4 The District has supported its position by relying, in part, on the consulting services of Raftelis Financial Consultants, Inc. ("RFC") William Stannard, the President and Chief Executive Office of RFC, has testified in these proceedings that not only are funding methodologies based on impervious ground cost prohibitive, but that the "use of property taxes funding the costs of stormwater systems is a common method used by cities and counties throughout the United States,"6 and that the proposed "tax -based funding is equitable."7 Mr. Stannard's position is at odds with both the Black & Veatch 2014 Stormwater Utility Survey produced by the District as Exhibit MSD 84G, and the opinions found in Water and Wastewater Finance and Pricing: The Changing Landscape, a book published by George A. Raftelis, the founder of RFC. Despite Mr. Stannard's contention that ad valorem taxes are a common methodology used throughout the United States, the Black & Veatch 2014 Stormwater Utility Survey found that only 4% of utilities surveyed used an ad valorem taxing methodology, with the vast majority of stormwater utilities instead adopting "stormwater user charges" or "stormwater user fees" to fund those expenses not covered through debt financing.8 FIGURE 33A 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). Debt financed 15% Cash financed 85% Stormwater revenue nands 17% Stormwater user frees 92% General ehlsgation (tax) bonds 8% Grants 27% Sales otx bonds 1% Ad ralorem taxes 4`-: Combined stormwater/other bonds 1% Permtttong and other taxes 18% Rehefst disc rfti't bads C.SE Sales tams 5% Other debt 5% Special tax districts 8% New development mpact fees 8 Other cash 12% 4 See Surrebuttal Testimony of William Stannard Exhibit MSD 115F, p. 3-4. 5 See Metropolitan St. Louis Sewer District Rate Change Proposal, Exhibit MSD 1, p.2 6 Surrebuttal Testimony of William Stannard, p. 2 Id $ Black & Veatch 2014 Stormwater Utility Survey, Exhibit MSD 84G, p. 11 Attached hereto. 3 To understand why the overwhelming majority of utilities have adopted stormwater user charges, consider the key characteristics of such charges: The charges are assessed for stormwater service that is provided, and hence has a reasonable nexus to the costs incurred in providing the service; The revenues from stormwater charges are dedicated to stormwater management, in other words to the purpose for which it is assessed; The charges assessed are proportional to the property's contribution and impact to stormwater runoff; The charges assessed are "voluntary" in that the user has the opportunity to limit the use of the service; and The fee or charge is non-discriminatory.9 Of the 92% of stormwater utilities using a stormwater user fee, more than 90% use a fee based on some form of parcel area. 10 FIGURE 79 IS YOUR STORMWATER USER FEE BASED ON SOME FORM OF PARCEL AREA SUCH AS GROSS AND/OR IMPERVIOUS AREA? Yes 9 Black & Veatch 2014 Stormwater Utility Survey, Exhibit MSD 84G, p. 3. 10 Black & Veatch 2014 Stormwater Utility Survey, Exhibit MSD 84G, Figure 19, p. 13. 4 Because impervious area is often the most important factor influencing stormwater runoff, it is a common element of stormwater user fee methods, and nearly 80% of stormwater user fees are based on impervious area." FIGURE20 WHAT IS THE BASIS FOR CALCULATING YOUR PARCEL AREA BASED STORMWATER USER FEES? (Select ad that apply) t.;1c x area with ---- intens.tV of development factor Gross area with ru noff factor 113e . Gross area only 3% Other impervious area The District has presented two arguments in opposition to the use of stormwater user fees based on impervious area. First, the District contends that "the outcome of William Zweig et al. v. MSD, appeal No. ED96110 (consolidated with Nos. ED96165 and ED96393) has resulted in the District reverting to a system of flat rate SW user charges, which have not increased since their implementation in 1988, and a system of ad valorem taxes that can only support basic SW operations."'2 However, the holding in Zweig makes clear that the District is not prohibited from implementing a stormwater service fee, but rather that such fee must be tied to the service being provided.13 Second, the District contends that the implementation of a stormwater user fee based on impervious area would be cost prohibitive.14 11 Black & Veatch 2014 Stormwater Utility Survey, Exhibit MSD 84G, Figure 20, p. 11 12 MSD Wastewater & Stormwater Rate Change Proposal, Exhibit MSD 1, p. 5-2. 13 See Zweig, 412 S.W.3d at 234-235. 14 See Surrebuttal Testimony of William Stannard RFC, Exhibit MSD 115F. 5 ELIMINATING BARRIERS TO IMPLEMENTING STORMWATER FEES Despite William Stannard's contention that implementing a stormwater user fee based on impervious area would be cost prohibitive, George A. Raftelis, states in Water and Wastewater Finance and Pricing that "[m]any technical barriers to implementing stormwater fees have fallen away as the measurement and/or manipulation of property characteristics (such as impervious area) has become more cost effective owing to the availability of more accurate and detailed source data and more capable software and hardware."15 The District estimates that the implementation of a stormwater user fee based on impervious area would cost the District "slightly under $1.1 million annually for the rate period FY 2017-20."16 While this figure may give the Commission sticker shock it is important to remember the figure is only representative of the methodology proposed by the District for calculating impervious area. The method of individually calculating a residential parcel's impervious area as described by the District has been implemented by only 6% of utilities according to the Black & Veatch 2014 Stormwater Utility Survey. The District is disingenuously selecting the worst case "straw man" calculation structure, one the District's own expert knows is not in fact followed by most districts, to argue against the adoption of a fee based on impervious fees. FIGURE 22 WHAT TYPE OF RATE STRUCTURE DOES YOUR UTILITY HAVE FOR THE SINGLE FAMILY RESIDENTIAL PARCELS? (Select all that apply) Uniform flat tee 67% Tered rates 28% Individually calculated 6% The more common method used by utilities to calculate single family residential (SFR) homes' impervious area is a uniform flat fee structure, often referred to as the Equivalent Residential Unit (ERU) or Equivalent Service Unit (ESU) method. Under this method, a representative sample of SFR parcels is reviewed to determine the impervious area of a typical SFR parcel, with the average amount being the ERU. Utilities may then charge a flat fee up to a defined maximum total area for one ERU. Alternatively, a utility may develop several tiers of fees based on analysis of SFR parcels within defined total area groups. This tiered approach improves the equitability of the stormwater user fee charged. Non-residential parcels would still need to be measured individually but the process would be less labor intensive as the non-SFR impervious area could be simply divided by the impervious area of the typical SFR parcel to determine the number of 15 George A. Raftelis, CPA, Water and Wastewater Finance and Pricing: The Changing Landscape (Boca Raton, CRC Press, 2015). Excerpts attached hereto. 16 See Surrebuttal Testimony of Richard L. Unverferth, Exhibit MSD 115B, p. 4-5. 6 ERUs to be billed to such parcel. This method, along with alternative methods based on impervious area, may be reviewed in the attached Funding Stormwater Programs publications attached hereto. THE CASE FOR INCLUDING A STORMWATER CREDITS Throughout the 2015 Rate Change Proceedings the HBA has advocated for the inclusion of stormwater credits or incentives into the Stormwater Rate Change Proposal regardless of the funding methodology implemented. The inclusion of stormwater credits in the Stormwater Rate Change Proposal is an important consideration for Commission as stormwater credits present equitable and political advantages. To understand the fundamental basis for stormwater credits, consider the following analogy presented in Water and Wastewater Finance and Pricing: "[S]tormwater is unmetered. Credits provide a means for recognizing reduced demand in the same way that a meter automatically recognizes reduced demand. If one implements water -saving devices in a building, under most rate structures, one' s water bill goes down. In the same way, if one implements stormwater treatment devices on a parcel, one's stormwater bill could decrease. In practice, a credit acts more like a mirror image of a wastewater strength charge. While some wastewater customers are charged an additional charge for high -strength wastewater, under a stormwater credits program, some customers are charged a smaller charge for "lower -strength" stormwater."17 BMPs are expensive. Not only is the installation of BMPs a new and increased cost not borne in the development of older subdivisions, the ongoing costs of maintenance are not borne by older subdivisions. The inclusion of some form of credit for these increased costs in new subdivisions levels the field as it relates to older subdivisions who avoid these costs and assists in reducing housing costs. Further, the inclusion of the credit for the retrofitting of BMPs in older subdivisions and maintenance of these BMPs encourages the correction of existing storm water problems through the use of citizen participation, a far more effective tool that government agencies working alone. EQUITABLE CONSIDERATIONS Any notion that a credit program cannot be introduced in systems funded through property taxes is a red herring as the fair and equitable requirement applies irrespective of the funding methodology contemplated. The rate structure and taxing methodology proposed under the Stormwater Rate Change Proposal is inequitable for several reasons. First, the taxing methodology will increase rates for customers living in historically lower income areas of the District (i.e. City and Near County). 17 Water and Wastewater Finance and Pricing: The Changing Landscape, Section 23.6.3 (p. 476). Excerpts attached hereto. 7 City and Near County Average Annual Stormwater Burden Current Tax Burden Proposed Tax Burden Single/Multi-Family MSD Total MSD {10C) Total $ 12.30 $ 1,084,99 $ 15.10 $ 1,0, 3.60 ! $ Change $ 3 . 6) 3,60 Change 28.8% . '.1 t Low Income $ 8.39 ' 728,33 $ 1041 S 730.77 I $ Change $ 2 42 2.42 % Change 28.8% 0.3 n Non -Residential $107,94 1 $ 9;370:12 $ 139.04 S 9,40+1.23 Change $ 31.11 _ 1. _ 1 % Change 28.8% ..':' In addition, without the inclusion of a credit program, the proposed methodology will effectively charge some customers twice, once directly through payment of the ad valorem tax itself, and once indirectly through costs associated with the operation and management of private stormwater management systems, often referred to as Best Management Practices ("BMPs"). BMPs — DECEN 1KALIZED AND SITE MANAGED The term Best Management Practices encompasses a wide variety of methods aimed at controlling the adverse impacts of development and redevelopment by preventing or reducing the release of pollutants into the waters of Missouri. When used in connection with stormwater, the term "BMP" is most often associated with natural and engineered systems that control the quality, rate, and volume of stormwater runoff from developed areas.18 Examples of BMPs systems include rain gardens, bio-retention basins, pervious pavement, green roofs, stormwater harvesting systems, wet ponds, and constructed wetlands. Two examples of District -approved BMP designs can be found on the following page with additional examples attached hereto in Appendix 1 — BMP Design Drawings: 18 See MSD's Phase II Stormwater Permit FAQs page, available at: http://www.stimsd.com/msd- faastahase-ii-stormwater-permit-faqs 8 Bio-Retention Ce11 (Cross Section View) Ltwage1il PUla r..I nL.V411 i L4i1FiiYlLS �� 1r WEN OsYftY 1/i LEFIN ICI to oop 4 Ly �I��11w�11g7E��gpt ��CF 91LIIL1F3i11dN SEE LAMi111Unval 1teRENS 1:ET�rI C' COMMIE wig 1 NAMPA Mit C—SA • CLEMl FEA MBAEL r wt. c.CLEAN OOMiEl 1.1 Q—A. a mr —rm.I GPF I I71l.7 COMMILE RUB HOW II C 15l�• ALL WE i../ AVEILA� 1 °WIR30 !SEE as,Zi51 ALM10, APFARMI111115 rlx:="fr�14 FI ii .IRA.71 41 CCLi;A.� n r MEDIAE 43 gir.t~ !eR: Mt `.3 PFAFUELIEE 7Alli ONGI ALI ro LE qFs . sM] 1ILLEd 12" ...+ F. IV 1FE PE, H I!TRW 4E`= F7Polt. F 9S7 EEFC9E 9L 91RLUM« TYPICAL SECTION !I2—BETE TIONl CELL Gomm Inv�l T. CONTRACT SHALL ; ?='Lf VAL BLEND CUT SHEET Rag THE SUPPLIER TO IASSO CON5TROCTION DEPARTMENT r9I,;.R TO THE COXSTRUCTION 1.7 THE BICRETENTIQN RA914.. Residential Rain Garden (Cross Section View) 6"-12" TYP POND*NG DEPTH 3H:1V SIDE SLOPES MAX. 9 NATIVE PLANTS PER LANDSCAPE ARCHITECTIDESIGER BERM AS NEEDED COMPACTED STRUCTURAL FILL UNDISTURBED NATIVE SUBGRADE AREA DRAIN NON -PERFORATED OVERFLOW PPE MIN SUMP DLVIH Y i'•R DRAIN ROCK. OPT. COMPACTED NATIVE SUBGRADE While BMPs serve to reduce the impact on MSD's stormwater system by reducing the quantity of stormwater runoff and improving the quality of stormwater runoff, the cost of installing and maintaining BMPs is borne solely by property owners.19 Although maintenance costs for BMPs vary significantly based on a variety of site -and region -specific parameters, the EPA has estimated the average annual cost of maintaining various BMPs based on the percentage of the total cost. ii1iP Annual Maintenance CDs') ( of Construction Cost) 'o Source(s) Retention Basins and Constructed Wetlands WRPC, 1091 Detention Basins' .:; r Li, in Liston et 11. I r197 St1)45.11 and Schnrler, 199711 Constructed 'Wetlands' 2% Lis ialnsana ca al. 19,)?; I3rov.n and gehisehr, 14971) infiltration Trench 5°h-2O°lo sehael(. 19 7 SZ1It1'C`, 1991 Infiltration Eaairi1 1%-3% 1_i inbalon et al. 1997: Su°RPC, 1991 #fi , Wio Band 0 al, 191i'. Sihucrc�, 190. Sand Filters' 11 °'.- 13°1n I.i', is gin: a eii, 497: S s'ales 5%.-7% swuPC, I.,19l rioretention 4 -7 n !Atisumc' the Nanme as ,wale,1 Filter strips S32 acre (maintained) SWRPC. 1991 I I. Li x ptoia ct al { 19 I?} reroveci ,Ilasi+siena3ace fn im the 19137311Z17310CC r.3nds;t°tss of anti rat ert3Cs, end pen:en:k=; wm. derived from costfi saantbcr budri By requiring tax payers to pay for the cost of installing and maintaining BMPs, and not providing a credit for such BMPs, the District is in essence proposing a taxing methodology that will charge some customers twice; once directly through payment of the ad valorem tax itself, and once indirectly through costs associated with the operation and management of BMPs. This methodology is unfair and inequitable. The HBA acknowledges both the need to develop a rate structure that provides adequate funding to meet the District's needs and the desire to use a structure that is not labor intensive in implementing. However, any notion that a credit program would be labor intensive to implement or cost prohibitive to administer is without merit as current credit programs exist in the District that can serve as a model for a proposed credit program. The added beauty of using these programs is that the District, by delegating the third party administration to these other organizations, essentially obtains the benefit of an expanded, vital green, BMP 19 See Appendix— 2 BMP Escrow Estimates attached hereto (providing escrow estimates for a variety of BMPs approved, or pending approval, by MSD in St. Louis County) 10 stormwater program without the full costs of administration. Further, if the District has concerns with these programs, there are ample credit programs throughout the United States that can serve as models for the District. EXISTING STORMWATER CREDIT PROGRAMS Stormwater credit programs are not a new concept to MSD. MSD has previously considered the use of credit programs in past rate proposals and currently offers a form of offsetting the cost of BMP installation on a small scale through the MSD Project Clear Rainscaping Small Grants Program.2° Furthermore, stormwater credit programs have been adopted by numerous cities and states illustrating the effectiveness of the programs at addressing the fair and equitable requirement of stormwater funding, and the ability of utilities to implement credit programs in a manner that is cost effective 21 Kansas City, Missouri Numerous cities and states have implemented credit programs without financial detriment. Among the cities that have effectively implemented stormwater fee credits is the City of Kansas City, Missouri. The Kansas City Water Services Department authorizes stormwater fee credits in the form of Ratio Credits and Detention Credits. Ratio credits of up to 50% may be obtained for properties that have a large impervious area, such that the total property area to the runoff surface area is at least 30:1. In addition, property owners may receive a detention credit between 10% and 50% for stormwater detention structures that are installed and properly maintained to reduce the peak flow of and runoff volume of stormwater from a drainage area.22 Lynchburg, Virginia The City of Lynchburg, Virginia provides stormwater credits of 20%-50% of the a residents stormwater utility fee for those residents that implement stormwater BMPs to reduce the stormwater rate or volume following from their properties. The City of Lynchburg provides a list of approved BMPs, requires proper installation and maintenance, and places a cap of 50% on credits a homeowner can receive. Richmond, Virginia The City of Richmond, Virginia offers a similar credit program to that of Lynchburg, providing a reduction of up to a maximum of 50% for those customers who implement a combination of stormwater control measures (i.e. BMPs) or multiples of a single method. 20 See Rainscaping Small Grants Program, attached hereto. 21 See Stormwater Credit Programs Guides attached hereto. 22 See Kansas City Water Services Schedule of Water & Sanitary Sewer Service Rates, Section 61-4. Attached hereto for reference. 11 Baltimore, Maryland The City of Baltimore, Maryland established a stormwater credit program as a way for ratepayers to reduce their fees, and as an incentive to implement stormwater management measures. Single family property customers are eligible for a credit for installing measures that reduce demand upon the City's drainage system or reduce the City' s cost of stormwater management. In addition to a percentage based credit (up to 45%) for onsite BMPs, the City includes a flat fee credit for the installation of rain gardens ($8-$16/year), tree planting ($3/tree/year), and rainwater harvesting ($24/year). These flat fee credits provide an incentive to customers while reducing administration costs of the utility. Minneapolis, Minnesota Minneapolis offers a percentage based credit equal to 50% of the fee for the area treated by stormwater BMPs. In other words, if 65% of the impervious area of a property is treated for quality by a BMP, the property owner would be eligible for a 32.5% discount from their stormwater fees (65% divided by 50% = 32.5%). Seattle, Washington Unlike most cities that limit credit programs to residential customers, the Seattle Public Utilities has expanded their credit program to all property owners, offering credits to any parcel property owner with a fully functioning, well maintained stormwater system that is in compliance with the City's stormwater standards. In essence, without the inclusion of a credit program, flat fees such as ad valorem property taxes are an inadequate means of equitably allocating costs among rate payers. Including a credit program in the proposed rate structure may provide the District with an the opportunity to retain the ad valorem taxing structure in a method that is fair and equitable. OTHER CONSIDERATIONS In addition to the equitable advantages associated with credit programs, credit programs serve a primary function in public perception. As noted by the Black & Veatch 2014 Stormwater Utility Survey, "stormwater credit[s] serves a key role in enhancing the perception of `user fees' by affording the customers opportunities to reduce the magnitude of the user fees commensurate with [the] extent of onsite stormwater management."23 By enhancing the perception of stormwater user fees, not only do stormwater credits provide a positive image for the utility, but they also encourage individual property owners to take an active role in reducing the quantity of stormwater runoff and improving the quality of runoff, thereby assisting the District in complying with the terms of the EPA consent decree. 23 Black & Veatch 2014 Stormwater Utility Survey, Exhibit MSD 84G, p. 17. 12 CONCLUSION The HBA acknowledges that the District's task of developing a rate structure that provides adequate funding to meet the District's needs, while being fair and equitable to all customers is a difficult one. It is not the HBA's intent or desire to make that task more difficult. However, by not incorporating some form of credit program into the proposed funding methodology, the Stormwater Rate Change Proposal, as currently structured, is unfair and inequitable. Incorporating a credit program provides a cost-effective means of addressing the fair and equitable requirement while simultaneously encouraging developers and individual property owners to exceed current regulations and take an active role in stormwater management, thereby benefitting the District in the following ways: (i) reductions in runoff volume reduce the amount of runoff requiring treatment, thereby reducing the District's cost at treatment facilities; (ii) increases in the quality of runoff allows the District to more easily meet water quality standard requirements imposed by the EPA Consent Decree; (iii) stormwater BMPs reduce stormwater runoff, thereby reducing the need for drainage infrastructure and reducing costs; and (iv) BMPs often result in increased tax revenues by encouraging the installation rain gardens and similar BMPs that often appeal to many home owners and can increase property values. 13 APPENDIX - 1 BMP DESIGN DRAWINGS 1 \\ Itv 'Ilia IMAM Uri 111111OM- r-�►tif 4s 8 A Arbors at Kehrs Mill tbdmIldM R1� ItrRO ERIENT P13N5 AVER QUALITY DETAILS THE iiirinuma ENGINEERS & SURVEYORS M NM MEM anwmurlmaa .o....ka a,n1a1>a Pna1wWJYa awakaglirtmosoroom CmneieY CMRaIcaf/u5wtj01a1a CO. 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UNIT COST UNIT TOTAL Rock BlanketBerms 288 $2.00 C.F. $576.00 Outrall Structure 1 $5,000.00 _ EA. $5,000.00 Permanent Planting 18,000 $1.75 S.F. $31,500.00 GRAND TOTAL: $37,076.00 Basin B DESCRIPTION: QTY. UNIT COST UNIT TOTAL Forebay Total Volume 2,878 $2.00 C.F. $5,756.00 Permanent Planting 2,214 $1.75 S.F. $3,874.50 Total Filter Bed Area 2,214 $3.00 S.F. $6,642.00 Native Seed Mix 5,305 $0.25 S.F. $1,326.25 Rock Blanket/Berms _ 1,108 $2.00 C.F. $2,216.00 GRAND TOTAL: $19,814.75 Basin C DESCRIPTION: QTY. UNIT COST UNIT TOTAL Forebay Total Volume 1,994 $2.00 C.F. $3,988.00 Permanent Planting 1,525 $1.75 S.F. $2,668.75 Total Filter Bed Area 1,525 $3.00 S.F. $4,575.00 Native Seed Mix 3,667 $0.25 S.F. $916.75 Rock Blanket/Berms 842 $2.00 C.F. $1,684.00 GRAND TOTAL: $13,832.50 THE STERLING ENGINEERS AND SURVEYORS The Arbors at Kehrs Mill -Phase 2 Project No. 12-06-154 MSD P-27551-03 8/7/2014 BMP Escrow Estimate CO. Detention Lake #1 DESCRIPTION: QTY. UNIT COST UNIT TOTAL Rock Blanket/Berms 432 $2.00 C.F. $864.00 Permanent Planting 18,756 $1.75 S.F. $32,823.00 GRAND TOTAL: $33,687.00 Basin D DESCRIPTION: QTY. UNIT COST UNIT TOTAL Permanent Planting 87 $1.75 S.F. $152.25 Total Filter Bed Area 87 $3.00 S.F. $261.00 Rock BlanketlBerms 554 $2.00 C.F. $1,108.00 GRAND TOTAL: $1,521.25 Basin E DESCRIPTION: QTY. UNIT COST UNIT TOTAL Forebay Total Volume 1,015 _ $2.00 C.F. $2,030.00 Permanent Planting 783 $1.75 , S.F. $1,370.25 Total Filter Bed Area 783 $3.00 S.F. $2,349.00 Native Seed Mix 1,678 $0.25 S.F. $419.50 Rock Blanket/Berms 1,144 $2.00 C.F. $2,288.00 GRAND TOTAL: $8,456.75 Basin H DESCRIPTION: QTY. UNIT COST UNIT TOTAL Forebay Total Volume 1,580 $2.00 _ C.F. $3,160.00 Permanent Planting 1,110 $1.75 S.F. $1,942.50 Total Filter Bed Area 1,110 $3.00 S.F. $3,330.00 Native Seed Mix 1,175 $0.25 S.F. $293.75 Rock Blanket/Berms 602 $2.00 C.F. $1,204.00 GRAND TOTAL: $9,930.25 THE STERLING ENGINEERS AND SURVEYORS Tesson Gardens Project No. 14-05-148 MSD P-25617-01 11/19/2014 BMP Escrow Estimate CO. Basin #1 DESCRIPTION: QTY. UNIT COST UNIT TOTAL Forebay Total Volume 5,058 $2.00 C.F. $10,116.00 Permanent Planting 2,287 $2.00 S.F. $4,574.00 Total Filter Bed Area 2,287 $3.50 S.F. $8,004.50 Native Seed Mix 1,574 $0.25 S.F. $393.50 Rock Blanket/Berms 30 $32.00 S.Y. $960.00 Seeding (Side Slopes) 460 $3.00 S.Y. $1,380.00 GRAND TOTAL: $25,428.00 THE STERLING ENGINEERS AND SURVEYORS The Enclaves at Quail Creek Project No. 13-02-055 MSD P-29969-00 4/23/2014 BMP Escrow Estimate CO. Basin #1 DESCRIPTION: QTY. UNIT COST UNIT TOTAL Forebay Total Volume 4,190 $2.00 C.F. $8,380.00 Permanent Planting 2,926 $2.00 S.F. $5,852.00 Total Filter Bed Area 2,926 $3.50 S.F. $10,241.00 Native Seed Mix 15,624 $0.25 S.F. $3,906.00 Rock Blanket/Bemis 92 $32.00 S.Y. $2,944.00 Seeding (Side Slopes) 893 $3.00 S.Y. $2,679.00 GRAND TOTAL: $34,002.00 Basin #2 DESCRIPTION: QTY. UNIT COST UNIT TOTAL Forebay Total Volume 761 $2.00 C.F. $1,522.00 Permanent Planting 398 $2.00 S.F. $796.00 Total Filter Bed Area 398 $3.50 S.F. $1,393.00 Native Seed Mix 567 $0.25 S.F. $141.75 Rock Blanket/Berms 29 $32.00 S.Y. $928.00 Seeding 97 $3.00 S.Y. $291.00 GRAND TOTAL: $5,071.75 Bioretention 'G' DESCRIPTION: QTY. UNIT COST UNIT TOTAL Permanent Planting 135 $2.00 S.F. $270.00 Total Filter Bed Area 135 $3.50 S.F. $472.50 Seeding 19 $3.00 S.Y. $57.00 GRAND TOTAL: $799.50 Amended Soils DESCRIPTION: QTY. UNIT COST UNIT TOTAL Total Filter Bed Area 3,696 $0.75 S.F. $2,772.00 Preservation Easement GRAND TOTAL: $2,772.00 DESCRIPTION: QTY. UNIT COST UNIT TOTAL Native Seed Mix 19,019 $0.25 S.F. $4,754.75 GRAND TOTAL: $4,764.75 Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) 412 S.W.3d 223 Supreme Court of Missouri, En Banc. William Douglas ZWEIG, et al., Respondents/Cross-Appellants, v. The METROPOLITAN ST. LOUIS SEWER DISTRICT, Appellant/Cross—Respondent. No. SC 92581. I Nov. 12, 2013. Synopsis Background: Ratepayers brought action against metropolitan sewer district, challenging constitutionality of sewer district's implementation of "stormwater user charge" without prior voter approval. The Circuit Court, St. Louis County, Dan Dildine, J., declared sewer district's action unconstitutional, enjoined future collection of the charge, but declined to order payment of damages or refunds. Parties appealed. Holdings: The Supreme Court, Paul C. Wilson, J., held that: [1] "stormwater user charge" was a tax rather than a fee, and thus was an unconstitutional levy under Hancock Amendment; [Z] courts are not authorized by Hancock Amendment to order refunds of taxes levied without prior voter approval, overruling Beatty v. Metropolitan St. Louis Sewer District, 914 S.W.2d 791, Ring v. Metropolitan St. Louis Sewer District, 969 S.W.2d 716, and City of Hazelwood v. Peterson, 48 S.W.3d 36; and 133 trial court acted within its discretion in awarding ratepayers approximately $4.3 million for attorney fees. Affirmed and remanded. Stith. J., concurred in result. Attorneys and Law Firms *226 John L. Gianoulakis. Robert F. Murray and Kevin A. Sullivan of Kohn, Shands, Elbert, Gianoulakis & Giljum LLP in St. Louis, and Susan M. Myers, St. Louis, for Metropolitan St. Louis Sewer District. Richard R. Hardcastle III. Erwin O. Switzer, Kirsten M. Ahmad and George A. Uhl of Greensfelder, Hemker & Gale PC, St. Louis, for the ratepayers. Opinion PAUL C. WILSON, Judge. William Zweig and the other named plaintiffs, on behalf of themselves and a class of similarly situated ratepayers ("Ratepayers"), sued the Metropolitan St. Louis Sewer District ("MSD") seeking declaratory, injunctive, and monetary remedies on the ground that MSD violated article X, section 22(a) of the Missouri Constitution when it implemented its "stormwater user charge" without prior voter approval. The trial court declared MSD's action unconstitutional, enjoined future collection of the charge, and ordered MSD to pay the Ratepayers' attorneys' fees and other expenses. The trial court, 011) ,our' to original Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) however, refused to order MSD to pay damages or refund charges already collected. MSD appeals the trial court's decision on Ratepayers' constitutional claim and the award of Ratepayers' attorneys' fees and expenses. Ratepayers cross -appeal, claiming that the trial court erred in refusing to enter a money judgment against MSD for the amounts already collected. This Court granted transfer pursuant to Rule 83.04, has jurisdiction under Missouri Constitution article V, section 10, and affirms the trial court's judgment in all respects. Ill Article X, section 22(a) of the Missouri Constitution prohibits political subdivisions "from levying any [new or increased] tax, license or fees" without prior voter approval. Despite the breadth of this language, section 22(a) does not prohibit a political subdivision from charging an individual user a fee in exchange for rendering a service to that user, so long as this charge is not simply a tax by another name. Keller v. Marion County Ambulance District, 820 S.W.2d 301, 305 (Mo. bane 1991). Under Keller, therefore, charges imposed by a political subdivision are separated into two species: (1) "taxes," which include "licenses and fees" and other levied charges; and (2) "user fees," which are charged for an individual's use of the political subdivision's service. Section 22(a) requires the political subdivision to obtain prior voter approval for the former, but not the latter. Keller offers five criteria intended to be "helpful" in telling these two species apart. Id at 304 n. 10. However, a tax by any other name remains a tax. It cannot be transformed into a user *227 fee by adept packaging, any more than a zoologist can transform a horse into a zebra with a bucket of paint. Here, no matter how many stripes MSD paints on it, the stormwater user charge is not a user fee. MSD concedes that the stormwater fee is not charged in exchange for an individual landowner's "use" of MSD's drainage system (i.e., discharging stormwater into that system during a rainstorm) or that landowner's "use" of MSD's oversight functions (i.e., receiving a particular stormwater inspection, permit, or educational program). MSD admits that it has no way to measure each landowner's discharge into its drainage system during a storm. Even if it could measure such usage, MSD contends that a fee based on such use would be both impracticable and unfair because some of the landowners who discharge stormwater into the drainage system play no part in creating the need for stormwater services while others who contribute to the need for such services do not use MSD's drainage system. Accordingly, MSD does not claim that the stormwater charge is a user fee paid for MSD's service of providing a stormwater drainage system during rainstorms or providing its stormwater oversight functions on request. Instead, MSD claims that the stormwater charge is a user fee paid for MSD's service of ensuring the "continuous and ongoing" availability of its stormwater drainage system (and oversight functions), rain or shine. Despite this novel characterization, the basic flaw in MSD's argument remains that a user fee must be charged in exchange for, and based upon, an individual's use of the relevant service. Here, no matter how MSD characterizes its service, the stormwater fee is not charged in exchange for, nor is it based on, each individual Ratepayer's use of that service. No Ratepayer uses MSD's service (i.e., ensuring the "continuous and ongoing" availability of stormwater drainage and oversight functions) any more or less than any other Ratepayer, and Ratepayers do not use such a service any more or less than the rest of the landowners and non -landowners throughout the district. Instead, the only true user of such an "availability" service is the district as a whole, not individual landowners or subsets of landowners. MSD responds that the stormwater charge should he classified as a user fee because it is based on each landowner's individual contribution to the overall need for MSD's stormwater services. MSD argues that only those landowners whose properties contain unnatural surfaces impervious to stormwater are responsible. collectively. for creating the need for stormwater services throughout the district. As a result. L1SD insists that this subset of landowners. collectively, must bear all of the costs of \1SD's ensuring such services are available whenever needed. Nothing in .. or MSD's arguments, however. justifies equating_ an individual's contribution to the total need for a service with that individual's use of that service for purposes of determining whether a charge is a user fee. MSD insists that a tax based on the assessed valuation ofa property has no relation to stormwater services, but a stormwater user charge directed at the landowners who, collectively. create the need for stormwater services is much fairer and more easily understood. This may be so, but it also is irrelevant. A tax need not be tied to the payer's use of the political subdivision's service, but a user fee must be. A charge based on contributing to the need for (rather than the actual use of) a service might be fair and easily understood, but it cannot be a user fee. Accordingly, MSD's decision to implement *228 the V,IestlRw ext tc) 2015 i nomson Neuters. ivo claim to onginai 1', o3 k- Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) stormwater user charge without voter approval violated section 22(a). FACTS Voters in City of St. Louis and parts of St. Louis County created MSD in 1954 when they ratified MSD's charter ("Plan") pursuant to article VI, section 30(a) of the Missouri Constitution. MSD's purpose is stated in the first section of the Plan: "In the interest of public health and for the purpose of providing adequate sewer and drainage facilities ... there is hereby established a metropolitan sewer district[.]" [Emphasis added.] After the Plan was approved, MSD assumed ownership of and control over all publicly owned sewer and stormwater facilities throughout the district. When voters expanded the district in 1977, however, MSD decided that it would not acquire all stormwater facilities in the newly annexed area. Instead, MSD determined that (if asked) it would help plan and coordinate stormwater programs already in existence. MSD changed this policy in 1989 when it announced that it would regulate all stormwater facilities throughout the district and would assume ownership of and control over designated facilities as funds became available. MSD's basic stormwater services are to operate and maintain a stormwater drainage system and to provide certain stormwater oversight functions such as planning, permitting, and public education. MSD's stormwater drainage system is not analogous to its sewer operations. To use MSD's sewer system, a landowner must have a physical connection to that system. But a landowner needs no physical connection to MSD's stormwater drainage system for stormwater falling on that owner's property to flow through MSD's system on its way to the Mississippi River and the Gulf of Mexico. MSD's stormwater drainage system is a combination of natural and artificial waterways, open and closed. Stormwater enters this system through natural aggregation and numerous trapped and un-trapped inlets. Before entering MSD's drainage system, however, most stormwater passes through natural or artificial collection devices such as curbs, gutters, culverts, or trenches. MSD does not operate or maintain these parts of the stormwater drainage system, which usually are owned (and maintained, if at all) by the Missouri Department of Transportation, local municipalities, or individual landowners. Not all of the rain that falls in the district flows through MSD's drainage system. Some of it is held on or absorbed by the land, and some drains directly into major rivers or is handled by local levee districts. Of the stormwater that drains through MSD's system, MSD cannot tell where the water originates or how much stormwater each property discharges into the system during a particular storm or over any period of time.' MSD's stormwater oversight functions are separate and distinct from its operation and maintenance of the stormwater drainage system. With the expansion of state and federal environmental laws, MSD has been given expanded responsibility for an increasing array of stormwater *229 planning, permitting, and public education functions. MSD's powers are limited to those set forth and approved by the voters in the Plan and such implied powers as may be necessary to achieve MSD's purposes. St. Louis Inv. Properties, Inc. v. Metropolitan St. Louis Sewer Dist., 873 S.W.2d 303, 307 (Mo.App.1994). MSD's ability to fund its activities also is limited. Article VI, section 30(b) of the Missouri Constitution provides: "The plan shall provide for the assessment and taxation of real estate ... giving due regard to the other provisions of this constitution." Under the Plan, MSD has the power to: (a) levy property taxes, provided the total levy for maintenance and operation does not exceed $0.10 per $100 assessed valuation; (b) levy special assessments for the construction, improvement, or extension of specific sewer or drainage facilities; and (c) establish a schedule of "rates, rentals, and other charges, to be collected from all the real property served by the sewer facilities of the District...." Before implementing the stormwater user charge at issue here, MSD funded its stormwater operations with a combination of taxes. MSD levied taxes on all real property in the district in the amount of $0.02 per $100 assessed valuation and, for property within the district's original boundaries, an additional $0.05 tax per $100 assessed valuation. These ad valorem taxes generated approximately $12.3 million in 2007. MSD also levied a $0.24 monthly surcharge for stormwater operations on each of its sewer customers. This charge generated an additional $1.2 million in 2007, raising MSD's stormwater tax receipts for that year to approximately $13.5 million. i~Icxt 4-J I 11 " Liairn to 311c911to, Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) These revenues, however, were not sufficient. In 2007, MSD spent nearly $33 million on its stormwater operations, which required MSD to subsidize its stormwater operations with $19 million from its sewer revenues. MSD insisted that this subsidy was not sustainable and, even if it was, a $33 million budget was not adequate to fund the range of stormwater drainage and oversight services MSD believes are required. Without more revenue, MSD claimed that repairs would continue to be performed only on an emergency (rather than preventative) basis and infrastructure improvements would be constructed only in sub -districts with adequate revenues. In addition, MSD insisted that its stormwater revenue scheme of ad valorem taxes and sewer surcharges was unfair because *230 landowners in the annexed part of the district paid the least toward MSD's stormwater services, landowners in the original district paid somewhat more, and landowners in sub -districts paid the most. In 2007, MSD proposed to remedy these shortcomings. The proposal sets forth MSD's goals and objectives: It is the District's objective to implement a stormwater funding methodology by which its stormwater customers provide sufficient revenues to meet the cash requirements to support a basic level of stormwater service. The basic level of stormwater revenue requirements are composed of operation and maintenance expenses ...; capital expenditures, and the build-up of an operation reserve. The "funding methodology" chosen by MSD to replace the existing stormwater revenue scheme was a "stormwater user charge." Landowners would be required to pay this new charge just as they paid the property taxes it would replace. But unlike the ad valorem taxes, which were based on the assessed value of the property, the new stormwater user charge would be based on the square footage of impervious area (e.g., roofs, patios, parking lots, streets, sidewalks, etc.) on each owner's property. When fully implemented, MSD estimated that this new charge would generate annual revenues in excess of $57 million (exclusive of sub -district revenues), which would be more than four times as much as MSD's 2007 stormwater tax revenues. MSD's proposal explained how it arrived at the rate it would use to calculate each landowner's stormwater user charge. It first estimated the annual revenue needed to ensure availability of adequate stormwater services (i.e., the "required receipts"). Then, it estimated the total square footage of impervious area (divided by 100) throughout the district (Le., the "available base"). Finally, MSD divided the "required receipts" by the "available base" to arrive at a rate of $2.29 per 100 square feet of impervious area. MSD ultimately divided this rate by 12 to charge the landowners monthly rather than annually. Some landowners would not have to pay this new stormwater user charge, however, and others would Have to pay only part of it. Owners of unimproved land would pay nothing because such properties, by definition, have no impervious areas. Even if a property has impervious area, the owner can receive a credit toward the stormwater user charge if: (a) the property produces no runoff; (b) the property's runoff flows into a major river without passing through MSD's stormwater drainage system; or (c) the property's runoff is captured by a levee district or other wastewater system not owned by MSD. This credit cannot exceed fifty percent, however, because MSD insisted that the owners of such properties must pay at least half of the charge as their share of the cost of MSD's oversight functions of planning, permitting, and public education.' Following public hearings and other proceedings, MSD's rate commission recommended *231 that MSD implement this proposal. In December 2007, MSD adopted ordinances to eliminate its existing stormwater taxes and implement the stormwater user charge on March 1, 2008. Rather than hit landowners with the new charge all at once, however, MSD chose to phase the charge in over several years. As a result, MSD initially charged an annual rate of $1.44 (or $0.12 per month) for each 100 square feet of impervious area and planned to increase this rate each year so that, by 2014, landowners would pay the full $2.29 rate (or $0.19 per month). MSD implemented the 2009 increase, but abandoned further increases as this litigation proceeded. In July 2010, MSD ceased collecting the stormwater user charge altogether when the trial court declared that MSD had violated section 22(a) by implementing the charge without voter approval. ANALYSIS [2] [3] This Court must affirm the trial court's judgment "unless there is no substantial evidence to support it, unless it is V' estlawNext 14 201 F Thom lson Reuters i'` o GIcafr io original L S. Gaverorner, .. Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law." Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. bane 1976). In reviewing the sufficiency of the evidence, the Court is mindful that the trial court may "believe or disbelieve all, part or none of the testimony of any witness ... and an appellate court will accept as true the evidence and inferences from the evidence that are favorable to the trial court's decree and disregard all contrary evidence." Sch. Dist. of Kansas City v. State, 317 S.W.3d 599, 604 (Mo. banc 2010). [41 The parties suggest that this Court is bound by the trial court's application of the Keller criteria to the facts in this case. The Court disagrees. Deference is paid to the trial court's factual determinations, but this Court reviews de novo both the trial court's legal conclusions and its application of law to the facts. Id See also, Murphy, 536 S.W.2d at 32. Application of the Keller criteria (and other relevant considerations) are not facts to be determined solely by the factfinder and deferred to on appeal. Instead, such criteria are a means of evaluating those facts and are intended only to shed what light they can on the application of section 22(a), i.e., a question of law. L The Hancock Amendment In 1980, Missouri voters approved article X, sections 16-24 of the Missouri Constitution, collectively referred to then and thereafter as the Hancock Amendment. In construing these provisions, this Court has noted that the "Hancock Amendment aspires to erect a comprehensive, constitutionally -rooted shield ... to protect taxpayers from government's ability to increase the tax burden above that borne by the taxpayers on November 4, 1980." Fort Zumwalt School Dist. v. State, 896 S.W.2d 918, 921 (Mo. banc 1995) (quotations and citations omitted). Such characterizations of the Hancock Amendment's overarching purpose can provide useful context but, when determining the effect of a particular provision, the text of the constitution must speak for itself. The principle applicable to this case is found in the very first sentence of the Hancock Amendment: Property taxes and other local taxes ... may not be increased above the *232 limitations specified herein without direct voter approval .... Implementation of this section is specified in sections 17 through 24, inclusive, of this article. Mo. Const. art. X, § 16 (emphasis added). The implementation of this principle is specified in section 22(a), which provides: Counties and other political subdivisions are hereby prohibited frorn levying any tax, license or fees ... or from increasing the current levy of an existing tax, license or fees ... without the approval of the required majority of the qualified voters of that county or other political subdivision voting thereon. Mo. Const. art. X, § 22(a) (emphasis added). II. The Keller Decision Keller holds that the phrase "tax, license or fees" in section 22(a) was not intended to encompass every possible source of revenue. Keller, 820 S.W.2d at 304-05. Instead, the requirement of voter approval applies only to the levying of new or increased "taxes," and the words "license or fees" were added only to indicate "an intent to prevent political subdivisions from circumventing the Hancock Amendment by labeling a tax increase as a license or fee." Id at 305. Therefore, "what is prohibited are fee increases that are taxes in everything but name .... [and what] is allowed are fee increases which are `general and special revenues' but not a `tax.' " Id at 303. The issue in Keller was whether section 22(a) applied to an ambulance district's decision to increase the price a patient must pay to use one of the district's ambulances. The Court held that section 22(a) did not apply because the "charges were for actual services rendered, rather than a subscriber charge of all consumers in the service area." Id at 302, 305. The key distinction in Keller, therefore, was between charges that an individual recipient pays for "actual services rendered" and the district's "property tax revenue [that] assures minimal ambulance service." Id. at 304 n. 7 (emphasis added). To illustrate this distinction, assume that a political subdivision imposes a charge on property owners to build and operate a swimming pool. If the political subdivision also decides to charge an admission fee to those who actually use this pool, no Next -uteia IVUC.Ia1':1IA./ .{nE . L _ __ 11-u ;'P'.•_ Zweig v. Metropolitan St. Louis Sewer Dist., 4i2 S.W.3d 223 (2013) voter approval is required under section 22(a) because that charge is a genuine user fee, imposed only when a specific service (i.e., access to the pool) actually is rendered to a particular recipient in an individualized transaction. The first charge is not a user fee, however, because it is not charged in exchange for an individual's use of that service. Instead, it is charged to ensure the availability of that service for the entire community. The political subdivision was levying a tax when it imposed the first charge, therefore, and prior voter approval is required under section 22(a). This key distinction on which the holding in Keller is based results from the Hancock Amendment's use of the word "levy." Id at 303. Section 22(a) does not prohibit new or increased taxes. Instead, it prohibits political subdivisions from levying new or increased taxes. Because section 22(a) focuses on the nature of the political subdivision's action, Keller holds that section 22(a) was not intended to apply to actions that cannot fairly be characterized as a levy. In ordinary usage, a tax is levied, but a fee is charged. See Webster's Third New International Dictionary 1301 (Unabr. ed.1961); see also Black's Law Dictionary 907 (6th ed.1990). Reading "levy" in this ordinary sense —as a term related to the power of government to impose a tax —it is clear that a "fee" can *233 only be levied if the "fee" is actually a tax. Id. 151 The definition of "levy" referred to, but not quoted, in this passage from Keller is as follows: "to impose or collect (as a tax or tribute) by legal process or by authority." Webster's Third New International Dictionary 1301 (Unabr. ed.1961) (emphasis added). When used in this sense, a levy "is the formal and official action of a legislative body invested with the power of taxation ... whereby it determines and declares that a tax of a certain amount, or of a certain percentage on value, shall be imposed on persons and property subject thereto." State ex rel. Indus. Servs. Contractors, Inc. v. Cnty. Comm `n of Johnson Cnty., 918 S.W.2d 252, 256 (Mo. banc 1996) (quotation marks omitted) (quoting 84 C.J.S. Taxation § 349 (1954)). In other words, the verbs "levy" and "levying" are used in section 22(a) to refer to actions that create an obligation to pay that is not contingent upon each payer's actual use of the political subdivision's service.' Applying this definition, Keller holds that the ambulance district was not levying a tax when it decided to increase the price it would charge a patient for using its services. Keller, 820 S.W.2d at 305. The act of setting that price was not a levy because the obligation to pay arises only if and when a particular patient actually uses an ambulance. Again, assume there is a drive-thru across the street from the swimming pool in the prior example. If the owner of the drive-thru decides to raise the price of a hamburger, the owner is not "levying" a price increase —even if the owner is a political subdivision —because the decision to increase that price has no practical or legal consequences unless and until a customer drives through and buys a hamburger. III. The Keller Criteria 161 The holding and reasoning of Keller have been overshadowed to some degree by the list of five criteria offered there to be "helpful in examining charges denominated as something other than a tax." Keller, 820 S.W.2d at 304 n. 10. In supplying these criteria, however, Keller warns: "No specific criterion is independently controlling; but, rather, the criteria together determine whether the charge is closer to being a `true' user fee or a tax denominated as a fee" Id (emphasis added). From the outset, therefore, the Court sought to ensure that the Keller criteria were viewed not as constitutional litmus tests to be applied with scientific rigor, but merely as relevant considerations that can point toward a proper classification. In Arbor Inv. Co., LLC v. City of Hermann, 341 S.W.3d 673 (Mo. banc 2011), this Court again emphasized that the Keller criteria are to be used only as reliable indicators, not constitutional divining rods. [C]onsideration of the Keller factors is a necessary step, but the purpose of their use is not because an arithmetic score will be determined that decides whether the particular charges in question pass or fail but rather is to assist the courts in determining the ultimate issue of whether the charge is a user fee or a disguised tax. Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) Id. at 682. 171 Finally, and perhaps most importantly, the Keller criteria were not cut *234 from whole cloth. Instead, Keller offers these criteria solely to aid courts in applying the Court's long-standing, "traditional" test for distinguishing fees and taxes: "Fees or charges prescribed by law to be paid by certain individuals to public officers for services rendered in connection with a specific purpose ordinarily are not taxes." Keller, 820 S.W.2d at 303-04 (quotation marks omitted, citing Leggett v. Missouri State Life Ins. Co., 342 S.W.2d 833, 875 (Mo. banc 1960)). The Keller criteria, therefore, were intended only to adapt the Leggett test to a new constitutional context, not replace it completely. Many courts —including the trial court in this case —have expressed frustration with the Keller criteria on the ground that they provide little insight and are subject to manipulation. The problem may lie with how the criteria have been applied. Before meaningful guidance can be gleaned from any of the Keller criteria, the Leggett test makes it clear that the court first must have a clear and complete understanding of the service that the political subdivision claims to provide, including the users of this service and the transactions in which that service supposedly is rendered in exchange for the user fee. See Leggett, 342 S.W.2d at 875 (fees are not taxes if they are "paid by certain individuals to public officers for services rendered") (emphasis added). Despite the critical importance of these determinations, no express inquiry into the nature of the political subdivision's service occurs until the fourth Keller criterion. Even then, Keller fails to emphasize the scope or importance of this service analysis, probably because Keller assumes this is clear from the Leggett test. In hindsight, however, the Keller criteria eclipsed the role of the Leggett rule so thoroughly that this connection rarely is made. As a result, the cause of judicial frustration with the Keller criteria may lie more with the order of those criteria than with their substance. To demonstrate this point (and avoid a further dose of judicial frustration), this Court begins its analysis with the fourth Keller criterion. A. Keller Criterion No. 4: What service does MSP provide in exchange for the fee? 181 The fourth Keller criterion asks whether the political subdivision is providing a service in exchange for the disputed charge. Keller, 820 S.W.2d at 304 n. 10. MSD does not contend that the stormwater charge is a fee for using MSD's drainage system by discharging stormwater into it during a storm or a fee for using MSD's oversight functions by obtaining a single inspection, permit, or educational program. MSD cannot make that argument because the facts do not support it. MSD admits that a Ratepayer pays the same stormwater charge every month regardless of the amount of rainfall or the amount of stormwater it discharges into MSD's drainage system, and that Ratepayers still must pay fifty percent of the charge even if they never use the drainage system. Meanwhile, MSD admits there are thousands of landowners who pay no part of the stormwater charge even though they discharge stormwater into MSD's drainage system every time it rains. MSD concedes that it cannot charge a user fee for each landowner's use of the stormwater drainage system because MSD has no way of knowing how much stormwater any particular landowner is discharging into that system at any particular time. MSD does not even claim that the stormwater charge is based on an estimate of such usage, using the amount of impervious area on a property as a proxy for the amount of actual runoff from that property. MSD admits that the amount of impervious *235 area on a particular property has nothing to do with the total amount of stormwater runoff from that property into MSD's drainage system. Accordingly, the stormwater charge is not —and MSD does not claim that it is —a user fee charged for a landowner's actual use of MSD's drainage system. By the same token, the stormwater charge is not a user fee charged for the use of MSD's oversight services such as planning, permitting, or education, MSD renders these services as requested or needed, regardless of whether the user pays the stormwater charge for owning land with impervious area. - Even though MSD concedes that this charge is not a user fee based on the actual use of MSD's stormwater drainage system or oversight functions, MSD insists that the charge is a proper user fee because those are not the relevant services. Instead, • - Neat Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) MSD insists that the relevant service for purposes of evaluating whether the stormwater charge is a user fee is MSD's ensuring the "continuous and ongoing" availability of a stormwater drainage system regardless of the weather, and the "continuous and ongoing" availability of its oversight functions regardless of when they are requested or needed. MSD makes no effort to identify the individual users of these "availability" services, however, or the transactions in which those services are rendered in exchange for a user fee. Instead, MSD argues that actual usage should not matter. MSD explains there was no need for stormwater services when the district was in its natural state because stormwater ran wherever gravity took it. When development replaced natural surfaces with impervious areas (e.g., roofs, sidewalks, streets, parking lots, etc.), however, these impervious areas generated more and faster runoff than the natural surfaces they replaced. MSD insists that this additional runoff creates the need for the stormwater services it provides. Because the need for stormwater services is created by the additional runoff that impervious areas produce, MSD contends that the total amount of impervious area must equal the total need for such services and the amount of impervious area on each owner's property must represent that owner's individual contribution to the overall need for those services. Accordingly, MSD insists that this individual contribution to the overall need for MSD's service is the fairest basis for determining each owner's share of the total costs of those services. These arguments explain why MSD believes it is fair for owners of property with impervious area to pay the stormwater user charge while owners of property with no impervious area do not. But MSD's arguments have nothing to do with whether the stormwater charge is a user fee because they say nothing about who uses MSD's stormwater services. In other words, MSD contends that: (a) because the owners of property with impervious area are responsible, collectively, for creating all of the need for stormwater services, those owners, collectively, must pay for them; and (b) because these owners pay for all of MSD's stormwater services, they must be the only users of those services. The Court rejects this tautology. The Court accepts MSD's characterization of the stormwater services it provides. The relevant service for purposes of analyzing *236 the stormwater user charge in this case is not that MSD provides drainage or oversight to individual users at particular times. Instead, the relevant service is MSD's ensuring the "continuous and ongoing" availability of its drainage system and oversight functions, regardless of whether or when they are needed. But the Court rejects MSD's argument that it provides these generalized "availability" services only to the Ratepayers and no one else. Instead, the Court holds that the user of MSD's "availability" services is the district as a whole. Because such "availability" services cannot be rendered to particular users in individualized transactions does not mean that MSD can charge a user fee for those services on some basis other than use. It cannot. Where there are no individual users and no readily identifiable transactions in which the political subdivision renders the relevant service in exchange for a fee, the charge cannot be a valid user fee. In Keller, the Court evaluated an ambulance district's decision to increase the price charged in exchange for rendering a specific ambulance service to an individual user in a readily identifiable transaction. The Court contrasted that fee with the charges that the ambulance district imposed on landowners to ensure the availability of such services without regard to usage, i.e., taxes. This case presents the reverse comparison. MSD imposed the stormwater user charge on landowners to ensure that its stormwater services would be available for the entire district when needed. It is immaterial that MSD limited this charge only to those it believes are responsible for creating the need for these services rather than all landowners as in Keller. What matters is that MSD did not impose the charge in exchange for an individual's actual use of those services.' B. Keller Criterion No. 2: Who vays—owners or users ? Keller 's second criterion distinguishes between charges that are paid by "all or almost all of the residents of the political subdivision" and charges that are paid by "those who actually use the good or service for which the fee is charged." Keller, 820 S.W.2d at 304 n. 10 (emphasis added). The parties devote much of their arguments to debating what constitutes "all or most" of the relevant population, but this debate misses the point of this criterion. The question is not what percentage of the population is charged, but why some are charged and others are not. Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) As Keller makes clear, if the political subdivision ties its charge to the use of the political subdivision's service, and if it charges this fee to all who use its service, it is likely that the political subdivision is setting the price for rendering its services to individual users and voter approval under section 22(a) is not required. But if the political subdivision ties the fee to residency or ownership instead of use, the charge is not a user fee and prior voter approval is required. *237 The Court holds above that MSD's service is ensuring the "continuous and ongoing" availability of its stormwater drainage system and oversight functions. But MSD does not —and cannot —tie the obligation to pay the stormwater user charge to an individual landowner's use of MSD's "availability" service because it renders that service to the district as a whole, not to individual landowners. Instead, MSD expressly ties the obligation to pay the stormwater charge to the ownership of real property. Accordingly, this criterion weighs strongly against the conclusion that MSD was imposing a user fee when it imposed the stormwater user charge. As above, MSD seeks to avoid this result by arguing that "contribution to the need" for a service is the same as the "use" of that service. The Court has rejected this argument but, in this context, its flaws are even clearer. By tying the obligation to pay the stormwater charge to ownership of land, MSD knew it would recover the anticipated revenue over the course of a year regardless of whether or to what extent any individual used its stormwater services. This has all of the essential characteristics of a levy. i.e., an act that creates an obligation to pay that is not contingent upon any later use of the political subdivision's service. This is why the second Keller criterion focuses on the source of the obligation to pay the disputed charge. If the political subdivision's action has no legal or practical effect until the payer uses the relevant service (e.g., rides in the ambulance or buys the hamburger), it is likely that the political subdivision was imposing a user fee and not levying a tax. If the obligation to pay is tied to ownership, however, the payer's actions neither trigger nor avoid the obligation, and the political subdivision's action meets the Keller definition of such a levy. MSD claims that the obligation to pay the stormwater user charge is not tied solely to ownership of land because the charge varies based upon the amount of impervious area on that land. This argument is directed at the amount of the charge, not at the source of the obligation to pay. For example, if MSD had chosen to vary the amount of its stormwater user charge based on the assessed value of the property rather than the amount of impervious area, the flaw in MSD's argument would be so obvious that further analysis would not be needed. That MSD chose a different attribute of the property —and one equally out of the payer's control —on which to vary its stormwater charge does not alter the fact that MSD tied that charge to ownership, not use. [91 Under this criterion, what matters is not how the amount of the charge is calculated but whether the charge is triggered by use of the political subdivision's service or some factor other than use, including residency or land ownership. Once MSD decided to impose the stormwater user charge as it did, there was nothing that a landowner needed to do (or could refrain from doing) that could affect whether that obligation arose. As a result, *238 the charge is not tied to any use of MSD's service and, in fact, does not even purport to be. Accordingly, this criterion strongly suggests that MSD levied this charge without the prior voter approval required by section 22(a)- C. Keller Criterion No. 1: When is it paid—reriularly or after use ? Like the preceding criterion, this criterion also focuses on the obligation to pay the disputed charge. But, rather than analyze the trigger for that obligation, this criterion analyzes when the payments occur. When the charge is "paid only on or after provision of a good or service to the individual paying," Keller notes that it is likely that the political subdivision was setting a user fee and not levying a tax. Keller, 820 S.W.2d at 304 n. 10 (emphasis added). When the charge is paid periodically, however, and regardless of when (or even if) the payer actually uses the relevant service, this criterion indicates that the I.. Geve,T,rt3eli: Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (20.13) political subdivision has levied a tax. Because MSD' s service is ensuring the "continuous and ongoing" availability of its drainage system regardless of whether or how much it rains, MSD argues that each Ratepayer's use of that service must be "continuous and ongoing" as well. As noted above, however, the only user of MSD's "availability" service (if the concept of use applies at all) is the district as a whole, not an individual landowner. MSD also argues that a Ratepayer necessarily pays "only on or after" using MSD's services because no payments were due until April 1, 2008, one month after the stormwater user charge was implemented. Under this criterion, however, the question is not simply regularity or whether the payments are in advance or in arrears. The focus of this criterion is on whether the payment is made "only on or after" the payer uses the political subdivision's service. Here, because individual use of MSD's "availability" services is not possible, payments of the stormwater charge cannot be made "only on or after" the individual payer uses those services. It does not matter why MSD deferred initial payments until a month after it implemented the stormwater charge. What matters is that both the due date and the implementation date were set without reference to external events or objective criteria. As a result, the stormwater charge is precisely the sort of periodic charge unrelated to the payer's actual use of the relevant service that the first Keller criterion seeks to identify. In addition, MSD's claim that the stormwater charge is a monthly fee collected after services are rendered is contradicted by the facts. MSD's 2007 proposal demonstrates that MSD calculated the stormwater user charge on an annual basis. MSD divided the total amount of money that it wanted to generate each year by the available base throughout the district. Whether the available base is total amount of impervious area or total assessed valuation, the process MSD used is the same process every taxing authority uses when levying a tax. Lane v. Lensmeyer, 158 S.W.3d 218, 228 n. 14 (Mo. banc 2005). Here, this process resulted in a rate for the stormwater charge of $2.29 per 100 square feet of impervious area. MSD labeled this rate in its 2007 proposal as follows: "Projected stormwater service charge per 100 square feet impervious area (annualized rate —billable monthly )" [Emphasis added.] Therefore, MSD's decision to collect this charge monthly rather than annually was a matter *239 of its own convenience, not constitutional significance. Though there is nothing illicit or illegal about MSD's decision to collect the stormwater charge monthly, MSD cannot use that decision as support for its argument that Ratepayers' payments are made "only on or after" each Ratepayer's use of MSD's "availability" services. Finally, MSD claims that it converted its stormwater revenue scheme from the previous tax -based approach to an approach based on the stormwater user charge at 12:00:01 a.m., March 1, 2008. Therefore, MSD argues that ail payments made after this conversion were made "only on or after" the payer used MSD's stormwater services. The facts suggest, however, that MSD's stormwater revenue scheme was the only thing that changed on that date. Stormwater continued to flow downhill from wherever it landed, and no more stormwater flowed through MSD's drainage system after March 1, 2008, than before. MSD did not change how it provided its services or, more importantly, who the users of those services were. At best, MSD claims that it was able to expand its services because of the increased revenue. But this proves too much. Any improved or expanded services were provided wherever they were needed. They were not provided solely to those who paid the stormwater charge any more than they were provided in exchange for that fee." The Court holds that there are no individual users of MSD's service of ensuring the "ongoing and continuous" availability of its drainage system and oversight functions. Such a service is rendered to the entire district. With no individual users and no way to tell when or to whom such "availability" services actually are rendered, this criterion weighs heavily in favor of the conclusion that MSD was not imposing the stormwater charge as a user fee. Accordingly, MSD violated section 22(a) when it implemented this charge without voter approval. D. Keller Criterion No. 3: How much to pav—fixed amount or based on usase ,Next 2015 homsur= • claim is . 9;+1.._.1 U.S. L,uvr, <<< a =, i !0 Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) The third Keller criterion looks at how the amount of the charge is calculated but, like the preceding two criteria, this criterion focuses on the relationship between the disputed charge and the payer's use of the service that supposedly is being rendering in exchange for that fee_ The more the amount of the charge is "dependent on the level of the goods or services provided to the fee payer" (i.e., the extent of the user's usage), the more likely it is that the political subdivision was setting a user fee rather than levying a tax. If the individual's use of the relevant service has little or no effect on the amount of the charge, however, it is likely that the political subdivision has levied a tax without prior voter approval. Keller, 820 S.W.2d at 304 n. 10. MSD suggests that the criterion should be worded: "If a user charge is individualized and variable, rather than averaged and flat, and if the measure of the service *240 relates to the level of the services, then the user charge passes muster under [Keller ] Factor 3." [Emphasis added.] The Court rejects this alternative formulation. Property taxes imposed on an ad valorem basis are every bit as "individualized and variable" as MSD's stormwater user charge. The only difference is the variable. As a result, the first part of MSD's restatement adds nothing useful. The remainder of MSD's alternative formulation of this criterion reflects MSD's effort to substitute the concept of "contributing to the need" for a service for the concept of the "use" of that service. First, MSD uses the phrases "measure of service" to refer to an owner's individual contribution to the overall need for stormwater services, and MSD measures this contribution by the amount of impervious area on that owner's property. Second, MSD argues that voter approval should not be required as long as there is some relationship between an individual's contribution to the overall need for a service (i.e., the "measure of the service") and that individual's actual use of MSD's stormwater services (i.e., the "level of the services"). The Court rejects such an attenuated standard. To be a user fee beyond the scope of section 22(a)'s voter approval requirement, the charge must be paid by all of the users of the relevant service based on each payer's actual use of that service. Here, MSD concedes the charge is based on each Ratepayer's individual contribution to the overall need for stormwater services. That contribution is not, as MSD suggests, "related" to each Ratepayer's use of that service. Because the relevant service is MSD's ensuring the "continuous and ongoing" availability of its stormwater drainage system and oversight functions for the entire district, there are no individual users of MSD's service. Accordingly, this criterion —like the others —weighs in favor of the Court's conclusion that MSD violated section 22(a) when it implemented the stormwater user charge without prior voter approval. MSD claims that its stormwater charge is the same as the rates charged by other utilities and, under Arbor, must be deemed to be a valid user fee. MSD argues that utilities use rates as a method of allocating costs among their customers in a fair and reasonable manner, and that this is what MSD did when it implemented the stormwater charge. The flaw in this argument is the same flaw that runs throughout all of MSD's arguments. MSD accurately describes how utilities set their rates, but utilities charge those rates only for actual use of their services.12 MSD charges its stormwater fee based on each landowner's contribution to the overall need for MSD's stormwater services, not that owner's actual use of those services. The two are different. Because there can be no individual *241 users of MSD's "availability" services, this difference is material and precludes any possibility that the stormwater charge is a valid user fee. E. Keller Criterion No. 5: Is the service historically and exclusively Rovernmental ? The fifth Keller criterion focuses on whether the services being provided have "historically and exclusively been provided by the government" Keller, 820 S.W.2d at 304 n. 10. This criterion is based on the assumption that historically governmental services are more likely to be funded by levying taxes but, when a political subdivision enters into the private -sector market, it is more likely to charge a price for its services just as its private competitors do. Early in MSD's existence, this Court affirmed MSD's broad governmental powers: "Providing for [stormwater] drainage and sewerage is a governmental function and an exercise of the police power of the state." Dalton, 275 S.W.2d at 230 (emphasis c;tLciViNext '. ernment ! Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) added). This Court later rejected the notion that MSD should be treated as a private -market participant: "MSD, which operates under the police power of the state in the interest of the public health, safety and welfare, is in effect an arm of the state exercising exclusively governmental functions. It has no private, proprietary functions to perform." Page v. Metropolitan Sewer Dist., 377 S.W.2d 348 (Mo.1964) (emphasis added, citations omitted). MSD attempts to counter its unique history by arguing that individual landowners, subdivision developers, and other private actors also ensure (or have ensured) the availability of stormwater drainage systems." MSD misperceives the fifth criterion. The question is not whether non -governmental entities ensure (or have ensured) the availability of the type of stormwater drainage system MSD maintains. The question is whether non -governmental entities do (or did) so in exchange for a fee. There is no evidence that any private entity provides (or ever has provided) availability of a stormwater drainage system for individual landowners for a fee, as MSD claims to do. The only marginally analogous providers are levee districts and landowners associations that support their ability to "ensure" the availability of stormwater drainage by levying taxes or assessments. MSD's contention that some landowners maintain availability of stormwater drainage facilities on their own property falls short of the mark. Maintaining stormwater controls on one's own property is no more "ensuring" the availability of such services than stringing an extension cord between a lamp and a wall socket is "ensuring" the availability of electricity. If a private developer constructing a stormwater drainage system for a new subdivision can be characterized as "ensuring" stormwater services, there is no evidence that developers do so in exchange for a fee paid by each individual landowner. Instead, the costs of such improvements *242 are more likely to be reflected in the prices charged for the subdivision lots. Accordingly, the fifth Keller criterion suggests that MSD was levying a tax —not merely setting a price —when it imposed the stormwater user charge without prior voter approval. F. Additional Characteristics The material inquiry is —and always must remain —whether the political subdivision has levied a new or increased tax without prior approval of its voters. Missouri voters did not approve the five Keller criteria when they approved the Hancock Amendment, nor does Keller hold that Missouri voters intended that no voter approval would be required if a new or increased tax is repackaged to "pass muster" under some or all of those criteria. Instead, this Court emphasized both in Arbor and in Keller that those criteria were offered only for whatever insight they may provide when applying section 22(a) to a particular charge. They are not —and were not intended to be ---constitutional talismans that can be used to ward off the application of section 22(a) 1101 Arbor also confirms that the Keller criteria are not the only indicia courts may consider when determlmng whether a political subdivision has levied a tax without voter approval. Arbor, 341 S.W.3d at 683. Courts may —and should —review all relevant considerations so that the decisions regarding the application of section 22(a) are as well-informed as possible. Accordingly, this Court has weighed the following facts and circumstances offered by the parties in deciding whether voter approval under section 22(a) was required before MSD could impose the stormwater user charge. 1. MSD's Lien for Nonpayment In Beatty v. Metropolitan Sewer District, 867 S.W.2d 217 (Mo. bane 1993) (Beatty II ), MSD claimed that its increased sewer charges were valid user fees under Keller after the voters rejected those increases at the polls. Id at 221 ("MSD read Keller in light of its financial needs and increased its charges ... without voter approval"). This Court concluded that MSD violated section 22(a) by implementing the increased charges despite the voters' rejection based, in part, on the fact that MSD's ordinances gave it a lien on the real property of any landowner who failed to pay those charges. Id." In St. Louis Investment Properties, 873 S.W.2d at 307, MSD's authority to force the sale of real property to ensure payment of its charges was held to be inherent in its express authority to impose those charges under the Plan. Here, as in Beatty II, MSD enacted an %V:Istl3wNext ,overr,,:.3nt 11Vc� Zweig v. Metropolitan St. Louis Sewer i7ist., 41Z S.Hv.30 223 (2613) ordinance giving it a lien on the property of any Ratepayer who fails to pay the stormwater user charge. This ordinance expressly provides that MSD's lien will have the "same priority as taxes levied for state and county purposes." Absent an agreement by the debtor, only the government (and those creditors it elects to favor with this remedy by statute) enjoy the benefits of a lien arising solely from the nonpayment of an obligation. *243 This is why, in Beatty II, the Court found that MSD's decision to give itself a lien for nonpayment of its sewer charges suggested that it had levied those charges as taxes. By the same token, Arbor holds that the absence of any such lien for nonpayment of the utility charges at issue there suggested that the political subdivision was imposing user fees and not levying taxes. MSD's stormwater charge more closely resembles the facts in Beatty II than those in Arbor. The fact that MSD has given itself a lien as a remedy for nonpayment of the stormwater user charge suggests that MSD was levying a tax when it implemented that charge and not simply setting prices for future sales of its services. 2. MSD's Other Remedies As noted above, the political subdivision in Arbor did not give itself a lien in the event of nonpayment of the utility rates at issue there. The Court not only cited the absence of such a remedy in concluding that the political subdivision was not levying taxes when it increased those utility rates, the Court also noted that "the result of failure to pay a city utility bill is that the service will be cut off, just as a private utility terminates service when payment Ls not made" Arbor, 341 S.W.3d at 686 (emphasis added). Here, MSD does not claim the right to shut off a Ratepayer's access to MSD's stormwater drainage system and oversight functions in the event that Ratepayer fails to pay the stormwater user charge.Instead, MSD claims the right to shut off that Ratepayer's sewer services and water supply. Unlike the remedy cited in Arbor, the fact that MSD can use nonpayment of its stormwater user charge as a justification to withhold services having nothing to do with stormwater services —including a justification to withhold water service, which MSD does not even provide —weighs against MSD's contention that it was imposing a user fee when it implemented this charge. Such remedies are more characteristic of the way in which governments collect unpaid taxes than the manner in which private parties collect unpaid prices or user fees. 3. Voters' Remedies 1111 Ratepayers suggest that, because voters do not directly elect the MSD trustees, it is more likely that MSD was levying a tax when it adopted the stormwater user charge. The Court disagrees. MSD's political structure has no bearing on the question of whether section 22(a) requires voter approval before its stormwater user charge can become effective. References in Keller and Arbor to the voters' opportunities to elect the leaders of those political subdivisions had nothing to do with the application of section 22(a). Instead, those statements were made in response to the taxpayers' complaints regarding the amount of the charges. Complaints about the amount of a given charge were a side issue in Keller, but they became the central issue in Arbor. In both cases, this Court held that the amount of the fee has no bearing on the application of section 22(a) and noted that *244 taxpayers' remedies for such complaints were political rather than legal. Here, Ratepayers do not complain about the amount of the stormwater user charge. If they had, Ratepayers' political remedies are no more relevant to whether MSD violated section 22(a) by levying the stormwater user charge without voter approval than in Keller or Arbor simply because those remedies are indirect (i.e., through the elected city and county officials who appoint MSD's trustees) rather than direct. G. Conclusion 1121 This Court sympathizes with MSD's predicament. The services it believes are required may cost more than district voters i....Next 1"r orrI su r ? ! {. ;l :; ciair Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) are willing to pay. Under the Hancock Amendment, however, that decision belongs to the voters. The Hancock Amendment assumes voters will make such decisions in their collective best interest, and it is not for MSD—or this Courtto ignore that assumption or deny the voters the right to make such decisions for themselves. For the reasons stated above, therefore, the Keller criteria and other relevant factors support the trial court's conclusion that MSD levied the stormwater user charge without prior voter approval in violation of section 22(a). IV Refunds Because the trial court's judgment on the merits is affirmed, this Court must decide what remedies are authorized by the Hancock Amendment. The trial court gave Ratepayers prospective relief in the form of a declaratory judgment that MSD's decision to impose the stormwater user charge without prior voter approval violated section 22(a) and an injunction prohibiting MSD from collecting that charge in the future. The trial court, however, denied Ratepayers' request for an order requiring MSD to refund approximately $90 million in stormwater user charges collected between April 2008 and the date of the trial court's judgment on the merits. [131 Absent special circumstances not present here, it is well -established that a taxpayer is not entitled to a refund of illegal taxes unless the refund is authorized by law. Community Fed Say. & Loan Assn v. Dir. of Revenue, 752 S.W.2d 794, 797 (Mo. banc 1988). Accordingly, even though MSD levied the stormwater user charge without prior voter approval in violation of section 22(a), Ratepayers are not entitled to a refund of amounts already collected because nothing in section 22(a) or elsewhere in the Hancock Amendment expressly authorizes Missouri courts to order such a remedy. As noted above, section 16 sets out the Hancock Amendment's overarching prohibition against levying taxes without voter approval and provides that subsequent sections will "implement" that basic prohibition. Section 22(a), discussed above, is one such implementing provision. Section 23 is another. It provides: [A]ny taxpayer ... shall have standing to bring suit ... to enforce the provisions of sections 15 through 22, inclusive, of this article and, if the suit is sustained, shall receive from the applicable unit of government his costs, including reasonable attorneys' fees incurred in maintaining such suit. "By its plain language, the only monetary relief courts are authorized to give under section 23 is an award of expenses and attorneys' fees. Fort Zumwalt, 896 S.W.2d at 923. The principal relief authorized by section 23, therefore, is declaratory and not remedial. The heading of article X, section 23 of the Missouri Constitution describes the nature of the remedy for a Hancock *245 Amendment violation. It reads "Taxpayers may bring actions for interpretations of limitations." Id. An interpretive remedy, in this context, allows the court to interpret a particular statute in light of [the Hancock Amendment's] constitutional limitations. In other words, section 23 authorizes declaratory relief but does not mention other forms of relief, such as injunction or damages.... The limited nature of the declaratory, or interpretive, remedy does not authorize a court to enter a judgment for damages or injunctive relief. Taylor v. State, 247 S.W.3d 546, 548 (Mo. banc 2008) (emphasis added). Not only is there no express authority in the Hancock Amendment's remedies provision (i.e., section 23) to order MSD to pay $90 million to Ratepayers and their attorneys, the substantive provisions of the Hancock Amendment at issue in this case (i.e., sections 16 and 22(a)) also do not authorize such a remedy. This lack of express authority in sections 16 and 22(a) is even more significant in light of the express authority under section 18(b) of the Hancock Amendment for the state to pay refunds in the event it violates the provisions of section 18(a). The framers of the Hancock Amendment knew how to authorize this remedy when appropriate and chose to restrict its use only to violations of section 18(a) and not section 22(a) There are sound reasons for the Hancock Amendment to limit the use of refunds. In light of the Hancock Amendment's overarching purpose to limit taxes (and, as a result of that limitation, to limit spending), unfettered use of refunds as a remedy for any and all violations easily might do more harm than good. The present case is a good illustration. As with most governmental entities, MSD operates on a cash basis and, for all practical purposes, was spending the stormwater user charge as quickly as it collected it. When the trial court declared MSD's imposition of the stormwater charge unconstitutional in July Zweig v. Metropolitan St. Louis Sewer Dist, 412 S.W.3d 223 (2013) 2010, MSD ceased collecting that charge and returned to its prior stormwater revenue scheme. As a result, MSD lacked the means simply to "refund" the estimated $90 million in stormwater charges previously collected. Prior to levying the stormwater user charge in March 2008, MSD's stormwater revenues were $19 million less than the costs of its stormwater operations. If this Court ordered MSD to pay $90 million in refunds, its only options would be to cease all operations and divert all revenue to those refunds or impose a new tax that (assuming the voters would approve it) likely would only serve to shift funds inequitably from one cohort of taxpayers to another. Nothing in the Hancock Amendment authorizes —let alone requires —this Court to order such a "musical chairs" approach to taxation. Accordingly, this Court holds that the Hancock Amendment does not expressly authorize Missouri courts to order a political subdivision to refund taxes collected in violation of section 22(a).16 To order refunds *246 without such express authority is, at best, to "infer or imply that a waiver of sovereign immunity extends to remedies that are not essential to enforce the right in question." Fort Zumwalt, 896 S.W.2d at 923 (emphasis added). This the Court will not do. Ratepayers contend that this holding conflicts with this Court's earlier holdings in Beatty v. Metropolitan St. Louis Sewer District, 914 S.W.2d 791 (Mo. banc 1995) (Beatty III), Ring v. Metropolitan St. Louis Sewer District, 969 S.W.2d 716 (Mo. banc 1998), and City of Hazelwood v. Peterson, 48 S.W.3d 36 (Mo. banc 2001). The Court disagrees. None of these cases stands for the proposition that the Hancock Amendment, by itself, authorizes Missouri courts to order refunds (or enter money judgments on any other basis) when a political subdivision has levied a charge without voter approval in violation of sections 16 and 22(a). This Court never has addressed this question squarely until this case, and the Court now rejects that proposition. Ratepayers claim Beatty III holds that the Hancock Amendment authorizes refunds when a political subdivision violates section 22(a). This is incorrect. Beatty III expressly declined to reach that issue. The taxpayers who challenged MSD's increased sewer charges in the Beatty saga did not seek refunds as a remedy for MSD's violation of section 22(a). Instead, they "filed a lawsuit seeking declaratory relief and an injunction prior to payment of the increased sewer rates," which this Court noted was an "appropriate method to enforce the Hancock amendment." Beatty III, 914 S.W.2d at 796. The trial court first dismissed the taxpayers' Hancock claims, and this Court reversed that decision and remanded for a decision on the merits of those claims. Beatty v. Metropolitan St. Louis Sewer District, 700 S.W.2d 831, 838 (Mo. bane 1985) (Beatty I). On remand, the trial court concluded that MSD could increase its sewer charges without voter approval. Beatty II, 867 S.W.2d at 221. This Court again reversed and remanded. Id Not only did this Court hold that prior voter approval should have been obtained, the Court remanded the case with instructions for the trial court to address plaintiffs' "right to restitution of money lost by reason of the erroneous or void judgment." Beatty III, 914 S.W.2d at 796 (emphasis added, quotation marks omitted). There was no claim in Beatty IJ—and no discussion —that the Hancock Amendment authorized or required the refund of all taxes collected in violation of section 22(a). Rather, the Court's remand instructions invoked only the inherent power of courts to order restitution of those taxes collected "by reason of' the trial court's erroneous judgment. When Beatty reached this Court for a third time, the Court acknowledged the conflict it had created by invoking the inherent equitable authority to remedy damages resulting from an erroneous judgment without identifying (or even discussing) whether there was a clear and unequivocal waiver of the state's sovereign immunity that would allow such a money judgment. Beatty III, 914 S.W.2d at 796. *247 Ultimately, the Court held that it did not need to resolve that issue in Beatty III because MSD's own ordinance provided the plaintiffs a sufficient remedy. Id (holding that the Court "need not balance the court's inherent power to impose such a remedy against the state's right to be immune from suit ... [or] determine whether the Hancock amendment transcends the defense of sovereign immunity"). Accordingly, the Court's holding in the present case does not conflict with the holding of Beatty III because Beatty III expressly declines to reach the question decided here. Ratepayers' reliance on Ring, the fourth chapter of the Beatty saga, also is misplaced. Ring did not address the question that the Court expressly left open in Beatty III. Because Beatty III holds that only the named plaintiffs were entitled to the set-off remedy under MSD's ordinance, Ring was filed as a class action in the wake of Beatty III in an effort to extend that remedy to all of MSD's sewer customers. Ratepayers now rely on the following statement lifted from Ring's conclusion: "[W]e hold generally that article X, section 23, operates as a waiver of sovereign immunity and permits taxpayers to seek a refund of increased taxes previously collected by a political subdivision in violation of article X, section 22(a)." Ring, 969 S.W.2d at 719. The sweeping language of this statement notwithstanding, there is less to Ring than meets the eye. }j?St tcltirNEXE NO igir;al U.S. Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) Though characterized simply as a continuation of the Beatty litigation, Ring's posture was considerably different. First, Ring was not a suit to "enforce" the Hancock Amendment because MSD stopped collecting the increased sewer tax after Beatty II, five years earlier. Second, the only authority ever asserted for requiring even partial refunds in Beatty was the inherent power of courts to remedy damages resulting from an erroneous judgment, which was never in issue in Ring. Finally, Ring addressed an argument that never was raised in Beatty, i.e., whether plaintiffs needed to comply with section 139.031 and holds —as the Court does here —that a taxpayer's compliance with section 139.031 has no impact on whether the Hancock Amendment, by itself, waives sovereign immunity and authorizes money judgments. Ring, 969 S.W.2d at 719. Ring begins its analysis of whether the Hancock Amendment waives sovereign immunity and authorizes monetary remedies for past violations of section 22(a) by acknowledging the holding of Fort Zumwalt that section 23 contains no express waiver of sovereign immunity for purposes of awarding monetary damages as well as the warning in Fort Zumwalt that courts must not infer such a waiver unless a money judgment is "essential to enforce the right in question." Ring, 969 S.W.2d at 718 (quoting Fort Zumwalt, 896 S.W.2d at 923). Against this backdrop, Ring notes that taxpayer actions to enforce section 22(a) arise only in two ways. The first is when taxpayers "seek an injunction to enjoin the collection of a tax until its constitutionality is finally determined." Id The second is when: ... a political subdivision increases a tax in violation of article X, section 22(a), and collects that tax prior to a final, appellate, judicial opinion approving the collection of the increase without voter approval, the constitutional right established in article X, section 22(a), may be enforced only by a timely action to seek a refund of the amount of the unconstitutionally -imposed increase. Ring, 969 S.W.2d at 718-19 (emphasis added). These two scenarios are not simply a menu from which Ratepayers are allowed to select the procedure they prefer. Instead, *248 Ring's second scenario arises only when the first scenario is not available, i.e., when refunds are the "only " means of enforcing section 22(a). Here, the first scenario was available. Ratepayers had every opportunity to seek a restraining order or preliminary injunction to enjoin MSD's collection of the stormwater user charge until its constitutional validity was finally determined. Ratepayers elected not to do so. Because refunds were not the `only" means of enforcing section 22(a) in this case, Ring's second scenario does not apply. Finally, Ratepayers contend that the holding in this case is contrary to Hazelwood. There, the Court stated: "The people of Missouri have reserved to themselves the constitutional right to enforce the Hancock Amendment, which operates as a wholly independent mechanism for the refund of unconstitutional taxes." Hazelwood, 48 S.W.3d at 41. As with the quotation from Ring, however, Ratepayers strip the Hazelwood statement of its context and create the impression that the Court was answering a question it had not been asked. Ratepayers' reliance on Hazelwood is just as misplaced as their reliance on Ring. Neither case was an action to enforce section 22(a). Hazelwood addresses the proper construction and application of Missouri's election contest statutes, not the Hancock Amendment. The taxing district never argued that its tax increase was immune from section 22(a); in fact, it conceded that prior voter approval was required. Hazelwood 48 S.W.3d at 38. Instead, the taxing district claimed that section 115.595.2, RSMo 2000, authorized it to collect the increased taxes between the election in August 1996 (at which it appeared voters had approved the increase) and the date of the judgment in the election contest seven months later (in which those election results were held to be invalid). Hazelwood holds that the introductory language of section 115.595.2 only allows the taxing district to rely on the initial returns at its own risk and subject to an obligation to restore the status quo ante if the election contest succeeds. Hazelwood 48 S.W.3d at 40. Anticipating this result, the taxing district challenged the trial court's class certification and argued that it should only be required to return those taxes that were paid by the named plaintiffs. This Court disagreed. Id. But the holding in Hazelwood concerning class certification is less important here than the fact that class certification was the context in which the Court made the statement on which Ratepayers rely so heavily. Hazelwood was not addressing whether the Hancock Amendment authorizes courts to order refunds or otherwise award money damages as a remedy for violations of section 22(a) because that question was never asked. © 201. Thcm8ui r2=uters No claim to or4nal U.S. Government VVlc: Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) 1151 Read carefully, nothing in Beatty Ill, Ring, or Hazelwood holds that article X, section ::, by itself, authorizes courts to award money damages in the form of refunds (or otherwise) as a remedy for a political subdivision levying a tax without the prior voter approval required by section 22(a)." For the reasons stated above, *249 the Court holds unequivocally that it does not. V. Attorneys' Fees 1161 As noted above, the only money judgment expressly authorized by article X, section 23, is an award of "costs, including attorneys' fees incurred in maintaining the suif' if the taxpayer's claim is sustained. Here, the trial court ordered MSD to pay Ratepayers approximately $4.3 million for their attorneys' fees and an additional $470,000 in expenses. The trial court did not abuse its discretion in making these awards, and, accordingly, they are affirmed. 1171 MSD contends that the trial court erred in including the time counsel spent pursuing Ratepayers' request for refunds when calculating Ratepayers' fee award. MSD argues that Ratepayers are not entitled to be compensated for that time because Ratepayers' claim for refunds did not succeed. Section 23 provides that a taxpayer is entitled to an award of attorneys' fees only "if the suit is sustained." Here, Ratepayers' suit was that MSD violated section 22(a) by levying and collecting the storm water user charge without prior voter approval. MSD confuses Ratepayers' suit with the remedies they sought based on that suit. Even though Ratepayers did not receive every remedy they sought, Ratepayers' suit was sustained in its entirety. Accordingly, the Court affirms the trial court's decision not to attempt to exclude the hours Ratepayers' counsel spent pursuing a refund remedy from the total hours on which Ratepayers' attorneys' fee award is calculated. E1s] MSD also claims that the trial court erred by including in the award of Ratepayers' "costs" the amounts spent on expert fees and other out-of-pocket expenses not traditionally included in the definition of "costs" (e.g., service and transcription fees). This ground has been well -ploughed. See Roberts v. McNary, 636 S.W.2d 332, 338 (Mo. banc 1982) ("the language in section 23 referring to costs makes clear that a successful taxpayer -plaintiff shall be reimbursed for all out-of-pocket expenses in pursuing the litigation"), overruled on different grounds by Keller, 820 S.W.2d at 304-05. MSD offers no compelling reason to overrule Roberts in this regard, and the Court declines its invitation to do so. Because MSD does not argue that the Ratepayers' out-of-pocket expenses were excessive or unreasonable, no further analysis is required, and this claim is denied. j19] Finally, MSD contends that the trial court erred in applying a multiplier to the lodestar that the trial court calculated in awarding Ratepayers' attorneys' fees. MSD argues that the use of such a multiplier should be error per se. In the alternative, MSD urges this Court to adopt the multi -factored federal law analysis first announced in Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 130 S.Ct. 1662, 176 L.Ed.2d 494 (2010), and vacate the trial court's award on that basis. When MSD filed its briefs in this Court, it did not have the benefit of this Court's decision in Berry v. Volkswagen Group of America, Inc., 397 S.W.3d 425 (Mo. banc 2013), which rejects these same arguments. In particular, Berry expressly "decline[d] to adopt the use of those federal guidelines to modify *250 long standing Missouri law." Id at 432. Instead, Berry analyzed —and affirmed —the trial court's use of a multiplier under Missouri's time -tested abuse of discretion standard. Id In holding that the trial court's use of a multiplier was not an abuse of discretion in Berry, this Court noted that the trial court justified its decision on grounds that were not also considered in determining what hourly rate should be used to calculate the lodestar. Berry, 397 S.W.3d at 432-33. Here, the same reasoning applies. The hourly rate selected by the trial court to calculate the lodestar did not reflect: (1) the risk Ratepayers' counsel assumed in taking this case on a contingent fee basis; (2) counsel's "opportunity cost" in undertaking this representation, i.e., the value of other matters that counsel could not undertake because of representing Ratepayers; and (3) the impact of Ratepayers' representation on counsel's other cases. The trial court noted specifically that representing Ratepayers impacted the amount of other work Ratepayers' counsel could undertake and timely provide. More important, however, was the fact that counsel accepted this representation solely on a contingent fee basis. Ratepayers' counsel thereby assumed the risk of receiving no compensation for the time invested or reimbursement for expenses advanced if Ratepayers' claim did not succeed. This risk was substantial, not only because of the difficulty in prevailing on such a claim, but also because the necessary investment of time and resources likely would be substantial given MSD's tenacious defense of similar Hancock challenges in the past. Though their assessment is not binding on the question of a reasonable fee, the trial court noted that Ratepayers and their counsel valued this representation —including the associated risks —at 25 percent of the total amount of stormwater user charges refunded. On Next yii3a! J.5 ,overnroEnt VVC kE Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) that basis, Ratepayers' counsel could have asserted a claim for $22.5 million (i.e., 25 percent of the estimated $90 million in refunds) had such relief been authorized for a violation of the Hancock Amendment. 1201 Finally, because the trial court held (correctly) that refunds were not authorized, it believed a multiplier was justified in this case to ensure adequate representation for future taxpayers' claims under section 23. The purpose of the Hancock Amendment's mandatory awards of fees and costs under section 23 is to ensure that taxpayers have access to qualified representation. That purpose would be frustrated if, in extraordinary cases such as this one, the trial court could not ensure adequate compensation for the risks such counsel must assume. Berry, 397 S.W.3d at 433 (noting that the application of the multiplier furthered both the remedial and deterrent purposes of the underlying cause of action). Even if qualified counsel are willing to represent taxpayers despite the risk of not being paid (or reimbursed for costs advanced) should the taxpayers' claims fail, such willingness likely will recede or vanish completely if their compensation in the event the taxpayers' claim does succeed is limited to the same amount such counsel would have earned taking cases with no risk of non-payment. The trial court in this case made an adequate record concerning its calculation *251 of Ratepayers' attorneys' fees, and its analysis correctly anticipated this Court's ruling in Berry. MSD does not challenge the trial court's conclusions regarding the number of hours or the hourly rate to be employed. It challenges only the trial court's decision to apply a multiplier to the resulting lodestar. The considerations discussed above demonstrate that the trial court's use of a multiplier in this case was not abuse of discretion. Accordingly, the trial court's fee award is affirmed." A further observation is necessary and appropriate concerning the attorneys' fees and costs in this case. Though the Court is not suggesting that these amounts were unreasonable, the Court believes they are regrettable. As noted above, Ratepayers' fees and expenses exceeded $4 7 million and, even though the amount of MSD's fees and expenses are not in the record, it is unlikely that they were any less formidable. Such staggering sums simply are not acceptable when taxpayers are paying both sides of the bill. Keller s criteria were intended only to help courts understand and apply the Leggett test to distinguish fees and taxes under section 22(a). They were not intended —and the Court could not have expected them —to result in the kind of litigation that ensued here. The trial court, the court of appeals, and this Court have evaluated diligently all of the expert testimony that both parties spent so much time and money submitting. Without debating the admissibility of this evidence, which neither party contests, it should be obvious to anyone reading this opinion (and those of the lower courts) how little impact this evidence had on the outcome of the central legal issue in this case. As noted above, the application of each Keller criterion is not a question of fact to be found by the trial court and deferred to on appeal. There is little (if any) need, therefore, for parties to have in-house or retained experts testify as to how they believe the Keller criteria should be applied. At the end of the day, the trial court must apply those criteria for itself, and the appellate court will review that application de novo. Despite nearly four days of trial in this case, both parties agree (and a review of the record confirms) that there were few disputed questions of material fact. To be clear, application of Keller 's criteria requires certain basic facts. In this case, however, those facts were largely —if not entirely —beyond dispute. As a result, most of the "evidence" at trial consisted of this debate between experts over how the Keller criteria should be applied. Legal arguments do not become more persuasive simply because they come from the witness stand rather than the counsel table. This Court has gone to some lengths to de -mythologize the Keller criteria; first in Keller, then in Arbor, and now in this case. It is hoped that this will clarify whatever confusion Keller may have created over whether it is possible to change the classification of a particular charge as a tax or user fee for purposes of section 22(a) simply by manipulating the way in which that charge is presented. It is not. That classification results from the nature of the political subdivision's action in imposing the charge and the relationship between that charge, the services rendered, and the *252 users of those services. The Keller criteria were intended only as a guide for applying section 22(a), not as a roadmap for circumventing it. In the end, the interests of the taxpayers and their local governmental entities are best served by seeing mat cases involving rights created by the Hancock Amendment are resolved quickly, accurately, and without undue expense or delay. With the cloud of potential refunds no longer lowering over such cases, class certifications may become less common. Even when such procedures are invoked, they no longer should have the chilling effect on the practical availability of restraining orders or preliminary injunctions that they may have had in the past. When the facts concerning a claim under section 22(a) are not in dispute, the Court anticipates that such claims will be resolved without trial or on stipulated facts and, if material facts are Zweig v. Metropolitan St. Louis Sewer Dist., 412 5.W.3t1 223 (2013) disputed, the trial should be limited to the disputed issues. Finally, arguments as to the proper application of the Keller criteria (and any other relevant considerations) should be made by counsel based on the facts agreed to by the parties or found by the court, just as in any other case. CONCLUSION For the reasons set forth above, this Court affirms the judgment of the trial court in all respects and remands this case for the limited purpose of having the trial court hear and determine Ratepayers' motion for appellate fees and costs. RUSSELL, C.J., BRECKENRIDGE. FISCHER and TEITELMAN, JJ., concur; STITH, J., concurs in result. DRAPER, J., not participating. Footnotes A single drop of rain may fall on A's property, join other drops and flow downhill onto B's property, join other drops on B's land and flow downhill onto C's property, flow down C's driveway, into a city street, along the gutter, and down a storm drain before entering the stormwater system that MSD operates and maintains. Even if MSD could tell how much of the stormwater entering its system is from C's land, which it cannot, it has no way of determining how much of that water fell on A's or B's property uphill from C and merely flowed over C's property on its way to MSD's drainage system. Ratepayers do not challenge MSD's authority to levy the stormwater user charge under the Plan or section 30(b) of the constitution. The only claim in this case —and the only issue decided here —is whether section 22(a) prohibits MSD from levying this stormwater user charge without prior voter approval. MSD levied its stormwater ad valorem taxes in 1954, long before the Hancock Amendment was adopted. Therefore, section 22(a)'s voter approval requirement did not apply. MSD levied the stormwater surcharge on its sewer users in 1988, however, and district voters approved that tax pursuant to section 22(a). Tax-exempt entities did not pay MSD's ad valorem taxes but appear to have paid the sewer surcharge without challenge. 4 MSD also created (with voter approval) 23 sub -districts and levied additional property taxes of between $0.04 and $0.10 per $100 assessed valuation in each sub -district. These taxes were used for capital improvements within each sub -district and, collectively, generated more than $8 million in 2007. As part of its 2007 plan, MSD proposed to seek voter approval to expand these sub -districts, combine them into five watershed sub -districts, and increase all of the taxes to $0.10 per $100 assessed valuation so that the annual revenue from all sub -districts would exceed $27 million. These proposed boundary changes and tax increases are not involved in this case. 5 7 An additional exemption was created during this litigation with the enactment of section 204.700, RSMo Supp.2009. The statute exempts residential landowners from having to pay the stormwater user charge if MSD "does not directly provide sanitary sewer services to such property and if the storm water runoff from such person's property does not flow, or is not otherwise conveyed, to a sewer maintained by such district." Neither party argues that this statute has any bearing on the application of section 22(a) in this case. MSD's rate commission was created by an amendment to the Plan approved by district voters in 2000. The rate commission cannot set or alter sewer or stormwater rates, but it can recommend that MSD do so. Under the Plan, MSD is not bound by the rate commission's recommendations if (among other grounds) MSD believes a recommendation would substantially impair MSD's ability to provide adequate stormwater services and `public health or institutional safety may be jeopardized." This meaning of the word "levy" should not be confused with the meaning "sometimes used, in the administrative sense, as referring to the mere ministerial or executive acts of ascertaining and entering the taxes on the tax book and collecting them." State ex Inf. Dalton v. Metropolitan St. Louis Sewer District, 365 Mo. 1, 275 S.W.2d 225, 233 (1955) $ This is not to say that MSD cannot charge user fees for some of its oversight services. It can, and does. In 2007, MSD collected Next (0. 2f. to orioina! U S. Government ',Nor. 19 Zweig v. Metropolitan St. Louis Sewer Dist., 412 5.W.3d 223 (2013) more than $?, million in plan review and submittal fees, waste hauler permits, inspection fees, etc. The stormwater user charge is not such a fee, however, because it is not charged in exchange for rendering one of these services to an individual user. 9 Nothing prevents a political subdivision from levying a tax to ensure the availability of its service and charging a user fee for rendering that service to an individual. The district in Keller did so and the Court upheld the user fee while noting that the ambulance district also levied taxes to ensure the availability of its ambulance service. In the pool example above, an admission charge is allowed even though the availability of the pool is supported by taxes. MSD, too, can collect such user fees —and does. See note 8, supra. MSD claims it cannot charge a user fee for its drainage system because it cannot track which owner is using it or to what extent. That may be. In this case, however, MSD does not even claim that the charge was imposed on this basis. 10 To be clear, whether the payer's receipt of the service is voluntary or involuntary is not determinative. A political subdivision can charge a valid user fee for rendering a service to a particular user in an individual transaction, even though the recipient's use of that service is not voluntary. For example, a political subdivision can provide trash removal services in exchange for a fee. Leaving aside the other legal issues this may create, the mere fact that a resident is required to use the political subdivision's trash service does not change the nature of that service or the fact that the resident is the user of it. Therefore, what matters is not whether payment of the stormwater charge is voluntary but whether the obligation to pay the charge is triggered by the use of MSD's stormwater services rather than the payer's ownership of property. 11 MSD's evidence and briefs are replete with similar statements that reflect a common-sense understanding of these circumstances and undercut MSD's efforts to contort those circumstances to satisfy the Keller criteria. MSD provides the best stormwater services it can, and it provides them wherever they are needed most and will do the greatest good for the entire district. It does not render interchangeable units of service to individual users in exchange for a fee, and the stormwater charge was not intended to change how or to whom MSD rendered those services. Instead, the charge was intended to increase revenues so that MSD could continue providing adequate services to the district. Only in the singular light of Keller would anyone suggest that this charge was imposed as a fee to be paid by particular users in exchange for a set measure of MSD's stormwater services. 12 The Court is aware that MSD's 1993 sewer charges also imposed without prior voter approval —were determined not to be a violation of section 22(a) because those sewer charges were a valid "user fee." Missouri Growth Ass v. Metro. St. Louis Sewer Dist., 941 S.W.2d 615, 624 (Mo.App.1997). In reaching that conclusion, Missouri Growth distinguished Beatty II, which held that MSD's sewer charges were taxes and not user fees, on the ground that MSD had made "significant changes" to its sewer charges after Beatty II was decided. Specifically, MSD began charging (at least in part) on the basis of each customer's actual sewer usage, which MSD estimated on the basis of the customer's actual water usage. Id. The question of whether using water usage as a proxy for sewer usage is adequate to change MSD's sewer charges from taxes (as held in Beatty II) to user fees (as held in Missouri Growth ) is not before this Court. Here, MSD does not claim that the amount of impervious area on a given property is a proxy for a landowner's use of MSD's stormwater drainage system. 13 In arguing this fifth criterion, MSD scarcely mentions the oversight functions (e.g., planning, permitting, and public education) that it argues elsewhere are so significant that they justify requiring a Ratepayer to pay at least half of the stormwater user charge even if that Ratepayer never discharges a drop of stonnwater into MSD's drainage system. Nor is there much for MSD to gain by emphasizing MSD's oversight functions under this criterion, given that there does not appear to have been any evidence that private entities do provide —or ever have provided —such oversight functions to individual landowners for a fee or otherwise. 14 Beatty II also holds that, because "true" user fees are seldom difficult to spot, section 22(a) applies to all actions by political subdivisions that impose a new or increased charge unless circumstances clearly refute that the action was a levy. MSD argues that this aspect of Beatty II fails to presume constitutionality and should be overruled. This is incorrect. Beatty II does not shift the burden of proof. It merely holds that the burden is met whenever a political subdivision imposes a new or increased charge without voter approval and the classification of the charge as a user fee is not compelled clearly and unmistakably by the Keller criteria and other relevant considerations. The reason that MSD does not claim the right to shut off a landowner's access to MSD's stormwater drainage services is that MSD has no ability to do so. Few, if any, properties are connected physically to MSD's stormwater drainage system in the way that customers are connected to MSD's sewer system (or to the electrical grid, water main, or gas supply) such that those services can be turned off and on. In addition, because MSD's service is ensuring the availability of its stormwater drainage system and oversight functions if and when they are needed, MSD can no more "shut off' such "availability" services than it can charge a fee for rendering those services to a particular landowner. 16 The trial court reasoned that Ratepayers were not entitled to refunds because they failed to comply with the refund procedures in section 139.031, RSMo Cum.Supp.2412. Both parties addressed the applicability of section 139.031 to claims for refunds under the Hancock Amendment, but the Court declines to decide this question on the ground that it would be a wholly advisory opinion. In certifying the plaintiff class in this case, the trial court excluded all landowners who paid the stormwater user charge under protest as required by section 139.031. Ratepayers do not challenge that ruling and the definition of the certified class is not before r i Ill li'vl 7.1 1' V-.,,, Zweig v. Metropolitan St. Louis Sewer Dist., 412 S.W.3d 223 (2013) 17 18 this Court. As a result of this definition, therefore, landowners who relied on section 139.031 are not parties to this case and will not be bound by this Court's decision. Similarly, because Ratepayers did not —by definition —rely on section 139.031, anything this Court might say about the effectiveness of doing so could not affect Ratepayers. Accordingly, the issue is entirely speculative and the Court cannot properly address it. It is sufficient for this case to hold that the Hancock Amendment, by itself, does not authorize this Court to compel MSD to pay Ratepayers an amount equal to the charges it imposed without prior voter approval in violation of section 22(a). As demonstrated above, the extraordinary circumstances and limited scope of this Court's decisions in Beatty III, Ring and Hazehvood render the isolated statements that Ratepayers have excised from those decisions inapplicable to the issue now before this Court. More importantly, these decisions pre -date Taylor, 247 S.W.3d at 548, in which this Court affirmed Fort Zumwalt and held that section 23 authorizes only interpretive or declaratory remedies and such remedies are adequate to enforce the provisions of the Hancock Amendment. In light of the breadth of some of the language used in Beatty Ill, Ring, or Hazelwood however, and recognizing the role that this language may have played in fostering unnecessary litigation regarding the scope of available remedies under section 23, these decisions now are overruled to the extent they suggest that section 23, by itself, authorizes courts to award refunds or other money damages. As noted above, the Court does not here address the question of whether a taxpayer may be entitled to such remedies by complying with an express waiver of sovereign immunity that may be found in some other statute, ordinance, or provision of applicable law. To emphasize this point, imagine that a Hancock Amendment issue arises and both the political subdivision and its taxpayers approach the same attorney for representation. Why would the attorney represent the taxpayers when: (a) if the taxpayers lose, the attorney will not be paid anything and may not even recover litigation costs incurred, and (b) if the taxpayers win, the attorney will not be paid any more than she would have been paid for representing the political subdivision without the risk of non-payment if it loses? Ratepayers filed a motion in this Court for an award of attorneys' fees and costs relating to this appeal. Though "appellate courts have the authority to allow and fix the amount of attomey's fees on appeal, we exercise this power with caution, believing in most cases that the trial court is better equipped to hear evidence and argument on this issue and determine the reasonableness of the fee requested." Berry, 397 S.W.3d at 433 (quotation marks omitted). Accordingly, the Court remands this case for the limited purpose of having the trial court hear and determine Ratepayers' motion for appellate fees and costs. End of Document ID 20 t 5 Thomson Reuters. No claim to original U.S. Government Works. .est[n.,Next . &EPA United States Environmental Protection Agency and the EPA Region II I states of Pennsylvania, Maryland, Delaware, Distnat of Columbia, Virginia and West Virgusa Funding Stormwater Programs EPA 833-F 07-012 Exectiii ve Stien"Ar y The construction, operation and maintenance of a municipal separate storm sewer system (MS4) can involve significant expense, especially when regulatory requirements (stormwater Phase I or Phase II), flooding concerns, water quality issues (including total maximum daily loads, orTMDLs) and population growth are factored in. This document is intended to assist local stormwater managers understand the alternatives available to fund their stormwater program. The most stable source of funding is generally the stormwater utility, so this document briefly lists the various funding alternatives then describes in more detail the three different types of stormwater utility rate structures and the basic steps involved in creating a stormwater utility. Siorrntlwater FlAkielikty Aliernoti ves There are many different mechanisms that municipalities can use to fund their stormwater programs. The two most common funding options, Property Taxes/General Fund and Stormwater Service Fees, are discussed below along with several other funding alternatives. Service Fees (including stormwater utilities) Some communities include stormwater management costs as line items within their water or sanitary sewer enterprise system budgets. Water and sanitary sewer utilities charge customers fees for services rendered. Many of these base their customer fees on metered water flow. This is often not equitable because a property's metered water flow usually bears no relationship to the stormwater runoff it generates. For example, a shopping center typically generates a significant amount of stormwater runoff from the impervious area of its buildings and parking lots, but it usually uses a relatively small amount of metered water. Many communities are now adopting stormwater service fees by means of a stormwater utility. A stormwater utility is a sustainable funding mechanism dedicated to recover the costs of stormwater infrastructure regulatory compliance, planning, maintenance, capital improvements, and repair and replacement. Stormwater fees are charged to taxpaying and tax-exempt properties and are typically based on property area. Stormwater utilities address the shortcomings and inequities of funding stormwater management by property taxes or water/sanitary service fees. There are more than 500 stormwater utilities in operation across the country. The average quarterly fee for a single family home is $11, which usually covers regulatory and operation and maintenance costs. Some January 2008 What is a stormwater utility? A stormwater utility (called a stormwater authority in Pennsylvania) is a mechanism to fund the cost of municipal services directly related to the control and treatment of stormwater. A stormwater utility will operate similarly as an electric or water utility.The utility will be administered and funded separately from the revenues in the general fund, ensuring a dedicated revenue source for the expense of stormwater management. communities charge as little as $2 per quarter, while others charge more than $40 per quarter to a single family home. Property Taxes/General Fund Many communities have funded stormwater management from property taxes paid into their general funds. However, there is great competition for municipal general fund dollars from other worthy municipal programs. Stormwater management improvements typically have a low priority, unless the municipality is reacting to a recent major storm or regulatory action. The total cost of stormwater management is not readily apparent when these costs are sprinkled among general fund departmental budgets. As stormwater management costs increase, general fund budgets are often not increased to meet those needs. In addition, tax-exempt properties do not support any of the cost, even though it can be shown that many of them, such as governmental properties, schools, colleges, and universities are major contributors of stormwater runoff, Finally, property taxes are based on assessed property value. The cost of stormwater service to individual properties bears no relationship to the assessed value of the property. Therefore, this method of recovering stormwater management costs might not be equitable. Special Assessment Districts If a stormwater construction project benefits only a portion of a municipality, it can be funded by fees assessed only to those properties within that area, which is called a special assessment district. System Development Charges (SDCs) SDCs (also known as connection fees or tie-in charges) are one- time fees commonly charged to new customers connecting to a water or sanitary sewer system to buy into the infrastructure that has already been built for them, to pay their fair share of the infrastructure expansion necessary to serve them, or a combination of both. The amount of the new customer's SDC is typically calculated on the basis of the potential water demand that the new customer will place on the system. Stormwater SDCs can also be developed. However, the amount of a customer's stormwater SDC is typically tied to the area of the customer's property. EPA 833-F-07-012 Funding Stonnwater Programs Grants and Low -Interest Loans Stormwater management grants might be available for various types of projects on a state -by -state basis. Environmental Tax Shifting Environmental Tax Shifting is a concept that has been proposed by the Friends of the Earth and other environmental groups to redirect tax code incentives in a direction that would support energy conservation and sustain the environment. In 2001 the Environmental League of Massachusetts published a report prepared by the Tellus Institute titled, Environmental Tax Shifting in Massachusetts. This report discussed two creative proposals to change state tax policy to enhance stormwater management. One was a pay to pave tax that would be levied "on newly - paved surfaces on a per -square foot basis." The second was to eliminate the Massachusetts pesticide and fertilizer sales and use tax exemption. This would generate $1.1 million in annual revenue in Massachusetts. The report stated that 28 other states also exempt pesticides and fertilizers from sales and use taxes. Types of 5 orkmovoter Utif ities There are three basic methods that stormwater utilities use to calculate service fees. These are sometimes modified slightly to meet unique billing requirements. Impervious area is the most important factor influencing stormwater runoff and is therefore a major element in each method (source: Establishing a Stormwater Utility in Florida, Florida Association of Stormwater Utilities, Chapter 4, Rate Structure Fundamentals). Equivalent Residential Unit (ERU) (Also known as the Equivalent Service Unit (ESU) method): More than 80 percent of all stormwater utilities use the ERU method. Parcels are billed on the basis of how much impervious area is on the parcel, regardless of the total area of the parcel. This method is based on the impact of a typical single family residential (SFR) home's impervious area footprint. A representative sample of SFR parcels is reviewed to determine the impervious area of a typical SFR parcel. This amount is called one ERU. In most cases, all SFRs up to a defined maximum total area are billed a flat rate for one ERU. In some cases several tiers of SFR flat rates are established on the basis of an analysis of SFR parcels within defined total area groups. Having such a tiered-SFR, flat -rate approach improves the equitability of the bills sent to homeowners. The impervious areas of non-SFR parcels are usually individually measured. Each non-SFR impervious area is divided by the impervious area of the typical SFR parcel to determine the number of ERUs to be billed to the parcel. Advantages The relationship (or nexus) between impervious area and stormwater impact is relatively easy to explain to the public on the basis of you pave, you pay. The number of billable ERUs can be determined by limiting the parcel area review to Category (impervious percentage range) Vacant/Undeveloped (0%) - Lj ht development (1 % to 20%) Moderate development (21 % to 40%) Heavy development (41 % to 70%) Very heavy development (71 % to 100%) impervious area only. Because pervious area analysis is not required, this approach requires the least amount of time to determine the total number of billing units. Disadvantages Because the potential impact of stormwater runoff from the pervious area of a parcel is not reviewed, this method is sometimes considered to be less equitable than the Intensity of Development (ID) or Equivalent Hydraulic Area (EHA) methods because runoff -related expenses are recovered from a smaller area base. This method could still be used to charge a fee to all parcels, pervious as well as impervious, to cover expenses not related to area, such as administration and regulatory compliance. intensity of Development (ID): This stormwater cost allocation system is based on the percentage of impervious area relative to an entire parcel's size. All parcels (including vacant/undeveloped) are charged a fee on the basis of their intensity of development, which is defined as the percentage of impervious area of the parcel. Rates are calculated for several ID categories. These ID categories are billed at a sliding scale, as shown in the table below. For example, an SFR parcel, which is categorized as moderate development, would pay $0.16/month/1,000 ft2 (or $1.60 for a 10,000 ft2 lot). 7 Rate per month per 1,000 square feet of total served area (Impervious plus pervious) $0.08 $0.12 $0.16 $0.24 $0.32 Advantages The ID method accounts for stormwater from the pervious portion of parcels. Therefore, it can be more equitable than the ERU method, It accounts for completely pervious parcels and therefore can allow vacant/undeveloped parcels to be billed. If a parcel's impervious area is increased slightly because of minor construction modification, it probably would not be bounced up into the next higher ID category. This reduces the time required for staff to maintain the billable unit master file. Disadvantages Parcels are grouped into broad ID categories. Parcels are not billed in direct proportion to their relative stormwater discharges. This method can be more difficult to implement than the ERU method because parcel pervious areas and impervious areas need to be reviewed. It is also more complicated to explain to customers than the ERU method. EPA 833-F.07-012 Funding Stormwater Programs Equivalent Hydraulic Area (EHA): iarceis are blued on the basis of the combined impact of their impervious and pervious areas in generating stormwater runoff. The impervious area is charged at a much higher rate than the pervious area. Advantages The EHA method accounts for flow from the pervious portion of parcels. Therefore, it is often seen to be more equitable than the ERU method. It accounts for undeveloped/ vacant parcels and allows them to be billed. It is perceived to be fairer than the ID method because parcels are billed on the basis of direct measurements of pervious and impervious areas to which hydraulic response factors are applied to determine a unique EHA for such parcels. Disadvantages Because pervious area analysis is required in addition to impervious area, this approach requires more time to determine the total number of billing units. It is also more complicated to explain to customers than the ERU method. Crea-tioh of A S-tork►+wAier Uir'lity The following are the typical steps involved in creating a stormwater utility. Development of a Feasibility Study The first step is to develop a study that provides the community with enough information to decide if it makes sense to proceed to implementation. The feasibility study will typically address preliminary revenue requirements (usually from current stormwater budgets), a preliminary assessment of the billing area to determine the SFR billing rate, the service fee method to use and credits to provide, the preliminary rate charge for each ERU, and the responsible party for billing. The feasibility study is then presented to municipal staff and officials to decide whether to proceed with development of the utility. Create a Billing System If the municipality decides after the feasibility study to continue development of a stormwater utility, a billing system is then created. This involves collecting user data, collecting parcel area data (such as ownership and impervious area for each parcel), and developing a system to bill users. The two most common stormwater billing systems are (1) a stormwater user fee with an existing water/sewer user fee bill and (2) non -ad valorem assessments. Approximately 80 percent of stormwater utilities use the first approach mainly because it is cost-effective due to the fact that an existing water and sewer billing system is already in place. Roll Out a Public Information Program Critical throughout the stormwater utility development process is a strong public education program. Many people are unaware of the increasing cost of stormwater management and the options to fund it. A well -funded stormwater program can help reduce flooding, improve drought conditions, create better fishing and recreation, and improve water quality. An organized public information and education effort, which typically involves the following components, is essential to the success of a stormwater utility: • Identifying key users and groups. Two potential groups to target include (1) universities schools, and shopping malls that generate a significant amount of runoff and often receive high stormwater bills; and (2) tax-exempt properties, such as universities, schools and churches, that do not contribute property taxes into the general fund, which traditionally have funded stormwater management. • Establishing an advisory committee. Include a cross-section of the community including representation from the university, business, nonprofits, churches, developers and shopping center owners. • Creating a stormwater utility Web site. The Web site should post appropriate progress documents and develop a frequently asked questions page. • Preparing pamphlets and presentations. A brochure describing the need for the stormwater utility, rate method, and projected rates should be prepared as well as an electronic presentation for use at public meetings. • Meeting with key user groups and the media. Presentations to civic groups and the media should be given. One-on-one meetings with customers projected to receive the highest bills should occur. • Distributing information before initial billing. The stormwater utility brochure should be sent to all customers before billing. If possible, include the customer's actual projected bill. Adopt an Ordinance An ordinance will provide legal authority for establishment of the utility. An example stormwater utility ordinance from Takoma Park, Maryland, is at www.takomaparkmd.gov/code/Takoma_ Park_Municipal_Code/index.htm (see Title 16 Stormwater Management, Chapter 16.08 Stormwater Management Fee System). Provide Credits/Exemptions Credits or exemptions are often built into the ordinance, and can be used to provide incentives for certain practices or relief from utility fees to certain types of land uses. Credits should be clearly described and can include installation of approved retention/ detention best management practices (BMPs), installation of approved BMPs such as rainspout disconnections or porous pavers, and educational programs for employees. Exemptions are often granted for undeveloped (100 percent pervious) 3 EPA 833-F-07-012 Funding Stonnwater Programs land because the impervious area is usually used to calculate the rate. Other exemptions can include roads (because the municipality typically owns the roads) and parcels on waterways (which do not discharge to the municipality's storm drain system), although not all programs allow these last two exemptions. Implementation The first bill is the most important —many customers do not focus on the new stormwater fee until they actually receive their first bill. Customers should be notified several months in advance of the date of billing initiation and their estimated fee. A telephone hot line, e-mail service and website should be created to address questions and concerns. In addition, the municipality should be prepared to address legal challenges to its stormwater fee. The municipality should also be prepared to maintain the master account file, including developing a process for updating the billing unit data for an existing customer and for entering the data for a new customer. farriers to Creai,r,9 a S-torr',wa.ter U-1tr ii y There are typically two barriers to creating a stormwater utility: legal and political. Legal Barriers In EPA Region 3, all states have legal authority to establish stormwater utilities (Pennsylvania has a bill to clarify its legal authority). A summary of the current or proposed legal authority within EPA Region 3 states is presented below (cities within that state with stormwater utilities are indicated in parenthesis): • Delaware (Wilmington): Chapter 40, Title 7 of the Delaware Code authorized the creation of stormwater utility districts. • Maryland (Montgomery County, Takoma Park): Section 4-204(d), Environmental Article, of the Annotated Code of Maryland, authorizes municipalities to create stormwater utilities. • Pennsylvania (Philadelphia —bills water customers for stormwater management according to water meter size): Pennsylvania HB88—The Comprehensive Watershed Stormwater Act is expected to be introduced in the fall of 2007. It requires counties to develop Comprehensive Watershed Stormwater Plans; requires municipalities to implement infrastructure improvements and recover costs from counties; authorizes counties to charge annual fees and assessments to pay for the program. • Virginia (Chesapeake, Hampton, James City, Newport News, Norfolk, Portsmouth, Prince William County, Richmond, Suffolk, Virginia Beach): Section 15.1-2114 of the Virginia Code is the enabling legislation that gives local communities the authority to establish stormwater utilities. • West Virginia (Fairmont, Beckley, Morgantown): The West Virginia Legislature amended sections 8-20-1 et seq. and 16-13-1 et seq. of the West Virginia Code in 2001 so as to authorize municipalities to include the operation and management of stormwater systems as part of a municipal combined waterworks and sewerage system. • District of Columbia (D.C.: Flat monthly fee for residences; others are billed on the basis of metered water flow): The District of Columbia Storm Water Permit Compliance Enterprise fund was established in 2000 by the D.C. City Council. The legislation was titled, Storm Water Permit Compliance Amendment Act of 2000. Political Barriers It usually takes at least one champion to help create a stormwater utility, especially in the face of local political opposition. A public information program that visually presents the inadequacies of the community's current stormwater management program, coupled with the benefits that have occurred at communities with stormwater utilities would help garner public support to offset opposition to the fee. A senior manager (city manager or county administrator, for example), or a senior elected official, such as the mayor, usually provides that steadfast leadership. It is important to explain the benefit of implementing a stormwater utility to opinion makers. Opposition from local news outlets has sometimes been able to stop the implementation of stormwater utilities (often by using inaccurate terms such as a rain tax). Educational materials and public meetings are necessary to show the financial benefit of stormwater utilities. When the public is clearly informed of the financial benefit to them —along with the many environmental benefits such as improved flood control, fishing, and recreation — support usually follows. EPA 7 e9ioi' 3 Stor`►,wa'ter Feihdih9 Case Sii+dies Wilmington, Delaware Wilmington has a combined sewer system and used o three - step approach to establish a stormwater utility to recover costs related to stormwater management on a fair and equitable basis. 1. Determine stormwater revenue requirements: The city maintained a single water/sewer enterprise fund. The city's combined sewer costs were allocated to three buckets: a wholesale sewer customer, city retail sewer customers, and city stormwater customers. The annual stormwater cost came to approximately $4.2 million —equal to approximately 43 percent of the city's total combined sewer costs. 2. Determine stormwater billing units: City staff reviewed several stormwater billing approaches and selected the ESU method, which would bill parcels solely on the basis of their impervious area. The city had accurate impervious area data for all SFR and multi family residential (MFR) parcels. This SFR/MFR category comprised 75 percent of all parcels. The median impervious area of all SFR/MFR parcels was approximately 789 square feet, which was defined as one ESU. The SFR/ MFR parcels were divided into four tiers to be billed at four EPA 833-F-07.012 Funding Stormwater Programs separate flat rates. Condominium complex impervious areas were calculated using geographic information system (GIS) data. The remaining properties' impervious areas were estimated by applying predefined stormwater coefficients to the total property area. The impervious areas of these properties were converted to ESUs. All parcels were to be billed except for city -owned parcels. The estimated total number of billable ESUs was 155,363. 3. Calculate stormwater fees: The annual stormwater cost was increased to include bad debt and stormwater credits, resulting in adjusted annual stormwater revenue of approximately $5.1 million. The quarterly stormwater fee, effective January 2007, was calculated to be $8.141 per quarter per ESU. A four -tier rate schedule, with a fixed fee for each impervious area tier, was established for all SFR/ MFR parcels. For all other parcels, the quarterly stormwater charges were based on their individual ESUs. Therefore, a parcel with 7,890 square feet of impervious area would be billed for 10 ESUs, or $81.41 per quarter. Takoma Park, Maryland (www.takomaparkmd.gov/publicworks/stormwater.html) Takoma Park established a stormwater utility in July 1996. It is responsible for constructing and maintaining the stormwater system, reviewing stormwater management plans, inspection and enforcement activities, watershed planning, and water quality monitoring. User fees are based on the amount of impervious area on a property. The annual fee for single family residences is $48.00 and became effective on July 1, 2003. Nonresidential and multifamily parcels are charged a fee on the basis of their measured impervious area as compared to the impervious area of an average SFR parcel (i.e., the ERU method). 0ne ERU is equal to an impervious area of 1,228 square feet. Tax-exempt parcels also pay the fee with the exception of property used for public purposes and owned by the state, county, or city agency or volunteer fire department. Suffolk, Virginia (www.suffolk.va.us/pub_wks/index.html) In 2004 Suffolk spent approximately $1.5 million from its taxpayer -supported general fund on stormwater management. In 2006 it implemented a stormwater utility, using the ERU method, at an initial rate of $3.95 per month per ERU. In Suffolk, one ERU is equal to 3,200 square feet of impervious area and is the weighted average for both SFR and MFR parcels. The rate increased to $5.20 per month effective July 2007. The fee is collected via property tax bills due in June and December. Schools, state, and federal developed parcels pay the fee. They are exempt only if they have a separate stormwater permit and discharge directly to a body of water not maintained by the city. Additiohal Pecompeer National Association of Flood and Stormwater Management Agencies. Guidance for Municipal Stormwater Funding. www.nafsma.org/Guldance%20Manual%20Version%202X.pdf University of Maryland, Environmental Finance Center. www.efc.umd.edu Indiana University -Purdue University Indianapolis. An Internet Guide to Financing Stormwater Management. http://stormwaterfinance.urbancenter.lupuLedu Natural Resources Defense Council. Stormwater Strategies: Community Responses to Runoff Pollution. Chapter 4: Funding and Gaining Support for Stormwater Programs. www.nrdc.org/water/pollutIon/storm/chap4.asp Florida Stormwater Association, Establishing a Stormwater Utility in Florida. www.florida-stormwater.org/manual.html Kaspersen, J. 2000. The Stormwater Utility, Will It Work in Your Community? Stormwater 1(1). www.forestermet/sw_0011_utility.html U.S. Environmental Protection Agency, Watershed Academy. Catalog of Federal Funding Sources for Watershed Protection. http://cfpub.epa.gov/fedfund GOh't��S • U.S. EPA —Paula Estorneil estornell. pa u la@epa.gov • Pennsylvania —Barry Newman banewman@state.pa.us NOTE: This document is not law or regulation; it provides recommendations and explanations that MS4s may consider in determining how to comply with requirements of the CWA and NPDES permit requirements, 5. ��2 Financial Capability and Affordability Jon P. Davis and Manuel P. Teodoro Like many utilities, the City of Richmond has our own set of challenges in providing safe and dean water to our customers at a price they find affordable. Here, at Richmond's Department of Public Utilities, our multi -pronged approach to affordability includes programs and events to aid the most vulnerable in our society, incentiviZe conservation measures, and maintain the .inane strength of our utility systems. Robert C. Steidel Director City of Richmond Department of Public Utilities 22.1 INTRODUCTION but also Water and wastewater utilities attempt to provide sults discussedonly n Chapter20, the cost le, affordable. Unfortunately, as demonstrated by the survey re of providing safe and reliable water and wastewater service continues to rise faster than generallycy accepted inflation gauges, such as the consumer price index. In the coming years,utilities and an expect to face continued upward pressure from aging infrastructure, population growth, ever-expanding body of regulatory requirements. These factors alone will make it difficult to main- tain the financial capability to operate an effective utility, while maintaininn are g g affordability of water and wastewater services to customers. dts lnet concepts of uthough the two tility finance; this inappropriatelyconflated, defines financial capability and affordability each of them, discusses how they are integral to providing sustainable service, lays out methods of assessing financial capability and affordability, and offers illustrations of utilities' measures to address affordability. 22.1.1 BASIC DEFINITION: FINANCIAL CAPABILITY erations costs Financial capability is the ability of wand wastewtility to ater sey for rveces.ttal FinancialcapabUlity looks at coassociated with providing safe and reliable water from a utility -wide perspective. 22.1.2 BAslc DEFINITION: AFFORDABILITY wastewater servicesithat are Affordability is the ability of individual customers to pay for water and far other essential costs. adequate to meet their basic needs, while maintaining the ability topay Affordability is a customer -level phenomenon that must be evaluated at the customer level. 22.1.3 WHY FINANCIAL CAPABILITY Financial capability and affordability reasons. At the utility level, financial structure expansion and replacements. AND AFFORDABILITY MATTER are important to water and wastewater utilities for several capability determines a utility's access to capital for infra - Financial capability also ensures that a utility can pay for its 443 444 Water and Wastewater Finance and Pricing. operating costs and help guard against unanticipated emergency costs. Finally, financial capability can play a role in arrangements for compliance with various regulatory requirements. At the customer level, affordability is central to a utility's public health mission. Customers — especially low-income customers —must be able to pay for these services without sacrificing other essential needs if a community is to maintain the full benefits of water and wastewater services. If customers are faced with utility bills that they find burdensome, the result may be excessive account delinquencies, customer complaints, and utility theft. If a significant percentage of customers begin to perceive their utility bills as burdensome, actual revenues collected are likely to fall short of projected revenues. When combined with the higher costs of managing disgruntled and delinquent customers, this revenue shortfall poses a distinct problem for financial managers. More broadly, water and wastewater affordability can also play a role in a community's economic development and quality of life. Finally, affordability may be a legal or regulatory consideration in rate design (see, e.g., Tbxas Water Code Chapter 13, Title II Section 13.183). 22.2 FINANCIAL CAPABILITY Developing metrics for, and measuring financial capability can be a challenging exercise, but the benefits can be substantial. These efforts can yield tangible returns in terms of cost management and revenue stability. 22.2.1 EPA AFFORDABILITY CRITERIA —A MEASURE OF FINANCIAL CAPABILITY In 1997, the EPA published "Combined Sewer Overflows —Guidance for Financial Capability Assessment and Schedule Development." The goal of the guidance document was to recognize the importance of both environmental and financial issues when developing and implementing Combined Sewer Overflow Long -Term Control Plans (CSO LTCP). The guidance document sought to provide a planning tool to evaluate the financial resources a community had to fund a CSO LTCP, then, use that evaluation to develop a reasonable schedule for plan implementation. Although this guidance document was created to address the narrow issue of financing for CSO programs, it has more broadly, become the basis for industry financial capability measurement across water and wastewater utilities. 22.2.2 FINANCIAL CAPABILITY INDICATORS There are two indicators proposed in the EPA guidance document that have become central in evaluating water and/or wastewater system financial capability. The first indicator focuses on the financial strength and economic well-being of the community as a whole. The second indicator focuses on the water and wastewater rate burden for the residential customer class and is meant to be a representative measure of the utility cost per household. Each type of financial indicator is discussed in more detail below. 22.2.2.1 Community Financial Strength Community strength indicators provide a means of gauging financial capability; they measure the total financial resources that a community has, which might be used to support its water and waste- water utilities. Utilities located in financially strong or affluent communities usually benefit from expanding customer bases and business development programs that strengthen a utility's ability to meet capital and operations costs. As presented in Exhibit 22.1, the following financial indicators are recommended for use in evaluating community financial strength. Much of the economic and employment data needed for these indicators are available through the www.fedstats.gov website, which is maintained by the federal government. Financial Capability and Affordability Bond rating Net debt/property market Unemployment rate Median household income) adjusted national MHI Property tax revenues/ total property market value AAA -A (S and P) or BBB (S and P) or B$ D ((Moody's) da ` r Aaa-A (Moody's) Bea (Moody's) y' ) <2% >1% below the national average >25% above the adjusted national MHI <2% 2%-5% 1% of the national average 25% of the adjusted national MHI 2%-4% Property tax collection rates >98% 9496-9896 >5% >196 above the national average >25% below the adjusted national MHI >496 <9496 445 EXHIBIT 22.1 EPA community financial strength indicators. Bond Rating. Moody's, Standard and Poor's, and Fitch bond ratings provide univer- sally recognized benchmarks of municipal financial strength and stability. Utilities and municipalities with substandard bond ratings are likely to have Less financial flexibility. However, bond ratings are partly determined by bond issuers' financial policies, which are in turn driven by management and political variables. Thus, bond ratings are not truly independent measures of financial capability. If a particular bond rating is listed as "insured;' it should likely be disregarded as a measurement of underlying community financial health. Community Median Household Income (MHI) as a Percentage of National Average MHL This ratio provides a comparison of local household earning power to average households nationwide. Ratios below 1.0 reflect communities with relatively less financial capability; ratios over lA indicate relatively greater financial capability. Mill data for many commu- nities may be obtained from the U.S. Census Bureau. Unemployment Rate. When _calculated as a percentage of the national average unemploy- ment rate, this number provides an indication of whether an above -average portion of the population is likely to be financially distressed due to joblessness. The U.S. Labor Department's Bureau of Labor Statistics provides unemployment data at the national, regional, and metropolitan levels. Property Tax Collection Rate. This percentage is an indicator of the community's general financial health. Cities with above -average delinquency rates are the most likely to be financially distressed. Collection rate data may be extracted from state property tax statis- tical reports published by the state revenue department. Net Debt as a Percentage of Property Market Value. This ratio measures debt paid from property tax revenues as a percentage of the total market value of all taxed properties. The resulting ratio provides an indication of the community's ability to generate increased Property tax revenues in the future. "Net debt" values may typically be obtained from year-end financial statements. Total property market value is often available from prop- erty tax statistical reports published by the state revenue department. • Property Tax Revenues as a Percentage of Total Property Market Value. This ratio pro- vides another indication of the community's ability to generate increased future property 446 Water and Wastewater Finance and Pricing tax revenues. For many communities, property tax revenue data and total property market value may be extracted from the state property tax statistical report published'by the state revenue department. Poverty Rates within the Service Area. The percentage of the population living at or below poverty -level income is an important indicator of a community's financial strength. Poverty rates should be viewed in terms of both absolute numbers and in relation to pov- erty areas regionally and nationwide. Bear in mind, however, that poverty level income is defined using national standards that may deviate significantly from local conditions. A combination of these indicators can contribute to an overall assessment of a utility service area's economic situation. Some of the desired information may be unavailable, and some data may be outdated or otherwise limited in its usefulness. Nevertheless, a well-rounded interpretation of community financial health requires blending different types of financial measurements. Examples of benchmarks for evaluating different indicators are shown in Exhibit 22.1. 22.2.2.2 Customer Burden Indicator The customer burden indicator measures the financial impact of current and proposed utility system costs on residential users. Costs are expressed on a cost per household (CPH) basis. CPH is then related to MHI, a measure available at the local area either by city or county to approximate the ser- vice area of a utility. It should be noted that the customer burden indicator was originally developed to assess the impacts of wastewater costs, including CSO compliance, on a utility's customer base. However, it has been expanded to relate to all utility services by adding water and stormwater, in addition to wastewater. Utilities may determine CPH in a number of ways. EPA guidance recommends using the rev- enue requirements of the utility which include all annual cash needs associated with both operating and capital expenditures. Revenue requirements are discussed in detail in Chapter 8. Those rev- enue requirements are allocated to the residential customer class on a flow -proportional basis. For instance, if the residential class represents 75% of the total utility flow, they would be allocated 75% of the revenue requirement. The CPH is determined by dividing the residential cost share by the number of households in the utility service area. As an alternative, a utility may simply approximate CPH by calculating a water, wastewater, and stormwater bill for an average residential customer. The customer burden indicator is intended to assess impacts into the future. It is appropriate for the utility to project CPH over a reasonable financial planning horizon. This may be accomplished by incorporating inflationary cost increases as well as planned capital projects into revenue require- ments forecasts. Finally, CPH is expressed as a percentage of MHI for the utility service area. A customer burden indicator example is shown in Exhibit 22.2. Financial strength and customer burden may be combined into a two dimensional representation of a utility's financial capability. Exhibit 22.3 shows how this would look. Strong values on the community financial strength and low burden (cost) on the customer burden indicator scales represent a sound financial capability. Regulators would interpret this as capacity within the utility to increase compliance costs without overly burdening rate payers. Opposite val- ues on both scales, in turn, represent a high financial burden community that is less able to absorb utility cost increases. Wastewater cost per household as a % of MHI EXHIBIT 22.2 EPA residential financial burden indicators. me Financial Capability and Affordability 447 R SEroritri : Si Wastewater cost per household as a % of MHI Medium burden Low burden Low burden EX?, WI 22.3 Financial capability matrix. hliclMilky High burden Medium burden Medium burden High burden High burden Medium burden 22.2.3 WHY FINANCIAL CAPABILITY ASSESSMENT IS IMPORTANT A thorough understanding of financial capability is important to all utilities for a variety of reasons including ' Financial capability ceiling • Integrated capital planning 4 Negotiations with EPA m Financial planning • Grant and local applications 22.2.3.1 Financial Capability Ceiling Just as an individual or family makes decisions about the allocation of financial resources, a utility's leaders and policymakers must decide how much of their community's resources may be devoted to water and wastewater utilities. Measures of community financial strength and the customer burden indicator allow a utility's leaders to establish a financial capability ceiling: a point that represents the maximum share of financial resources to be allocated to water and wastewater utilities. Utilities approaching the ceiling must consider changing the way they operate, how they, finance infrastructure, how they structure their rates, and how they recover costs in order to avoid impacting their ability to provide service in a sustainable manner. This financial capability ceiling is illustrated in Exhibit 22.4. EPA guidance discussed above was one attempt to determine a financial capability ceiling. However, even the EPA acknowledges that this is only one of many national and local metrics that should be considered in assessing the financial burden on our utilities. Each utility must develop its own understanding of its financial capability through the use of benchmarking and available metrics. 22.2,3.2 Integated Capital Planning EPA financial capability criteria discussed above were first proposed for wastewater systems. The criteria were intended to assess the additional burden caused by Clean Water Act consent decree compliance. Since their development in 1997, the concept of an integrated utility has evolved. We can no longer look at wastewater as separate from drinking water or even stormwater. Today's integrated utilities often embody the responsibilities of all three services and must balance regu- latory requirements with system expansion and sustainable infrastructure management. A utility can no longer apply financial capability solely to its wastewater system. Instead, it must be used in the context of an integrated planning framework that encompasses all utility systems By this new definition, regulatory compliance is just one of many criteria that must be effectively balanced with 448 Water and Wastewater Finance and Pricing 2010 2012 2014 2016 2018 20201 Average residential customer bill (annual) EXHIBIT 22.4 Water and wastewater bills approaching affordability ceiling (measured as a percentage of MHI). the integrated utility. Under an integrated planning framework, compliance joins infrastructure reinvestment, system expansion, and efficiency as factors used to optimize capital project planning. The integrated utility must understand its own financial capability in order to undertake inte- grated planning. Financial capability sets limits for long-term annual capital spending. Without a thorough understanding of its financial capability ceiling, a utility may overburden its customer base by raising rates too high or too fast. Developing this financial capability ceiling is a key con- straint for capital prioritization in the integrated planning framework. 22.2.3.3 Negot'aition with EPA From its beginning, financial capability has been a tool in consent decree negotiation with EPA. The financial capability ceiling discussed above constrains how utilities are able to spend on capital projects. Consent decree projects compete for prioritization in an integrated planning framework. Since the financial capability ceiling limits capital spending, lower priority projects are pushed back in the schedule. Eventually, lower priority consent decree projects are completed, but not at the expense of high priority projects that are driven by system reinvestment or efficiency. Utilities that understand their financial capability and appropriate prioritization of their capital projects are in the beat position to negotiate a consent decree timeline with their regulators. 22.2.3.4 Financial Planning Financial capability is also a key consideration in long-term financial planning. Since utilities approaching their ceiling may have impaired financial capability, they must be very careful with their expense control. Primarily, these utilities must limit debt funding for their capital programs and limit overall revenue requirement increases. A utility approaching its financial capability ceil- ing must severely curtail its debt issuance. Borrowing to fund capital projects requires a utility to repay the original principal phis interest on the loan plus debt service coverage that can run between 5% and 40%. The financially impaired utility may be forced by financial markets to transition from bond funding to cash -funded capital, issuing debt only when old debt issues are retired, therefore placing additional burden on rates in the short-term. In addition to limiting debt, impaired utilities will also have to limit other operating cost increases. Since the ability to raise rate revenue will be constrained by the financial capability ceiling, utilities must control costs or rely on outside funding sources. Financial planning will be critical for the impaired utility so that it may meet its obligations Financial Capability and Affordability 449 of providing high quality service and maintaining their systems in a sustainable manner without being crushed against a financial capability ceiling. 22.2.3.5 Grant and Loan Applications While integrated planning and extending consent decree timelines help control overall utility costs, understanding financial capability may help high -burden utilities secure additional fund- ing from grants and subsidized loans. Many grant and loan programs give a preference for finan- cially impaired applicants. Examples include U.S. Department of Agriculture Rural Utility Service Grants and Loans as well as Community Development Block Grants from U.S. Housing and Urban Development. Many state revolving loan programs also give a preference to financially impaired communities. A utility that understands its financial capability status and is able to articulate, empir- ically, the degree of its financial impairment, has a distinct advantage in the competitive application process. 22.2.3.6 Assessing Financial Capability: A Case Study from Baltimore, Maryland In 1997, the EPA developed a two -phased approach to assess the financial capability of munici- palities and serve as guidance in determining appropriate implementation schedules for the capital improvements required to address consent decree issues. The EPA guidelines are used to determine a municipality's "financial capability indicator" and "residential indicator." The financial capabil- ity indicator measures a service area's ability to finance the necessary improvements by measuring property tax collection rate, unemployment levels, bond ratings, overall debt, and other regional metrics. The residential indicator is calculated by determining a household's share of: (1) the cur- rent utility expenditures and (2) the total present value of costs related to compliance (capital and operating) as a percentage of service are MHI. The financial capability indicator is a composite score based on six metrics used to evalu- ate the ability of a municipality to take on the expenses related to compliance. Since it uses a broad range of criteria, it is an appropriate estimate for a utility's ability. The EPA's guidelines for determining the residential indicator are flawed. Calculating a household's share of total system costs must include the future costs related to noncompliance capital investment as every utility must make these investments to maintain a reliable and secure system. Baltimore is uti- lizing the integrated planning framework to prioritize its overall capital needs and provide its customers with the most benefit per dollar invested. MHI has been used as a central component of EPA financial capability measures since the 1997 report; however the MHI standard is met with objections from utilities and industry associations alike. The National Association of Clean Water Agencies (NACWA) recently published a white paper declaring "the federal government's use of an area -wide MHI cannot accurately assess the impacts on this sensitive community population" and "use of a median value by definition mutes consideration of important diversi- ties across a permittee." As reflected in Exhibit 22.5, the city had an MHI of $39,386 according to the 2010 U.S. Census. Looking beyond just the city-wide MHI provides insight into how potential water and sewer costs will impact the full spectrum of utility customers, including seniors and low-income households. Approximately 26.2% of the city's population lives below the federal poverty line. Within that group, 12.3% of the city's population lives below half of the federal poverty line. Exhibit 22.5 shows the income distribution of city residents as a whole. It is clear that while the city-wide MHI may be low at a $39,386, a large percentage of customers have significantly lower income levels. Baltimore also developed a utility financial plan to detail expenditures required to meet capital and operating costs over a long-term planning horizon. Capital cost requirements, in particular, were compiled to address regulatory requirements, system reinvestment, and system reliability con- cerns. Based on the projections in the financial plan and average residential consumption, the city was likely to experience financial capability crisis. 450 Water and Wastewater Finance and Pricing Below 50% of poverty line 76,082, 12% Above MHI 310,481, 50% Below poverty line 83,243, 14% Above poverty line, below MHI 151,156, 2496 EXHIBIT 22.5 City of Baltimore income distribution. Annual water and sewer costs would represent 4.0% of city-wide MHI by FY 2026. Annual water and sewer costs would exceed the customer burden indicator (defined as exceed- ing 4% of household income threshold) in FY 2016 for 39% of all households (annual income of approximately $30,000). Annual water and sewer costs would exceed the customer burden indicator (defined as exceed- ing 4% of MHI threshold) for 53% of the city's census tracts by FY 2023 (representing approximately 47.7% of the city's population). For the 26% of the city's population (165,000 people) that live below the federal poverty line, the annual water and sewer costs represent 3.8% of income in FY 2013. Customers will spend approximately 9.5% of their annual income on water and sewer by FY 2030. The annual water and sewer costs already exceed the customer burden indicator for the 77,000 people currently living below 50% of the federal poverty line, and account for nearly 8% of their income. 27% of all families will be spending 4.4% of annual income on water and sewer costs in FY 2016. These concerns are captured in Exhibit 22.6. In an effort to help communicate financial capability issues, Baltimore analyzed financial capa- bility at a census tract level, calculating the customer burden indicator for the median household in each census tract. Exhibit 22.7 shows the geographic distribution of the customer burden indicator across the city. Armed with this comprehensive analysis, Baltimore has been much more effective communicat- ing its financial capability concerns to elected officials and regulators. 22.3 AFFORDABILITY Careful, rigorous measurement of affordability is important for many reasons. First and foremost, reliable affordability metrics help utility managers and policymakers understand the financial effects of their decisions on customers. Valid affordability measurement allows affordability to be considered alongside other criteria when evaluating capital, operating, and rate design deci- sions. Second, measuring affordability carefully demonstrates to customers, elected officials, and regulators that a utility's leaders are sensitive to affordability concerns. Public protests against rate Financial Capability and Affordability 451 10096 90% 8096 7096 60% 5096 4096 3096 20% 1096 0% r FY 2013 I I II I .dillF111 FY, FY F's FY FY FY FY FY FY FY FY FY FY FY FY FY FY 2014 2015 2('!'i 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Affordable census tracts Not affordable census tracts EXHIBIT 22.6 City of Baltimore water and sewer annual bills (21 ccf quarterly consumption). 2013 Census tract Affordable Unaffordable EXHIBIT 22.7 City of Baltimore affordability by census tract. increases in some major water and wastewater utilities have erupted in recent years, undermining confidence in utility leadership and complicating the rate -setting process. Good measurement of affordability can help leaders prevent such clashes and set a constructive tone in discourse over rate design. Finally, valid measurement of affordability helps utility leaders design appropriate and effective measures to address affordability challenges. Although affordability is a consideration for all customers, this chapter focuses on affordability for residential water and wastewater customers, except as otherwise noted. 22.3.1 DEFINING AFFORDABILITY As noted earlier in this chapter, affordability is related to, but different from, financial capability. The key difference is that affordability is a customer -level phenomenon, while financial capability 452 Water and Wastewater Finance and Pricing is a utility -level phenomenon. Defined simply, water and wastewater affordability is the degree to which basic water and wastewater costs require households to forego discretionary expenditures. Affordability for low-income residential customers is of particular concern because low-income customers are most likely to face the most serious financial tradeoffsdue to the cost of basic water and wastewater services. 22.3.1.1 Household Relative Affordability Affordability as defined here is similar to what EPA's National Drinking Water Advisory Council (2003) calls "household relative affordability." Defining affordability in terms of individual custom- ers' overall financial resources, and the critical demands on those resources, recognizes that water and wastewater services are just two of the many goods and services that households buy. From an economic standpoint, this definition of affordability captures the real tradeoffs that households must make when paying for water and wastewater services. 22.3.1.2 Determinants of Affordability Several variables influence affordability for a given customer: • Customer financial resources: A customer's financial resources (typically measured as household income) determine his or her ability to pay for any goods or service. • Essential water and wastewater service: The amount of water and wastewater services that is considered essential for basic human health needs (typically measured as some volume per person per day) partly determines the cost of basic utility services. The amount of water and wastewater service necessary for essential needs will vary across customers, depending most significantly on the number of people in the customer's household. • Water and wastewater rates: Water and wastewater service rates determine how much customers must pay for service. To the extent that rates are volumetric, the cost of basic water and wastewater services is a joint function of rates and the volume deemed necessary for essential needs. • Other essential costs: A customer's disposable income also depends upon the costs of other essential or unavoidable costs. These other costs typically include housing, food, health care, clothing, energy, and taxes. These costs can vary in absolute terms over time, across utilities, and across customers. Taken together, these variables define affordability for a given customer. Section 21.3.3 lays out an analytical method for measuring affordability empirically and quantitatively. 22.3.2 CRITIQUE OF COMMON MEASURES The most frequently used existing approaches to measuring affordability are inadequate for several reasons. 22.3.2.1 Complaints Probably the most common way that water and wastewater utilities assess affordability (albeit infor- mally) is through complaints by customers in response to bills or anticipated rate adjustments. Although customer complaints are usually qualitative and anecdotal, they can strongly influence policymakers' perceptions of affordability and so affect decisions about rate design and nonrate affordability programs. Sensitivity to direct complaints can be a useful way to assess affordability in absence of bet- ter information. However, using customer complaints as the sole means to gauge affordability can lead to inaccurate perceptions and even contravene the goal of affordability for low-income customers. Customer complaints emerge nonrandomly, and so can present a skewed affordability Financial Capability and Affordability 453 picture with respect to the entire customer base. Moreover, complaints about bills do not neces- sarily come from the low-income customers who face the most serious tradeoffs due to water and wastewater service costs. Bill complaints from relatively affluent customers may have higher costs in absolute terms, but face much less serious economic tradeoffs because their water and wastewater costs make up a smaller share of their available incomes. Research suggests that lower -income individuals participate in public decision -making processes far less than higher - income individuals,' and so customer complaints about bills are likely to be biased in favor of higher -income customers. 22.3.2.2 Delinquencies and Disconnections Unusually high numbers or a rise in the number of delinquent trills and subsequent disconnec- tions are sometimes considered signs of unaffordable rates. In aggregate —that is, across multiple utilities --it might be valid to infer affordability problems from high delinquencies and disconnec- tions. Additionally, steadily increasing or decreasing numbers of delinquencies and disconnections over time can provide indicators of affordability. However, delinquent accounts and disconnections vary for many reasons, some of which may reflect affordability, but some of which do not. For example, delinquencies can occur due to tim- ing or administrative procedures. Some general purpose municipal government utilities use water service disconnections as enforcement mechanisms for payment of other services. More seriously, delinquencies and disconnections do not necessarily capture the real economic trade-offs that households face when paying water and wastewater bills. For example, delinquency and discon- nection figures do not reflect decisions of low-income customers to pay utility bills while foregoing other essential costs (e.g., health care). 22.3.2.3 Average Bill as Percentage of Median Household Income When setting out to measure affordability formally, the most common approach is to use the cus- tomer burden indicator discussed in Section 22.2: the average residential water and wastewater bill for a given utility as a percentage of the community's MHI. Usually this percentage is calculated for an entire utility, but sometimes it is calculated for a subset of customers, such as a neighborhood or a census tract, as in Exhibit 22.7. 'Typically, this percentage is then compared with a set affordability standard, most often 2.0 or 2.5%. If a utility's average bill as a percentage of MHI is less than this standard, then its bills are deemed "affordable"; if it is greater, then its bills are considered "unaf- fordable." These standards apparently derive from the standards of financial capability that the EPA applies in regulatory enforcement. "Two percent of MHI" has become a common convention in water and wastewater rate design, often employed but rarely questioned or considered carefully. The chief merit of using average bill as percent of MHI to measure affordability (and 2.0 or 2.5 as the affordability standard) is the method's simplicity. As a measure of financial capability, average bill as percentage of MHI has some merits. However, despite its widespread application, this method of measuring affordability is flawed in several respects: Basic versus average consumption. Average bill as a percentage of MHI does not relate water and wastewater consumption to affordability in a meaningful way. In nearly all utilities of significant size, the average of residential water consumption is considerably higher than its median, which indicates that high -volume customers are disproportionately influ- ential in establishing the affordability standard. Water and wastewater services are rela- tively income -inelastic services (i.e., demand does not increase significantly as income increases). Nevertheless, higher demands during periods of warm weather indicate that Brady, Henry B„ Sidney Verba and Kay Lehman Schlosman.'Beyond SES: A Resource Model of Political Participation," American Political Science Review 89.2 (1995): 271-294. Print. L. 454 Water and Wastewater Finance and Pricing much high -volume residential demand is due to outdoor irrigation and not basic house- hold use. Income elasticity considerations aside, in almost every utility, average demand is much higher than the volume necessary to maintain human health. Consequently, the standard metric does not accurately reflect the basic needs at the heart of affordability concerns. Costs of other essential goods. Although water and wastewater services are literally vital to customers, they are not the only vital goods and services that customers must purchase. Housing, food, health care, energy, and other essential goods and services also affect the affordability of water and wastewater costs. Moreover, these costs can vary widely across communities in ways that are beyond the control of any individual customer or their utili- ties. Utility costs may be low as a percentage of income, but much higher as a percentage of disposable income if the costs of other essential goods are high. Disposable income in this context means income that is not spent on water service, wastewater service, and other essential goods. The standard approach to affordability measurement is insensitive to these other costs. Median income versus low income. In all but the smallest or most desperately poor com- munities, the median -income household is unlikely to face serious water and wastewa- ter affordability problems. On the other hand, water and wastewater services may force important economic tradeoffs for poorer households. Measuring affordability as a function of an entire utility service area's MHI obscures the impacts of rate setting on low-income customers, where utility leaders presumably have the greatest affordability concerns. The Baltimore case illustrates the way that households and communities with varying incomes can experience utility costs in varying ways. This problem grows more severe as income stratification in a community increases. Put simply, the most common method used to assess affordability formally --average bill as a percentage of median household income —does not measure customer -level affordability in a meaningful way. Unfortunately, "average bill at 2.0 (or 2.5) percent of MHI" as an affordability standard has never had a strong basis in the reality for utilities' neediest customers, but rather has been adopted as an analytical convenience. The 2.0 (or 2.5) percent of MHI affordability standard has evolved into what Robert Socolow has called a "golden number": "a number which may have once been an effusion of a tentative model evolves into an immutable constraint." Although it has value as a measure of financial capability as discussed in Section 22.2, utility leaders should realize its limitations and abandon this metric as a measure of affordability. 22.3.3 MEASURING AFFORDABILITY This chapter advances a new, more meaningful measure of water and wastewater affordability that • Focuses on individual customers (not the entire utility) • Provides for basic service (not average demand) • Accounts for essential nonutility costs • Focuses on low-income customers (not average or median customers) • Is empirically valid within data constraints Based on these principles, this section advances a sound, flexible approach to affordability analy- sis that improves substantially on existing methods. • Socolow, Robert. "Failures of Discourse." Bulletin of the National Academy of Arts and Sciences 29.6 (1976): 11-32. Financial Capability and Affordability 223.3.1 The Affordability Ratio Affordability can be measured as the ratio of basic water and wastewater prices to disposable house- hold income for low-income customers. Mathematically, for a given customer c this affordability ratio (AR) is (Cost of minimum per capita water and wastewater service) x Household income Household size Less Essential costs 100 The numerator of the AR is the price of basic service to a customer, which varies depending on the utility's rates, the per -person volume of service that is considered necessary to maintain health, and the number of people occupying the given household. The denominator is the customer's dis- posable income, which varies depending on the customer's after-tax income less the cost of essential goods and services, such as housing, food, health care, and home energy. The combination of costs that are deemed essential may vary across utilities; for example, in some communities, some trans- portation costs might be considered essential. The AR reflects the economic tradeoffs that custom- ers face due to the costs of basic water and wastewater service. That AR, captures affordability only for customer c. An affordability ratio at the median income level (AR„,) could be calculated for an entire customer base to assess affordability for the utility as a whole. However, an AR value calculated for a low-income customer is much more useful for pur- poses of evaluating affordability for low-income customers. An assessment of AR at either the poverty -level income (ARp) or at the 20th income percentile (AR,a) in a given community provides a meaningful assessment of affordability for low-income customers. Using the AR2 as an affordability standard is useful because in most studies of welfare economics the 20th percentile represents the lower boundary of the middle class. At this income level, households have very limited financial resources, but are unlikely to qualify for most income assistance programs. The ease and precision with which the AR can be calculated depends on the availability of household -level economic data for the utility's customers. Calculating the numerator is a fairly straightforward process. Ideally, the AR's denominator would be based on a recent, comprehensive household -level consumer survey of the utility's customer base. Since such data are unlikely to be readily available for most utilities, analysis will depend on estimates of household income and expenditures. The quality of the estimates will depend on the quality of household level data avail- able. In any event, the AR and especially ARC offer significant advantages over the more common methods of evaluating affordability. 22.3.3.2 Analysis Example This section demonstrates the calculation of AR values for households at the median income and at the 20th income percentile using the residential water and wastewater rates developed in Chapter 20 for a customer with a 5/8" meter. Household size, income, and expenditure figures will be based on the U.S. national data. . The AR calculation begins with basic water and wastewater prices. The minimum volume of water deemed necessary to support human health will vary from one utility to another; for purposes of this analysis we assume a minimum of 50 gallons per capita per day (50 gpcd). According to the U.S. Census, the average household size was 2.59 in 2010. Since a "fractional person" is impossible, we calculate AR. for a three -person household. At 50 gpcd, the minimum monthly volume is 62 ccf for a three -person household and 12.4 ccf for a six -person household. Exhibit 22.8 shows the 456 Water and Wastewater Finance and Pricing Monthly basic volume (CCF) 6.2 Water charges per month Fixed $3.31 Volume $20.66 Wastewater charges per month Fixed $3.57 Volume $26.86 Total water and wastewater bill $51.08 EX H a 2' 2.$ Basic water and wastewater prices. 3-person household Median 20th income percentile After-tax income $4236 $1719 Expenditures Shelter 919 581 Food 622 388 Health care 312 218 Home energy 189 141 Disposable income $2194 $392 EXHIBIT 22.9 Monthly disposable income calculation of the corresponding AR numerator using the uniform residential rates calculated in Sections 10.2 and 10.3. Calculating the denominator of the AR formula requires income and expenditure data. The example shown here uses income data from the 2010 U.S. Census and expenditure data from the 2011 Consumer Expenditure Survey by the U.S. Bureau of Labor Statistics. AR values are calcu- lated at median income and the 20th income percentile. Exhibit 22.2 illustrates the calculation of these denominators, which are used to calculate median AR. and AR20 in Exhibit 22.9. The exam- ples shown here use national income figures; affordability analysis for a specific utility should use the best available income data for the local community that the utility serves. As the AR values in Exhibit 22.10 demonstrate, affordability is heavily dependent on household income: at the median income, AR is 2.33, meaning that the cost of basic water and wastewater ser- vice for a three -person household is about 2.33% of disposable income. However, at the 20th income percentile, the same level of service is equal to 13.04E of disposable income. 22.3.3.3 Alternative Approaches Although the AR is the preferred metric for affordability, there are other measures of affordability that improve on the typical approaches discussed in Section 22.3.2. Thro alternative approaches are offered here, each of which reflects the affordability of basic water and wastewater service for low- income customers: (1) basic water and wastewater price as a percentage of poverty -level income; and Financial Capability and Affordability 457 3-person household Median 20th income percentile a. Monthly basic water and wastewater cost $51.08 $51.08 b. Disposable income $2194 $392 Affordability ratio (a/b • 100) 2.33 13.04 EXHIBIT 22.10 Calculation of affordability ratios. (2) hours of labor at minimum wage necessary to pay for basic water and wastewater costs. These metrics are both easy to calculate with data that are readily available for most utilities, although they lack the precision of the AR and should be considered second-best options. Water and wastewater as percentage of poverty -level income. In the United States, the U.S. Census Bureau sets a poverty threshold of income that is meant to capture the mini- mal cost of living. Poverty thresholds vary according to the number and ages of persons in a household. To measure affordability using a poverty threshold, the analyst must select an assumed household size and composition and the corresponding poverty threshold as published by the Census Bureau. The cost of basic water and wastewater service can then be calculated as a percentage of poverty -level income. As an example, Exhibit 22.11 shows the calculation of these percentages for three-, four-, and five -person households with two adults and minor children at the official 2011 poverty thresholds. Measuring water and wastewater costs as a percentage of poverty -level income is sensi- tive to the costs of other essential goods and services, and also focuses on the low-income customers for whom affordability may be a serious concern. However, it is important to recognize that poverty thresholds are calculated for the U.S. population as a whole, and so do not reflect regional variations in cost of living that may be significant in some parts of the country. Moreover, this metric does not reflect needs -based assistance programs for which poverty -level households may be eligible. By contrast, households in the lower third or half of the income distribution may face serious economic tradeoffs as a consequence of water and wastewater costs, and yet be eligible for few or no assistance programs that might relieve financial pressure. Hours at minimum wage. Another easy alternative way to measure affordability is to calcu- late the number of hours of labor at minimum wage that would be necessary to pay for basic Assumed household size 3 4 5 persons persons persons a. 2011 gross poverty threshold (annual) $18,106 $22,811 $26,844 b. 2011 gross poverty threshold (monthly) $1509 $1901 $2237 c. Basic water price (monthly) $25.38 $32.07 $38.77 d. Basic wastewater price (monthly) $22.43 $28.87 $35.32 Percentage f(c+d)/b1 3.17% 3.21% 3.31% ' Assumes two adults and minor children. EXHIBIT 22.11 Water and wastewater prices as percentage of poverty income. 458 Water and Wastewater Finance and Pricing a. Basic water price (monthly) b. Basic wastewater price (monthly) c. Minimum wage $20.66 $30.43 $7.25 $26.44 $32.22 $39.38 $48.33 $7.25 $7.25 Hours [(a+b)Icj 7,05 9.08 11.11 EXHIBIT 22.12 Hours of minimum wage labor necessary to pay basic water and wastewater prices. water and wastewater service. Exhibit 22.12 shows this calculation for three-, four-, and five -person households assuming the U.S. federal minimum wage of $7.25 per hour. The minimum wage used for this analysis may vary by state or locality, or other minimum wage laws may apply. This metric represents in very meaningful terms the cost of basic water and wastewater service for low-income households, many of which labor at, or near, the mini- mum wage. It is important that minimum wage —not average income or average hourly —is used for this calculation in order to capture affordability for low-income households. 22.3.4 How MUCH IS AFFORDABLE OR UNAFFORDABLE? The metrics explained in this chapter help define affordability in meaningful terms and so allow for careful consideration of affordability alongside other rate -setting goals. However, what is afford- able, and how important affordability is relative to other goals, are ultimately matters of judgment for a utility's leaders and policymakers, When using the AR (or alternative metrics), a utility's leaders and policymakers must decide what kinds of economic tradeoffs are reasonable to expect a low-income household to make in order to pay for basic water and sewer service. It is also important to remember that comparisons of affordability metrics values are valid only across a set of alternatives for a single utility. That is, it is appropriate to consider the affordability of one rate structure relative to another, or the affordability of rates under different budgetary sce- narios, or the affordability of rates in a single utility over time. As discussed earlier in this chapter, an average combined bill of 2.0 or 2.5% of MHI is for some purposes a useful measure of utility financial capability (see Section 22.3.2.3). However, there are no "golden numbers" .or useful uni- versal standards of water and wastewater rate affordability. Utility leaders should resist attempts to reduce affordability to such a simple threshold target, and instead articulate meaningful afford- ability standards based on their own communities' values and priorities. A broad empirical study of affordability across many U.S. utilities could provide a valuable reference for utilities that are trying to understand their affordability situation relative to other utili- ties. Unfortunately, no such empirical study currently exists. An extensive analysis of affordability across many utilities would allow utility leaders to gauge their own affordability conditions relative to others'. In the future, perhaps such an analysis will be available for such comparisons. However, comparisons of affordability across utilities should be made with great caution because service quality and community values may vary considerably from one utility to the next. 22.4 ADDRESSING AFFORDABILITY CHALLENGES Utilities may address affordability challenges in many ways. Aspects of rate design can help make rates more or less affordable. Utilities may also employ a variety of nonrate affordability programs that can help meet affordability needs. Financial Capability and Affordability 459 22.4.1 RATE DESIGN Utilities may build affordability considerations into their rate structures. Here we identify a few common rate design features that can affect affordability. 22.4.1.1 Cost of Service Considerations It is important to consider cost of service principles when contemplating the use of rate design to address affordability. Cost of service principles preclude rate designs that subsidize one group of customers at the expense of another group of customers through rate revenue. Consequently, allo- cations of costs to some customers in explicit pursuit of affordability for other customers violate cost of service principles and may violate the law in some states. In practice, however, a degree of cross -subsidization is inevitable under any rate structure unless all customers consume water and wastewater services in exactly the same ways or cost of service allocations are performed for liter- ally every customer in a utility.* Once costs have been allocated to customer classes, it is possible to use rate design to shape affordability impacts in ways that do not violate cost of service principles. The rate design features discussed here can be completely consistent with cost of service principles if developed carefully. Subsidizing utility services pursuant to affordability using nonrate revenue (such as general tax revenues in a municipal utility, or grant funds) does not violate cost of service principles. 22.4.1.2 Mia n ze Fixed Charges In general, rate structures that improve customer control over periodic bills improve affordability because they allow customers to reduce their bills through conservative use. By contrast, rate struc- tures with very high fixed charges or large volumes of water built into a fixed charge increase the cost of the first unit of water or wastewater service and restrict the customer's ability to reduce his or her costs. Consequently, utilities may help address affordability by minimizing their fixed charges in ways that are consistent with cost of service principles. For example, in the interest of afford- ability, customer billing and fire protection costs could be included in the fixed charges, with most or all other costs built into volumetric charges. Minimizing fixed charges in this way may conflict with other worthy rate design goals, such as revenue stability. Relatively high fixed charges provide steady revenue for utilities, but can have significant adverse affordability impacts. 22.4.1.3 Low Rates for Low Volumes As defined here, affordability is most dependent on the costs of relatively low per -person volumes of water consumption. Consequently, rate structures that charge relatively little for low volumes of water are, in general, most affordable. Flat or uniform volumetric rates and declining block rates are less affordable, ceteris paribus. 22.4.1.4 Household Size -Based Rates Since affordability is so dependent on the number of persons served by a single customer account, one alternative for addressing affordability is to set rates according to household size. Volumetric blocks or charges may be adjusted according to the number of persons living in a household, so that a household with four persons would buy more water at an initial block rate than a similar household with only three persons, for example. In order to maintain strict compliance with cost of service principles, such a rate design would have to allocate some per person costs, effectively creating separate customer classes for each household size. Such an allocation would require very detailed data on household composition within a customer base, as in the water budget rates devel- oped in Chapter 10. Alternatively, a utility could simply estimate the distribution of household sizes • Modem, Manuel R "Measuring Fairness: Assessing the Equity of Municipal water Rates"Journal AWWA 97.4 (2005): 111-124. 460 Water and Wastewater Finance and Pricing across its service population based on census data, and then set up discounts for larger households. However, such an approach risks violating the cost of service ethic inasmuch as it may create an effective subsidy for larger households. A disadvantage of rates based on household size as an affordability measure is that the number of persons per household is a poor predictor of income, and therefore a poor predictor of affordability. In fact, in the United States, household income tends to increase as household size increases up to four or five persons, after which income begins to decline as persons are added (2011 American Community Survey). Consequently, rates based on household size may inadvertently benefit many households who have no real affordability concerns. 22.4.1.5 "Lifeline" Rates Utilities may set special rate structures for customers who qualify under financial hardship eligibil- ity criteria established by the utility. These criteria may be linked to qualification for other public assistance programs. These lifeline rates may be developed as a separate customer class under a cost of service analysis, or they may be set below the actual cost of service with revenues generated elsewhere. However, some utilities may risk violating the law if lifeline rates fall below actual cost of service and other rate revenue is used to subsidize lifeline service. 22.4.2 NONRATE AFFORDABILITY POLICIES Utilities may also choose to help address affordability issues through nonrate policies. Here we identify a few nonrate policies that can be considered to affect affordability. 22.4.2.1 Budget Billing Budget billing is a practice employed by utilities to help level out the seasonality effects on customer bills. This practice has been particularly well received with electric and natural gas service where seasonal heating and cooling demands skew customer bills. Water and wastewater utilities may see a similar situation with seasonal outdoor water use. Customers may experience high seasonal demands to meet irrigation needs. Those customers may be able to balance their high seasonal need with lower off-season demand. Budget billing would allow for a levelized bill that better fits within the customer's monthly budget. Although budget billing does not directly affect affordability in the sense that it does not change the overall cost of water and wastewater service relative to disposable income, budget billing can help customers manage utility costs more easily. 22.4.2.2 Direct Assistance Utilities may give direct financial assistance to low-income customers to offset customer bills. In most cases direct assistance is distributed and administered by a third -party such as a public or private social welfare agency. A common example of this assistance is a one-time payment to help during an urgent need situation such as unemployment or medical situation. The utility, through its third -party agent, may provide funding to prevent customers from lapsing into delinquency due to a temporary economic setback. 22.4.2.3 Subsidies Unlike direct assistance, which is funded through the utility, subsidies are funded directly through the government outside of the utility. Most often, subsidies are administered through social service agencies and are directed at a smaller subset of economically disadvantaged customers. 22.4.2.4 Forgiveness Utilities usually have the authority to adjust customer bills within their customer information sys- tem. Bill forgiveness simply means adjusting customer accounts receivable to a lower amount. This practice is most often used when the customer account contains high bills due to a Leak or other Financial Capability and Affordability 461 plumbing issue that has since been corrected. Adjustment of the account balance may be sufficient to keep a customer out of delinquency. 22.4.2.5 Restricted Service Utilities are often reluctant to turn off essential water and sewer service to a customer's residence. In most places, health and building codes prevent people from living in a structure where water and sewer service has been turned off. In order to curtail service without displacing the residents, utilities may resort to restricted service. This practice limits service at the connection point to literally, a trickle. Restricted service will be inconvenient enough so that the resident will work to rectify their account issue; however, it will allow for basic sanitation like toilet flushing. In addition, restricted service can limit the customer's consumption to the point where they are able to catch up on utility bill payment. 22.4.2.6 Fixture Retrofits and Plumbing Assistance There is a common misconception in our industry that economically disadvantaged customers are low -volume water users. It may be true that disadvantaged customers, on average, use less water than the median residential customer. However, some are, in fact, high water users. One reason is that disadvantaged customers are more likely to have old fixtures or poor plumbing than waste water. If the utility is able to assist in addressing leaks and improving efficiency, the customer may be better able to manage meter consumption and reduce the possibility of future account delinquency. 22.5 AFFORDABILITY PROGRAM DESIGN CONSIDERATIONS There are many issues to consider when establishing an affordability program. Considerations include - Program costs or lost revenue - Internal or external administration • Qualification of applicants 22.5.1 PROGRAM Cows Affordability program costs take many different forms based on the structure and extent of the program. Bach of the methods for addressing affordability challenges discussed in Section 22.4 contains an implicit cost in the form of lost revenue. Whether a utility subsidizes bills or forgives customer balances, their result is lost revenue. One major concern with development of an afford- ability program is forecasting the extent of this lost revenue. It is impossible to say with certainty, how many customers will apply for assistance. However, the utility should use data from the census, social service agencies, and private charities to estimate the potential for lost revenue costs. Inevitably, the utility will also incur costs to administer its program. These hard costs take the form of personnel, space needs, equipment, and systems and must be included in projections of program costs. 22.5.2 PROGRAM ADMINISTRATION One central consideration with of amiability programs is the structure of program administration. Utilities often seek to manage program costs by outsourcing administration to third party agents such •as social service agencies or privately run chanties. Outsourcing costs are typically lower since these groups may bundle utility assistance with provision of other types of assistance services. Outsourced administration may, however, come with some loss of control over how the program is run including interaction with customers, qualification of participants, and focus on water and wastewater issues. Despite the drawback, most utility affordability programs are, at least in part, administered by agents outside of the utility itself. 462 Water and Wastewater Finance and Pricing 22.5.3 APPLICATION AND QUALIFICATION OF PARTICIPANTS The use of customer assistance programs requires the development of criteria for determining which customers are eligible for assistance. Considerations in developing such criteria include: the nature of the assistance program, the financial resources of the utility, the presence of other assistance programs in the service area, and the depth/breadth of affordability problems. Criteria commonly used to determine assistance eligibility are as follows: • Income: This number is commonly set between 1.25 and 2.0 times the poverty level, adjusted by the number of members in the household. Households exceeding the specified income level would be ineligible for assistance. Employment: Eligibility under this criterion is proven through the presentation of dismissal notices, pink slips, or proof of successful enrollment in government unemployment programs. This measurement is generally used in conjunction with short-term crisis assistance programs. • Medical expense hardship: Medical expenses are one of the leading causes of bankruptcy in this country. Proof of eligibility under this criterion would involve presentation of medi- cal bills or collection notices. This criterion is generally used in combination with other criteria to prevent assistance from being inadvertently provided to high -income house- holds, As with the unemployment criterion, this approach is generally used for short-term crisis assistance rather than long-term financial support. • Geographic designation: Using customer addresses as eligibility criteria may be appropri- ate if the utility can document specific poverty areas within the service area. Before using this criterion, however, policymakers should clarify the basis of the decision for including one area while excluding others. • Age: Using age as an eligibility criterion is intended to target elderly customers needing assistance. However, age is not necessarily the most reliable indicator of financial status. As a result, this criterion should be used only in combination with one or more of the other criteria listed above. • Eligibility for other aid programs: This may be the easiest way to establish aid eligibility. Under this criterion, eligibility for utility billing assistance is based upon successful enroll- ment in assistance programs offered by other institutions. This criterion has the benefit of requiring minimal administrative costs because the utility may be able to simply check applicant's names against enrollment databases maintained by other programs. The disad- vantage to this approach is that the utility has no control over enrollment criteria. Once policymakers have selected one or more approaches for improving service affordability, sensitivity analyses should be used to estimate how customer impacts and monthly revenues might be affected by changes in the regional economy, seasonal demand, and program eligibility criteria. Predicting the cost of assistance programs requires estimating the number of eligible customers as well as the percentage of eligible customers that are likely to actually participate in each program. Utilities often discover that, unless assistance programs are heavily advertised, program participa- tion falls short of estimates. 22.5.4 AFFORDABILITY PROGRAMS IN PRACTICE 22.5.4.1 San Antonio Water System, Texas` Project Agua was begun by the San Antonio Water System (SAWS) in 2000 as a way to help residential customers of its system in need of a way to pay their water bill. A customer's eligibil- ity for the program is contingent upon meeting Federal Income Assistance Guidelines that are http://www.saws.org/service!affordability/projectagua.efm 1 Financial Capability and Affordability 463 determined by the City of San Antonio Department of Human Services. Eligibility requirements include income, family size, age, location of residence, disability, and degree of need of emergency. Funding is provided by tax-deductible contributions from customers of SAWS, both residential and commercial, via donation boxes located on customer bills. Designated amounts automatically go to Project Ague. 22.5.4.2 Portland Water Bureau, Oregon' The Portland Water Bureau has an affordability program in place to aid its customers in paying water and sewer bills. Eligibility is established by local community service centers where the cus- tomer's residence is located. Gross monthly household income based on the number of family mem- bers in the household is the primary requirement for receiving assistance. The range of income is from under $1845 per month for one occupant to under $4896 for eight occupants. For each additional occupant $106 is added incrementally per month. Assistance is available to only those individuals occupying the property. In addition, the Portland Water Bureau is flexible in modifying its policies and procedures for those customers with disabilities. 22.5.4.3 DC Water, District of Columbia* DC Water has in place three programs to help eligible customers pay their water and sewer bills: budget billing plan, the Customer Assistance Program (CAP), and Serving People by Lending a Supporting Hand (SPLASH). The budget billing plan is based on the average water and sewer usage of a customer over the course of the year and the payments are therefore spread out evenly allowing the customer to have more budgetary control over their payments. DC Water periodically reviews accounts during the year to establish this usage. CAP provides customers a monthly discount of up to 400 cubic feet (4 CCF) of free water and sewer charges. Eligibility requirements are determined through the District Department of the Environment (DDOE) based on federal income guidelines. SPLASH assists families in dire need of maintaining their water and sewer services and is funded by contributions from customers and the community. Extended payment plans are also available for eligible customers. 22.5.4.4 Columbus Water Works, Georgia Columbus Water Works Low Income Credit Program implements a reduced rate for its eligible customers. In order to be eligible, the customer must have an account in their name and meet fed- eral poverty guidelines for household size and income that are established in the Federal Register. The program became effective in January 2007 due mostly to feedback from customers and the economic environment. The program allows for a $4.50 credit on a customer's monthly bill similar to the City's monthly garbage credit of $3.50. Income status is verified annually for all eligible customers. 22.5.4.5 Northeast Ohio Regional Sewer District, Ohio• The Northeast Ohio Regional Sewer District has four programs available for eligible customers of its sewer system: homestead, affordability program, crisis assistance, and summer sprinkling. The homestead program is available to customers 65 and older or to anyone who is disabled but is limited to customers whose gross annual income does not exceed $31,000 and are owners of the property where they reside. The affordability program is available for customers whose income is at or below 200% of the poverty level. The rate reduction for both the homestead and affordability programs is the same at 40%. Customers can be enrolled in either program but not both. The crisis ' http://www.portlandoregon.govlwater/atticle/371216 http://www.dcwateccominews/publicationskustomer_service.pdf i http,//www.cwwga.orgldocumentlibrary/297_LOW%2oINCOMEMOCREDIT.pdf http:llwww.neorsd.org/save.Php 464 Water and Wastewater Finance and Pricing assistance program offers assistance of 50% of the sewer balance (up to $300) to the account of those customers who have had a major life event occur. The summer sprinkling program is in effect from May 1 to September 30 and helps those customers of owner -occupied one-, two-, three-, or four -family residences whose summer usage exceeds average winter usage due to lawn irrigation. DISCUSSION QUESTIONS 1. Why is affordability attracting more attention in the current landscape of water and waste- water finance and pricing? 2. What is the difference between financial capability of a utility and customer affordability? Why is financial capability important at the utility level? Why is affordability important at the customer level? 3. What are some of the indicators of community financial strength? What would represent "strong," "mid -range," and "weak" ratings as it relates to each financial indicator? How would a utility gather this information for its service area? 4. Discuss how the "customer burden indicator" relates to the EPA affordability criteria. How does median household income determine customer burden? 5. Explain how to use the financial burden matrix in Exhibit 22.2. 6. Discuss the concept of EPA's "financial capability ceiling" and how it has evolved since 2000. 7. Discuss the relevance of the following issues as it relates to a utility's financial capability: • Integrated capital planning • Negotiations with EPA • Financial planning • Grant and loan applications 8. What is affordability? Why is rigorous measurement of affordability important to a utility? 9. What are some of the variables that influence affordability for a given customer? 10. Traditionally, the following measures have been used by utilities to assess affordability of services: • Nature and amount of complaints • Level of delinquencies and disconnections • The average bill as a percentage of median household income • Discuss some of the problems of assessing affordability by using these traditional measures 11. This chapter offers some advances to address many of the criticisms of traditional mea- sures of affordability. One of these techniques is the development and use of an affordabil- ity ratio (AR). Define the affordability ratio as used in this chapter. How can it be used to assess affordability within a utility's service area? 12. Discuss how (1) calculating the utility bill as a percentage of poverty -level income, and (2) calculating the utility bill in terms of hours at minimum wage offer ways of assessing affordability. 13. Discuss how the following rate design features can be used to address affordability concerns: • Approach to cost of service • Minimizing fixed charges • Basing rates on household size • Having low rates for low volumes of usage • Lifeline rates 14. Identify how the following policies may address affordability: • Budget billing • Direct assistance Financial Capability and Affordability 465 Forgiveness of bills Restricted service Fixture retrofits and plumbing assistance 15. What are some of the considerations in designing an effective affordability program? 16. What takeaways can be gleaned from the financial capability case study for the City of Baltimore? 17. What efforts could be considered nationally to promote the affordability agenda?' Combined Sewer Overflows —Guidance for Financial Capability Assessment and Schedule Development, US EPA, February 1997, EPA 832-B-97-004. 23 Expanding Financing and Pricing Concepts into Stormwater Keith Readling and Henrietta N.P. Locklear I believe the future is challenging storm water programs to not just manage surface water in a tradi- tional "bricks and mortar" fashion like water/wastewater, airport or other utilities. A diverse but bal- anced storm water program can be much more than that. Storm water programs should not only serve the public by addressing water quality and quantity problems but these programs should also advance other quality of life factors the community values like education, environmental art, open space, parks, greenways, gardens and recreation. W. Dave Canaan Water and Land Resources Director Mecklenburg County, NC This chapter expands water and wastewater finance, pricing, and management concepts into storm - water. Specifically, the sections of the chapter follow Exhibit 23.1, from planning the stormwater program through rate making and the mechanics of billing, collections, customer service, and data maintenance. 23.1 , INTRODUCTION 23.1.1 HISTORICAL AND EVOLVING STORMWATER SERVICES Local government stormwater management programs have existed since municipal services began. In almost all cities and towns, these programs historically focused on roadway drainage as the only service. Roadway drainage was, and still is, critical to the safety of the traveling public and to effi- cient maintenance and protection of the transportation infrastructure; however, this singular focus left out many important components of stormwater quantity (runoff volume and peak runoff rate) management, and completely left out stormwater quality (pollution) management. As municipal stormwater management programs evolved, in particular in municipalities where significant flooding was a problem, floodplain management and flood -related services and regula- tions became common program components. Driven in most cases by the establishment of the National Flood Insurance Program (NFU) in 1968, these services tended to be focused on protect- ing real property from flooding through development restrictions, and in some cases through other regulations, buyout programs or through similar programs that provided for homes to be protected through elevation or flood proofing. As such, by the early 1970s, most cities of significant size had stormwater management programs that included a capital investment component (for building drainage infrastructure), tied mostly to mad construction; an operation and maintenance component, focused on maintaining the convey- ance capacity of the drainage system; and a floodplain management component, focused on protect- ing real property from flooding through land use regulation. 467 468 l�+'irLJkli� ticfwiCtL t 1}1t1it [SL�L�4ifj R ; '1 L11l•. s'I,N�,1xr E EuLstingarlrs7E1c: NCW Mtn. Ia LLr �p�iLsl aka LlM L Water and Wastewater Finance and Pricing .itit Ys1I4r.CiuLtiguf. • L'1}1-4ti]L L•J'debi AA lever 1 Arm- [L1 Tair11} •• .eg Lie(134 F as LOU, atk'cr thug 4F4.41 r77wu k :'N pi ow. an) 1nfi I' ' - 11 nfir Fir i»rer rtrrf LLN II L'IJM it'vino! miL EXHIBIT 23,1 Flow of information in this chapter. 1 iL}1aikl1hr. rr i.i6W-•n MILLI r1oL4Fiti kLmir Sii�N17LY[�1T'� uylrIn)I r h)1.1Y702 Just as was the case for water and wastewater, the 1970s and 1980s brought a tremendous amount of new regulation at the state and federal level for stormwater. Two of the most important changes during this time period were (1) the advent of sediment and construction site runoff control regula- tions, often implemented by states, individually; and (2) the 1987 amendments to the Clean Water Act, which expanded the National Pollutant Discharge Elimination System (NPDES) permit pro- gram to include stormwater discharges in addition to wastewater discharges. Specifically, storm - water NPDES discharge permits issued after this legislation was enacted (generally beginning in the early 1990s) began to require urban areas to minimize pollution of waters of the state to the "maximum extent practicable." Between sediment and erosion control programs and NPDES com- pliance programs, jurisdictions across the country found themselves providing greatly expanded stormwater management services that focused on both public and private property through com- ponents for managing water quantity and water quality, for both capital projects and operation and maintenance. Water -quality programs have evolved further since the 1987 amendments to the Clean Water Act, often to include more regulation in coastal areas and in certain sensitive watersheds, total maximum daily load (TMDL) requirements, or other new or amended requirements. As regulations continue to evolve and as TMDLs are applied to more and more watersheds, local governments are confronting increased stormwater program needs driven by these regulations. Meanwhile, in moat jurisdictions, the expected cost to replace aging drainage infrastructure is very high, and the need for capital replacement is imminent. 23.1.2 TRADITIONAL FUNDING SOURCES AND THEIR LIMITATIONS Transportation -related capital drainage projects, which until recently comprised the majority of all stormwater capital investments, have traditionally been funded through pay-as-you-go funds (typically originating as ad valorem tax revenues) or through transportation debt financing. Operation and maintenance efforts focused on the stormwater drainage system have tradition- ally been funded with general public works operating budgets, also most commonly supported by ad valorem tax revenues. In some cases, and to varying degrees, drainage construction and p. Expanding Financing and Pricing Concepts into Stormwater 469 maintenance have been funded with portions of the nonstate system street aid allocation of state motor fuel tax receipts that are returned to local governments. These fuel tax funds vary in description and amount from state to state. In North Carolina, they are known as Powell Bill funds and in Virginia, they are known as street aid funds. Many other states have similar systems. A third funding source for certain stormwater program elements is permit fees. These are quite commonly used to fund various regulatory efforts such as erosion control plan review and inspection, but these funding sources are relatively small, and suitably used for only lim- ited purposes. There are limitations to the tax funding and permit fee -funding approaches when it comes to running a municipal stormwater management program. The most significant is simply that the rev- enue source is not sufficient for funding the program. Permit fees can only cover a small portion of a multifaceted program as described herein, and tax revenues are limited because they are used for many different government programs and consequently there is intense ongoing competition among initiatives for these funds. 23.1.3 THE SHIFT TO FEE -BASED FUNDING FOR STORMWATER PROGRAMS As stormwater management programs have become more complex and focused on both water quantity and water quality, the cost of stormwater management has risen sharply. At the same time, as these programs have begun to include more efforts that are driven by water quality regula- tions, the financial penalty, sometimes in the form of fines, for not realizing established goals has become significant. These issues, in concert with the high cost for replacing aging infrastructure, all make tax -based funding inadequate for the stormwater management needs of a jurisdiction. Similarly, when stormwater expenditures were infrequent and modest, some local governments could fund them with grants; in recent years both the availability and adequacy of grant funding have plummeted. With stormwater costs steeply higher, total dependence on tax -based funding has become much more unsustainable for stormwater programs that spend significant monies, because of the dif- ficulty in competing with more visible or high -profile public needs for limited tax revenues. Many technical barriers to implementing stormwater fees have fallen away as the measurement and/or manipulation of property characteristics (such as impervious area) has become more cost effective owing to the availability of more accurate and detailed source data and more capable software and hardware. A third shift in the stormwater funding climate is that as more and more jurisdictions develop stormwater fees, these jurisdictions without such fees are increasingly emboldened to "take the plunge," believing that legal or political fallout is, over time, becoming increasingly unlikely. The first true stormwater utility in the United States was implemented in 1974. Thus, compared to the more traditional utilities of water and wastewater, fee -funded stormwater management is still a new idea, and because of that, governmental entities have tended to proceed with great caution in choosing to implement such fees. So, the shift to fee -based funding for stormwater management has been fueled by a number of factors. 1. Stormwater management costs are soaring to unprecedented levels 2. Thx funds are limited and competing for these funds is very difficult 3. The regulatory consequences of underfunding stormwater service can be significant 4. Data are increasingly available that would allow the development of a stormwater fee 5. The technology to implement and maintain a fee is affordable and available 6. The concept of a stormwater fee is less alien than it once was, and legal precedent for fees exists in many states 7. The public is increasingly willing to support fee -based funding if it is shown to be more equitable than the alternatives L 470 Water and Wastewater Finance and Pricing 23.2 STORMWATER SERVICE COST DRIVERS 23.2.1 EXPANDING REGULATION Similar to water and wastewater, stormwater management costs over time have increased as the costs of complying with water -quality regulations have increased. Compliance costs are directly driven by new or modified regulations. The costs of regulation vary in type and scope and include both operations and capital costs. Needs may include staffing and equipment for surface water body monitoring, stormwater system mapping, drainage system maintenance, development review and enforcement, training and activities for pollution prevention, and recordkeeping and reporting. Capital costs may include storm - water system construction and improvement and structural water -quality treatment devices. 23.2.2 AGING INFRASTRUCTURE Most jurisdictions have not followed a rigorous course of stormwater system maintenance over their existence. As a result, infrastructure components are nearing the end of their intended operation periods, and require replacement. In addition, many components are worn or broken and require attention. Absent an operation and maintenance program, the overall costs continue to go up each year, as more and more parts of the system fall into disrepair. 23.2.3 UNDERSIZED FACILITIES A related driver is the cost of upgrading portions of the system because they are undersized to convey the runoff they receive for the design storm they were intended to convey. Facilities could have been designed and constructed properly, but as development occurs upstream, the volume of runoff that reaches them has increased and they cannot convey it. Bigger pipes are needed and these replacement pipes cost more to install than replacement pipes of the same size would cost. 23.2.4 LOCALE -SPECIFIC COST DRIVERS Every jurisdiction has its own cost considerations and concerns. While these can be grouped under the categories of infrastructure -driven and regulatory -driven concerns, the drivers manifest them- selves very differently in each jurisdiction. These differences translate into differences in costs, rate structure, and credits. For example, Baltimore, Maryland's program costs include compliance with a trash TMDL that requires the elimination of 100% of trash in Baltimore Harbor. Just one example of an effect the TMDL has on the program's funding framework is that, unlike in many other places, public participation in neighborhood and stream cleanups is a creditable (and very important) activ- ity. The reason is that trash removal is a measurable component of the City's compliance program. As with other types of local government service provision, citizens in many areas have high expectations for services from their local governments. For example, regular residential yard waste and seasonal leaf collection are services that many citizens expect to be offered. These costly ser- vices are often included under the umbrella of stormwater services, since regular yard waste col- lection plays a role in keeping the storm drainage system clear of debris. Citizens also press for local government involvement in private drainage concerns. That is, they want and expect cities and counties to solve drainage and storm drainage system issues on private property. Citizen expecta- tions for government services are high and they drive demand and costs. 23.3 DEVELOPING THE STORMWATER MANAGEMENT PROGRAM 23.3.1 COMPONENTS OF THE PROGRAM As the introduction to this chapter explains, many local governments have provided services that can be considered as "stormwater services" for a long time, namely those associated with maintaining Expanding Financing and Pricing Concepts into Stormwater 471 a well -functioning street drainage system. These, and other services associated with the natural or built drainage system; can be termed infrastructure -related costs, and include cleaning, maintain- ing, replacing, upgrading, and upsizing the system. Staffing, equipment, and capital costs all may be infrastructure related. The other two broad categories of activities are regulatory and administration costs. Regulatory costs are those associated with either regulating others (for example, the development community) or complying with regulations, such as NPDES permit requirements. The costs of regulating others include staffing for development plan review, floodplain administration, and sediment and erosion control inspections. The costs of regulatory compliance, which overlap with regulation of others and with infrastructure costs, also include staffing, equipment, and capital costs. Regulatory compli- ance overlaps with regulation of others in cases where the government's own permit requires that it regulates another group. For example, a jurisdiction's NPDES permit may require that it adopts and maintains authority to eliminate illegal discharges produced by citizens or businesses within the jurisdiction. In other cases, regulatory compliance overlaps with infrastructure costs in that increased drainage system maintenance may be one method for decreasing pollution (such as sedi- ment) that reach the natural drainage system from the built system. Also, regulatory programs may necessitate capital investments in infrastructure such as the implementation of structural stormwater controls. Administration costs include overhead expenditures such as department administration, legal representation, and, in the case of a fee -funded program, costs associated with administration of the fee such as billing database maintenance. Within each of these broad categories, the subcat- egories of costs have cost types of personnel, equipment/supplies, and capital costs. 23.3.2 Leva ANC EXTENT OF SERVIC The level and extent of service provided for each activity within a stormwater management program is the rubric that broadly defines the program. The level of service characterizes the frequency of the service or other standard to which the service is provided. Examples of levels of service include • Streets are swept once per week • Catch basins are cleaned when they are Ns full ® Inlet grates are cleared of leaves on an as -needed basis • Concrete pipes are replaced based on a 50-yearreplacement cycle a Customer calls are returned within one business day The extent of service describes the stormwater program coverage for components of stormwater infrastructure such as natural streams, drainage ditches, and constructed stormwater infrastructure. Each of these components can be categorized as to whether they are publicly or privately owned, are within or outside of public right-of-way, and whether they convey runoff from public, private, or a combination of public/private lands. The level of service is applied to specific components of infrastructure (the extent of service). The intersection of these two concepts is particularly helpful in setting differential levels of service among elements of the drainage system' For example, one level of service (a high level) may apply to inlets in the street right-of-way, while another level of service (a low level or no service) may apply to drop inlets on private property. Further, inlets on private property could be excluded from the program's extent of service entirely. Defining the program's extent and level of service is an integral step, both in developing a program's vision and in quantify- ing the costs for that program. " Reese, Andrew J. and Henrietta Presler H. Municipal stormwater system maintenance: An assessment of current prac- tices and methodology for upgrading programs, Stormwater Magazine. September -October, 2005. Accessible on the web at: i ttpJ/72,3.251.71/SW/Editorlat/Munieipal_Stormwater System_ Vfaintenanee_79.aspx 1� 472 Water and Wastewater Finance and Pricing 23.3.3 THE TIMING OF SERVICE DELIVERY An important consideration in planning a stormwater management program is the timing of ser- vice delivery. For some services, such as capital infrastructure replacement, it is necessary to gain additional knowledge about what to build, how large to build it, or in what order to build it before the construction can occur, even if the funds and political support are available. So, on one hand, with what has become in many cases a neglected part of municipal infrastructure, replacement or repair cannot proceed without study and analysis that may take a long time. Similarly, for many local governments, it is exceedingly difficult to acquire and train a capable staff, even when the funds are available. So, for a program component that targets, for example, enhanced drainage maintenance (more thorough, more frequent, etc.) and that contemplates using in-house resources, it is easy to underestimate how long it will take to achieve the staffing increases required to support the enhanced program. Often, jurisdictions develop a program plan that anticipates action and expenditure more quickly than it can actually occur. -This tendency should be considered in program planning so that the utility does not raise expectations unreasonably about how fast improvements will be gained. At the same time, "new" stormwater ratepayers will see, in the form of the stormwater fee, what their government is spending on stormwater management. Because the true cost is now evident, ratepayers immedi- ately expect to see a higher level of service in the form of maintenance activities and construction projects. The new program must include some immediate, visible efforts even if they are routine maintenance actions, not large capital projects that might take years to plan, fund, and construct. 23.4 ESTIMATING THE SERVICE COSTS 23.4.1 THE EXISTING PROGRAM The fragmented nature of stormwater programs and activities has been discussed in this chapter. Specifically, stormwater functions can be performed by many units within a city or county govern- ment. To estimate the costs that comprise this (frequently) decentralized program, it is necessary to unbundle multiple departmental budgets, and then compile and add the costs from these depart- ments. One effective approach is to gather information about operations through interviews with representatives from the full spectrum of departments within which stormwater program activities are thought to occur. The most complete information about the activities can be gathered from discussions with the staff members who are responsible for them, while the most accurate informa- tion about existing costs may be obtained from managers and supervisors. These discussions are intended to reveal the scope and frequency of the current stormwater operations, as well as the staff, equipment, and capital assets (if applicable) dedicated to the operation. In some cases, stormwater management may not be a familiar concept to interviewees. The interviewer should be prepared to introduce the concept of stormwater and the purpose of the cost development. It is likely that drainage maintenance personnel would understand how their activi- ties are related to stormwater/drainage. But, for example, sanitation staff members who conduct household hazardous waste (HHW) collection might not relate the collection to stormwater, even though HHW collection is a pollution prevention best -management practice to prevent surface water contamination. Overall, it is quite common for the estimation of existing stormwater costs to be the first time these costs have ever been considered for parsing from a broader set of services within a jurisdiction, and some degree of difficulty should be expected. During the existing cost development, particularly for local governments that are developing a program in response to water -quality regulations, it is helpful to cast a wide net. Gathering informa- tion about program components, even the small ones, enables the jurisdiction to develop a complete operational and financial picture of stormwater-related activities. Some of the identified activities may not, in the end, be funded through a stormwater user fee but instead can continue to be funded Expanding Financing and Pricing Concepts into Stormwater 473 Drainage system maintenance Street sweeping Household hazardous waste collection Storm drain marking programs Public outreach and communications Pesticide, herbicide, and rodenticide programs Design Land acquisition Regulatory compliance Plan review Inspections Erosion control programs EXHIBIT 23.2 Services that can be included under the stormwater program. through current methods (usually ad valorem tax revenues). An example is a county stormwater program, where services related to surface water quality are provided, in the form of technical assis- tance and public education, by the county Soil and Water Conservation District (SWCD). Although the efforts of the SWCD may improve surface water quality or even fulfill regulatory requirements, it is unlikely that the funding or performance of these services would shift the local government's stormwater management program to be funded by a fee. Exhibit 23.2 shows a range of services that could be included under the umbrella of the stormwa- ter program, particularly a program with a surface water quality focus. The information gathered about the stormwater program during discussions with staff is then tied to budget data to develop the existing program costs. First, the existing program costs should include burdened full-time equivalent staffing costs. These can be either based on the actual salaries and benefits for the personnel devoted to the activity or can be based on the salary and benefits for the class of personnel (depending, for one thing, on how sensitively salary data are handled in the jurisdiction). In many cases, and notably different than with water and wastewater utilities, only a portion of a single staff person's time is devoted to stormwater-related activities. Second, the vehicles and equipment used to execute stormwater services should be included in costs. Commonly, vehicle equipment costs are either capitalized or expensed, and a budget for their maintenance is allocated each year. Another approach is to use hourly costs for vehicles and equipment that reflect operation, maintenance, and replacement costs. Some local governments would have already calculated these rates for other purposes. Third, the capital improvements of the drainage system, whether they are debt or pay-as-you-go funded, should be included in the program costs. Other costs, including sup- plies and contracted services, are a final type of existing costs. The compilation of all these costs results in the total annual existing program costs. In many cases, the local government will find that a surprisingly large number of disparate resources are devoted to stormwater. 23.4.2 FUTURE PROGRAM CosTs The cost drivers for stormwater management programs discussed earlier, namely expanding regula- tion and aging infrastructure, often necessitate that a local government envisions and plans for a future program that may be significantly different from the current program it operates. Defining the future program should be intertwined with the question of how stormwater services will be governed, managed, operated, and funded. Since local governments often involve stakehold- ers in decision making about future funding, they will also solicit input from these groups on the future program. Stakeholder groups can provide opinions on questions from the level and extent of service, to the timing of service delivery, and to the manner in which services will be delivered (use of internal staff versus external resources). 474 Water and Wastewater Finance and Pricing As with water and wastewater financial planning, a planning period of five or ten years is an appropriate window for projecting costs. The future program may contain a number of costs that remain relatively flat, but the overall program may grow either because of an increased level of ser- vice in existing services or because new services are added. Similarly, the choices a local government makes about cost allocation for combined sewer areas can influence the future program costs greatly. In many municipalities where there is no separate- stormwater fee, all combined sewer costs have historically been allocated to wastewater. When a stormwater fee is anticipated, it is the appropriate moment to reconsider this simplification and allocate a reasonable share of the combined sewer costs to stormwater. This can result in the oppor- tunity for a rate decrease for wastewater, or at least a forestalling of an increase, in many cases. On top of these difficulties, it is very common for little to be known about the capital needs for the stormwater system. Historically severely underfunded, this infrastructure may require inven- tories, condition surveys, and modeling before much is known about the true cost of repair and replacement. Because of this, it should be expected that the future program costs are less certain than existing costs. 23.5 DEVELOPING A RATE STRUCTURE 23.5.1 CONCEPT OF DEMAND FOR STORMWATER SERVICE Water and wastewater rate structures draw a relationship between customers' demand for service and their charge. In the same way, stormwater rate structures make this relationship clear. Although, as discussed in Section 23.7, stormwater is an unmetered service, and the elements comprising stormwater demand for service probably most closely parallel those of wastewater. These are the volume of discharge, the peak discharge, and strength of discharge. As with water and wastewater, these elements determine a given utility's infrastructure size and capacity, maintenance, and water - quality treatment needs. 23.5.2 CHOOSING A RATE STRUCTURE BASED ON COST CAUSATION The most appropriate rate structure links demand for service to the rate structure. Total runoff volume, a cost causation factor, is influenced by a number of variables on a given parcel: size of the parcel, vegetation, slope, soils, and the amount of roof top and pavement (impervious area where water cannot readily percolate into the earth). All these influence the estimable runoff volume and thus the demand from the property. Among these variables, some of them are major variables, with the paramount variable being the amount of the impervious area. On the other hand, other variables are minor, such as the health of the vegetation on the parcel. Rate structure choices usually reflect the primacy of some variables in determining demand (Exhibit 23.3). 23.5.3 BALANCING FAIRNESS WITH EASE OF UNDERSTANDING AND SIMPLICITY Rate structure choices also reflect other equity, practical, and efficiency -related concerns. A number of variables contribute to demand for service. Some are major and some are minor and the fairest process would take all these variables into account. However, a rate structure that did so would be very complex. It would be the fairest rate structure, but it would also be difficult to implement because of the effort involved in measuring the attributes, maintaining the data, and explaining the rate structure to customers. On the other end of the spectrum, the simplest rate structure would be a flat rate. For example, meter size has been used in some jurisdictions, and a pure land use clas- sification has been used in others. Flat fees are not very fair as a means of equitably allocating cost among rate payers. However, they are relatively easy to implement and maintain. They can be easier to explain to ratepayers than a complex rate structure. Expanding Financing and Pricing Concepts into Stormwater Lightly developed Porous Flat Heavily developed +4IP impermeable Bare ground EXHIBIT 23.3 Variables affecting demand for service. 475 Impervious area rate structures have been used very frequently to date by jurisdictions because an impervious area basis reflects cost drivers, it is very fair, and is relatively easy to understand. 23.5.4 lwr0r.m.rs RATES T.arz RAM-J7/16g CAWS s Having chosen a rate structure that meets the jurisdiction's demands for fairness, simplicity, and ease of understanding, a simplified rate structure might be chosen for one or more rate -payer classes. A jurisdiction may choose simplified rates for a number of reasons: to drive down customer service demand, decrease the cost of implementing and administering the rate structure, or make it easier for rate payers to understand. The primary example of a simplified rate structure is the use of a single flat rate or tiered flat rates for residential rate payers. A simplified residential rate structure greatly increases simplicity —easing communication with customers and controlling the cost of implementation. In many jurisdictions, the fairness of the rate structure can be maintained with a single flat rate, since residential lots do not significantly differ in their characteristics across the community. 23.6 RATE MAKING AND FINANCIAL PLANNING 23.6.1 SIMILARITIES AND DIFFERENCES TO WATER AND WASTEWATER RATE + AXEN Rate making and financial planning for a stormwater utility are similar in most regards to that of a water or wastewater utility. However, water and wastewater service provision has been funded through user fees for a long time. Thus, the ongoing operational costs and capital improvement • plans are separated from other governmental services, are relatively stable, and are well quantified. 476 Water and Wastewater Finance and Pricing As described in Sections 23.3.3 and 23.4, stormwater programs are not well differentiated from other programs. They are frequently confronting regulatory requirements for which the costs are only roughly estimated and about which there is uncertainty. Finally, stormwater programs often lack system condition assessments and long-term capital improvement plans that provide the basis for defining long-term capital costs. The financial planning for stormwater programs, especially for programs just starting out under utilities, may contain significantly more uncertainty than plans for typical water or wastewater utilities. The demand for stormwater service is much more inelastic than for drinking water. Customers may reduce demand through implementing stormwater treatment sanctioned by the utility (through credit programs as discussed in Section 23.6.3). But the effort and cost involved in activities that qualify for credits are usually significant, and so, the barriers to reducing demand are high, Consequently, the need to estimate demand reductions associated with a given rate methodology is usually insignificant. Of particular concern during stormwater rate making is estimating the rate of delinquency. Since stormwater service is not metered, it generally cannot be "shut off." Unlike water service, storm - water is a billable service for most utilities even for unoccupied and abandoned properties. The likelihood of collecting on abandoned property fees is reduced as compared to that for a bill associ- ated with an ongoing viable property. The result of these factors is that the overall collection rate for a stormwater utility is, in most cases, lower than that for stormwater associated with a metered service. During initial rate making for a newly formed stormwater utility, one of the most important and difficult efforts is to accurately estimate a delinquency rate and set rates accordingly to ensure an adequate revenue stream. 23.6.2 RATE STUDY AND CODIFYING RATES As with any other typical utility, the rate -setting process is, in simple terms, determining the cost of service, determining the number of units available to charge for that set of services, and dividing the cost of services by the units of charge. The rates are equal to that quotient, after various allow- ances are taken into account. For example, there may be allowances for nonpayment and for credits (discussed below). In each community, the process for codifying a stormwater fee varies based on state law and local ordinances. Commonly, a local board must pass an ordinance codifying the utility as a fund. The rates may be specified within that ordinance or in a separate ordinance (or passed by a sepa- rate board, as in Baltimore City, whose Board of Estimates votes upon rates). Usually, the storm - water fee codification process can closely parallel that of other utilities. There are a number of exceptions, however. For example, in California, stormwater fees must be approved by 2/3 of voters, while water and wastewater rates are subject only to a protest of 50% of property owners. During rate making, when it comes to determining the allowances for nonpayment, stormwater can be more complex and uncertain than water and wastewater. The most significant reason for this is that stormwater is not a metered service and generally cannot be "turned off." The service is not determined by occupancy/vacancy of a parcel. Take a vacant building for which the water meter has been removed —although that building no longer represents a water customer, it continues to represent a stormwater customer. The likelihood that the customer will pay a stormwater bill is decreased, but is not zero. The likelihood may vary based on whether the stormwater fee is billed via a utility bill or a tax bill as well. 23.6.3 STORMWATER CREDITS One aspect of stormwater rate making that differs from water and wastewater rate making is the concept of stormwater credits. Credits are fee reductions that are made available to customers who Expanding Financing and Pricing Concepts into Stormwater 477 implement practices, or activities that reduce their demand for stormwater service. For example, a customer who implements a practice to reduce pollution in stormwater leaving his parcel might be eligible for a credit. The common credits that are offered among utilities include credits for imple- menting structural stormwater controls that reduce total volume, peak discharge rates, and pollution, or for education programs. Utilities most often implement credit programs that are very much tai- lored to their cost of service, cost drivers, community acceptance of rates, and other characteristics. Although credits may seem like an odd concept, their origin is rooted in the characteristic of stormwater service that has been discussed throughout the chapter: that stormwater is unmetered. Credits provide a means for recognizing reduced demand in the same way that a meter automati- cally recognizes reduced demand. If one implements water -saving devices in a building, under most rate structures, one's water bill goes down. In the same way, if one implements stormwater treatment devices on a parcel, one's stormwater bill could decrease. In practice, a credit acts more like the mirror image of a wastewater strength charge. While some wastewater customers are charged an additional charge for high -strength wastewater, under a stormwater credits program, some custom- ers are charged a smaller charge for "lower -strength" stormwater. Where courts have examined the legality of stormwater fees and have applied tests to determine whether they were indeed fees as opposed to taxes, one aspect of the tests is whether the utility fee was voluntary in nature. The presence of a credits program tends to strengthen the fee under the test of voluntariness, since credits give customers some control over their fees. 23.7 BILLING AND COLLECTION OPTIONS 23.7.1 SERVICE BILLING WITHOUT METERING THE SERVICE Stormwater billing and collections are made more complicated by the fact that the service fee is usually based on demand placed on the system rather than on any specific benefits provided to the customer. Unlike measuring the amount of water dispensed through a water meter, stormwater runoff is extremely challenging to measure due to the high level of complexity in weather and land characteristics that impact water volume, peak flows, or water pollution levels. As a result, few mea- suring tools exist to quantify runoff and none of them is able to quantify demand on an individual customer basis for thousands of customers within a service area. So, stormwater is billed without metering the service. A customer's demand is only indirectly measured, through corollary or sub- stitute variables that relate to runoff or pollution, such as impervious area. Stormwater utilities must first identify the customers who place a demand on the system. Most utilities refer to tax parcel maps to identify customers as tax parcel maps that tend to cover all land area within a jurisdiction except for public rights -of -way. Depending on the way that the rate structure is designed, either all parcels or a subset of parcels that are developed will be considered as active customers, while vacant properties without development may not be. Public rights -of -way and streets need not be charged a stormwater fee as they form a part of the stormwater conveyance system and, therefore, do not place a demand on the system. Once the customers have been identified, the utility must then calculate service demand. Most often, service demand is modeled based on characteristics of the property such as the amount of impervious area, the amount of gross lot area, density of development, land use, slope, aspect, and other characteristics. In many cases, the availability of land characteristic data will impact the rate structure and billing methodology selected by a utility, so that the most pertinent variables with the most coverage among customers can be used to model demand. Utilities frequently employ flat rates, tiering (i.e., placing customers into three or more categories based on demand), or algorithmic approaches for some customer classes to further reduce the complexity of modeling demand. The majority of utilities have primarily relied on the amount of impervious area to serve as the basis for units of service as the most strongly supportable corollary from the engineering, policy, and 478 Water and Wastewater Finance and Pricing administrative perspectives. Characteristics of the land are best modeled spatially so that all forms of geographic information can provide the foundation for accurate stormwater billing. 23.7.2 GEOGRAPHIC INFORMATION SYSTEMS Since the early 1990s, geographic information systems (GIS) have become increasingly critical to modeling stormwater service demand as they often manage a wide variety of land characteristics on a tax parcel level basis. GIS data have two components —tabular data describing characteristics that can be modeled in space and an associated geographic location or area. These tabular characteristics may be used for algorithmic modeling of demand based on quantitative variables associated with each parcel, but the geographic component has been featured more prominently in recent years. The GIS data model allows selected variables to be modeled spatially and helps stormwater utili- ties to determine the optimal combination of parcel characteristics that correlate best with service demands. Customers can be modeled on a parcel -by -parcel basis using the tax parcel maps so that the whole service area is taken into consideration when calculating fees. Where the geographic model is employed, the most common GIS layers that are used are Tax parcels - Aerial orthophotography Impervious area polygons Utility service locations (premises) Service area boundaries As reflected in Exhibit 23.4, tax parcel GIS data generally contain polygons representing parcel boundaries as well as tabular information for each parcel used for tax assessments. These data may include property values, details on structures, and owner characteristics. If the impervious area cor- ollary is used to model service demand, the tax parcels can be overlaid on aerial orthophotographs (images taken above the ground looking down) so that impervious areas can be delineated by drawing boundaries around them in GIS software. After delineation, impervious area polygons can be spatially Stortnwater GIS data layers • Parcel boundaries in light blue • - - • Water utility service points in red • Aerial ortlwphotography as the basemap EXHIBIT 23.4 Data layers overlain within GIS software. r Expanding Financing and Pricing Concepts into Stormwater 479 intersected with tax parcels to determine the square footage of the impervious area on each parcel This value can then be translated into a billing unit such as an equivalent residential unit (Le., the median value of impervious area for all residential properties in the service area) or any other unit (i.e., 500 square feet). GIS data can also be used to assist with assigning fees associated with parcels to other utility bills, such as water/wastewater bills through the use of service location points. Service points, or "premises;' often represent water meter locations or parcel centroids associated with utility accounts. The points may be helpful in determining the optimal method to split stormwater fees among other utility bills should no one-to-one relationships exist. Finally, a service area boundary defines the area within which the fees apply. The service area boundary may cross parcels so that parcels can be par- tially in and partially out of the area. Exhibit 23.5 shows all of these data layers overlaid within GIS software in a residential neighborhood that is entirely within a stormwater utility service area. Other GIS data layers that may prove helpful include • Hydrologic features - Stormwater conveyance system - Land use/land cover data • Topographic data These additional GIS data layers serve to provide context on customers falling into special cases that must be explicitly considered within billing policies. For example, parcels that directly dis- charge into water bodies are often considered to place less demand on the system than other custom- ers. These properties can be spatially identified via hydrologic features or stormwater conveyance system layer and given a fee credit or reduced rate where appropriate. Land use and topographic data may be used as corollaries to service demand in some locations where impervious area delinea- tion is too costly to initiate or maintain. Tax bdl Ji l Y4 mini .!ru IlviuPLI1 S}nfTli lam) lrr u r.I4 41,T.111111.. Link between fees and accounts is High easy (one to collections one between tax parcels and parcel - based fees) Tax-exempt Annual billing parcels are (usually)— stormwater results in less only —account frequent data data may be maintenance difficult to and lower obtain costs .I.SiilLILI 14t5.i. S.IPry1 I iLij my tyM#ID Stornnvater Shared with added to others existing system Link between accounts and Existing Highest feestakes utility bill collections effort to establish and maintain Parcels Quarterly, without bimonthly, other utility or monthly services are billing— stormwater mutts in only --account frequent data data may be maintenance difficult to and higher obtain costs Stormwater Shared with added to others existing system New independent bill Link between fees and accounts la Al fees are Much lower easy (one to stormwater collections one between only (see tax parcels collections) and parcel - based ice) $tiling frequency can be defined and Borne entirely matched to by stormwater chaired data program maintenance effort Stonnwater bears costs of new biking system EXHIBIT 23,5 Billing method comparison. 480 Water and Wastewater Finance and Pricing The process of calculating fees for individual customers highly depends on billing policies decided by the individual utility. Once these policies are set, the tabular and GIS data sources can be assembled, updated, and processed to result in units of service and charges for each customer within the service area. The utility must then decide how the fees are to be conveyed to the customer to balance anticipated collections with administrative burden. 23.7.3 CONVEYING THE FEE As presented in Exhibit 23.5, three methods are available for conveying stormwater fees to custom- ers once they have been calculated. The first two rely on existing billing systems to convey the new fee —either the tax -billing system or an alternate utility billing system such as the water/wastewater bill. The third method for conveying the fee is to create a stand-alone bill generated through a new billing system entirely devoted to stormwater. This approach has been used in Richmond, Virginia and was initially used in Tega Cay, South Carolina, before the utility converted to billing on the annual county tax bill. This approach is much less common than the other two. Bach of the three methods has its own requirements and implications. Most utilities choose to implement the fee through existing billing systems because the majority of the infrastructure for billing is already in place to support the other fees. These systems generally already have services tied to customers with the accounting and financial support needed to support collections and adjustments. Attaching the stormwater fee to the property tax bill is the easiest from a data model and maintenance perspective, as the tax -billing system uses the same unit as a customer (the tax parcel) and bills are typically sent only once per year, thereby reducing administrative costs. Tax billing is also advantageous as the rate of collections is very high and, where supported by law, tax liens or tax sales can be used in cases of delinquency. Some stormwater utilities may not choose to use the tax bill either because they do not want the fee to be associated with a tax, or because the utility is not directly associated with the governmental body responsible for assessing property taxes. Billing with property taxes also means that adjustments and appeals have a longer term before corrections may be seen by the customer. For these reasons, conveying the stormwater fee via the property tax bill is most frequently used by smaller utilities with fewer complexities and smaller staff. Although some rate payers deduct their utility payments when they are paid along with taxes, these utility payments are not legally deductible according to IRS (Internal Revenue Service) rules. In many cases, it makes more sense to convey the stormwater fee through the water/wastewater bill, especially if all three utilities are managed by the same organization, such as a department of public works. The existing water billing system has similar advantages to the tax bill as customers are already identified and linked to services at geographic locations. The water bill can be preferable for utilities wanting a shorter time interval between payments while still maintaining a high collec- tions rate. The staff supporting water utilities can also be augmented under a similar staffing strategy to maintain seamlessness between services from the customer's perspective while reducing the need for separate staff to perform similar work. Conveying the fee on the water bill also gives 'the storm - water utility the additional benefit of being able to stop water service for customers who are unwilling to pay. Many of the workflow processes that apply to water/wastewater will also apply to storrnwater, so that the administrative burden can be reduced compared with separating the utility. The major drawback to billing on the water bill is that water and stormwater follow different data models for identifying and hacking customers. A parcel that has a single stormwater customer (i.e., the owner) may have multiple water meters and account holders. These relationships are far more complex than the one-to-one relationship of billing on the tax bill. However, conveying the stormwater fee on the water utility bill is an excellent choice for larger programs that can use the support of a mature utility to assist in the implementation and management of a similar utility. An offshoot of this approach is that the potential exists to reallocate billing costs among all utilities, thus potentially reducing bill- ing costs for the metered services as stormwater begins to pay "its fair share." In Philadelphia and in Charlotte, North Carolina, the stormwater programs pay a portion of billing costs. Expanding Financing and Pricing Concepts into Stormwater 481 A less common option for conveying stormwater fees is to develop a stand-alone bill for storm - water services. This option tends to be used where the law prevents the utility from associating the fee with other services or where the stormwater utility is managed by a separate governing body than the local government or entity associated with tax or utility billing. A stand-alone stormwater bill is often entirely developed from the ground up and may require a high level of administra- tive effort to maintain. The major advantage of a stand-alone bill is that all program policies can be entirely decided by the stormwater management team without influence from other utilities or departments. This approach allows for the complete customization of data maintenance intervals, workflow processes, and decision making that could impact billing. These advantages do come at the cost of a reduced collections rate given that there is no, or reduced, leverage where customers are unwilling to pay. The administrative burden for customer service, payment processing, bill printing, and data maintenance will also be wholly placed on stormwater staff for stand-alone bills to be successful. It is not recommended that the stormwater fee be billed on a stand-alone bill unless there is no other recourse, due to the reduction in collections that could highly impact program revenues. 23.7.4 DEVELOPING AN INTEGRATED SYSTEM TO SUPPORT THE PROGRAM Stormwater billing data need to be stored and maintained no matter what option is chosen for con- veying the stormwater fee. At a minimum, the characteristic components involved in the calcula- tion of the fee (i.e., customer class, impervious area, etc.) will need to be accessible for updating in , response to customer inquiries. Many of the fundamental stormwater characteristics are closely tied -to GIS data and even the most robust utility billing systems available do not have adequate support for spatial data. These modern systems also lack interfaces specific to stormwater billing such as the option to implement fee credits on a renewal basis for activities benefitting the program. As a result, a software system is needed that can connect GIS data to financial billing systems with particular attention to the data model and process needs specific to stormwater. An integrated stormwater billing system allows the stormwater utility to translate fundamental geospatial and tabular information into relevant variables for calculating fees and describing cus- tomers. This information can be processed initially and at scheduled intervals in GIS software to result in data that drive the billing process. These derived metrics are stored in a database where customer service, administrative, financial, and other staff can alter information in response to cus- tomer characteristic changes over time. At regular intervals, these stormwater data can be recalcu- lated and communicated to another billing system (or to a bill print vendor in the case of stand-alone bills) so that fees are kept as accurate and up to date as possible. Integrated software systems are best when developed by teams with a combination of subject -matter expertise relating to stormwa- ter, as well as expertise in spatial data and software systems. If such a team is not accessible, the utility should be careful to specify explicit requirements relating to stormwater so that the system is able to accommodate all of the program's needs. 23.7.5 FREQUENT DATA CHALLENGES Owing to the high level of complexity involved in billing a non -metered service to customers that may not align with other billing systems, stormwater billing does not come without its challenges. First, should the stormwater fee be conveyed on the water bill, there are many cases where the fee must be divided among water utility customers. One example of a non -one-to-one relationship is a strip mall that falls on a single parcel, yet has multiple water customers in the form of restau- rants and shops. For this challenge, billing policies may be established to divide the fees equally among the accounts, assign all fees to a single account, or allow the parcel owner to decide the distribution of fees. Another challenge is determining how to most effectively bill customers who have no active services other than stormwater, also called stormwater-only customers. Owing to the 482 Water and Wastewater Finance and Pricing limited leverage available to stormwater utilities to collect on customers with no other services, it is often best to spend some effort trying to locate active services for all parcels or, in some cases, to tie stormwater-only parcels to other parcels that are owned by the same entity with other active services. This policy of aggregating parcels can increase the collection rate, but does significantly increase the level of administrative effort to manage aggregated bills. These are just some examples of challenges that may arise during stormwater billing, but all challenges can be overcome given sufficient planning, flexibility in billing data and systems, and decision making on processes that will increase the accuracy and reduce the maintenance needs of billing information over time. 23.8 CUSTOMER RELATIONSHIP MANAGEMENT AND DATA MAINTENANCE 23.8.1 UNDERLYING DATA AND How THEY CHANGE OVER TIME As with water and wastewater, the customer and account data used as the basis for stormwater billing are in a constant state of change as customers buy and sell properties, build and demolish structures, subdivide and combine parcels, and start or stop other utility services. The utility must endeavor to be proactive in keeping data sources up to date; otherwise, customers are likely to open customer service inquiries that could have been prevented. Some data sources are unlikely to significantly change in the short term such as land cover, topography, and hydrologic features. These data sources generally provide context to the stormwater program management team and need only be re-examined at long time intervals such as years or decades. Another data source that changes very gradually, or not at all, is the service area boundary. If the stormwater service area is fixed to the municipal boundary, then changes may occur only when new communities are annexed. If the boundary depends on the continued expansion of service infrastructure, then the boundary may only change slowly, and then only at the outermost edges of the current area. Slow -to -change data sources should be taken into account during utility implementation, and may not need to be re-examined until decades have passed when the utility undergoes review. Some stormwater data sources change more regularly, such as at biennial, annual, or biannual intervals. The aerial orthophotography that serves as the basis for impervious area delineation is usually updated at one to three year intervals due to the cost and logistics involved in procuring '.=f the images. Ideally, aerial imagery would be updated on an annual basis so that the utility techni- cal staff could perform change detection analyses to uncover customers whose service demand has increased or decreased. Impervious area delineation may change even more frequently than the 'bt return interval for aerial imagery if the utility also takes into account building permits, site plans,;` :';~, and as -built drawings if they are available from other entities within the service area. Impervious g areas may also be measured by an engineer or surveyor and corrected by digitizing survey -grade . 'Y maps should a customer appeals or challenges the fee. Changes to fees due to customer inquiries are most likely to occur early in the life of the utility as the rate of change of imperviousness is low : r on most properties. Parcel maps are also likely to remain unchanged except for updates annually or biannually in preparation for mailing new tax bills. Reassessing the customer base on an annual , basis is also recommended in response to changes to the tax parcel maps. Still other fundamental data sources for stormwater billing are updated on a monthly, weekly,;;: or even daily basis. The auditor or assessor data associated with tax parcel maps tend to be updated even more frequently than the parcel GIS data layer as the auditor or tax assessor cares far rnOFe about the tabular data that impact assessed property values than they do about the GIS paw;. boundaries. These parcel characteristics, including parcel owner names and addresses, shouldi' -. closely examined on a quarterly basis for stormwater-only customers, because these customers:' most sensitive to changes in names or addresses. Customer characteristics for utility bills (stic4:'? as water) change at an even more rapid pace than parcel characteristics, as utility customers cOil-,;, stantly move and alter services. In larger utilities, hundreds of customer characteristics and ser•.++Y e`, agreements may change every week. The stormwater utility must be careful to apply only the fl Expanding Financing and Pricing Concepts into Stormwater 483 relevant changes to alternate utility accounts so that the stormwater revenue stream stays constant despite changes to service agreements. 23.8.2 MAINTAINING BILLING AND CUSTOMER DATA With stormwater billing sources changing as rapidly as weekly, it can be challenging for the storm - water program utility to maintain up-to-date data for billing purposes. Where possible, the utility should establish relationships with the providers of source data so that updates are received in an expedient manner and so that feedback can be given regarding improvements, where needed. Utility billing data should also be updated in response to trigger events such as property sales and filing of building permits. If access to these common events is available, then the utility may be able to pro- actively update information prior to a customer request. Stormwater utilities should be particularly .cognizant of divergence between source data and the current billing data. Billing data should be compared against trusted sources frequently to identify areas of change and improvement. 23.8.3 CUSTOMER EXPECTATIONS Billing data maintenance is of critical importance to fostering a strong relationship with the cus- tomer. In fact, for most customers, the only direct communication the municipality may ever have with the customer is through the utility bill. Customer expectations have risen greatly as informa- tion becomes increasingly available and accessible. As information systems increase in sophistica- tion, so too do the demands of informed customers. The customers expect that their fee should accurately reflect the demand for service that they place on the stormwater system. Along these lines, estimated bills should be avoided and algorithmic approaches should only be applied where the statistical correlation of available variables is favorable. Customers also expect that, when bills are in error, the solution is seamless and occurs quickly. Customers now have come to expect con- venience features from the utility such as streamlined ways to pay and view their bills. The utility should strive to fulfill as many of these expectations as possible to promote strong customer rela- tionships that increase support for the goals of the overall program. In addition to data maintenance and convenience features; the utility should wnrk toward a smooth start-up if a new fee is being implemented. To achieve this end, plenty of outreach should be provided to all customer classes in a variety of media formats such as press releases, mailers, com- munity meetings, and even television or radio advertisements. Raising awareness about the new util- ity and providing answers to the most frequently asked questions about the new fee can drastically reduce the volume of customer inquiries when the utility is first implemented The utility should strive for accuracy in billing, but should strike a balance between effort prior to go -live and ongo- ing maintenance once bills are in hand The program should always plan to augment staff, signifi- cantly for the first six months to one year, and then reassess resourcing after that point. Automating workflow processes relating to billing data to reduce administrative burdens on stormwater staff is appropriate once these processes have been tested and optimized. Achieving a smooth start-up can- not be overemphasized, as the first year of the program can set the tone for years to come and can help reduce the likelihood of suits or challenges brought against the program. DISCUSSION QUESTIONS 1. Identify the types of services that may be provided in a stormwater program. 2. What are the major cost drivers of stormwater services? How have local governments tra- ditionally responded to these drivers? 3. What are the similarities and differences between stormwater and water/wastewater in the following areas: • Types of service provided • Where within a city or county services would be provided 484 Water and Wastewater Finance and Pricing • Nature of costs for providing services • Cost drivers • Types of rate structures that can be used to bill for services • Methods of billing for service provided 4. Does it make sense to include stormwater issues in a book on water and wastewater finance, pricing, and management? Why? 5. What are the components of a stormwater management program? How has the "level and extent" of services influenced the way a stormwater program is organized? 6. Why does the fragmented nature of a stormwater program create problems for estimating costs of service? What is an appropriate approach for determining stormwater costs? 7. How have stormwater capital improvements been traditionally financed, and costs recovered? 8. Discuss the inelastic nature of demand for stormwater services. How does this inelasticity complicate designing a stormwater rate structure based on cost causation? 9. What are some variables that can be considered in a stormwater rate structure that will balance fairness with ease of understanding and simplicity? 10. Discuss the role of stormwater credits as a part of stormwater billing. What customers would normally be eligible for stormwater credits? 11. Identify the major methods of billing for stormwater services. What are the advantages and disadvantages of each method? 12. Discuss geographic information systems (GIS) and their role in identifying and billing stormwater customers. 13. What would be some of the complaints that might arise from customers regarding storm - water billing? 14. Discuss how data in a stormwater billing system are maintained. How do these data change over time? 15. Discuss the importance of customer education in a stormwater program. Rainscaping Small Grants Program - MSD Project Clear, St. Louis http;//www.projectciearstl,org/get-the-rain-out/rainscaping-small-gran... Metropolitan :,t t_Qlils ,ewer D$strlct pr diject (http://www.projectclearsttorgi) Visit www.stimsd.com (http:llwww,stlmsd.com) MSD Project Clear Is the initiative to Improve water quaJlry and alleviate many wastewater concerns in the St Louis region. It will Invest billions of dollars over a generation in planning, designing; end building community r inscapnng, system improvements, and an ambitious program of maintenance and repair. Find out more *haul man Project dear 3 {hllp,ilwww.pralecickarsti orgiabouto Get the Ram Out - 1 I Repair & Maintain - timid *mom improvements - {http://www.projectclearstl.arg (httpJ/www.prajectclearstLerg (httpJ/www.pmieectclearstl.ari /get the -rain autt/{ j /repair-andanaintain/1 i Mudd-system-improvements/1 Rainscaping Small Grants Program MSD Project Clear Rainscaping Small Grants Program - 2015 Full Round application process has closed Metropolitan St. Louis Sewer District's Project Clear is the initiative to Improve waiver quality and alleviate many wastewater concerns In the St. Louts region. It will invest billions of dollars over a generation In planning, designing, and building community rainscaping projects, system improvements, end an ambitious program of maintenance and repair. lane of the Initiatives for MSD Project Clear Includes $100 million in rainscaping investments. Ralnscaptng is any combination of plantings, water features, catch basins, permeable pavement, and more that manage stormwater as lase as possible 10 where it falls, rather than moving it someplace else. Below ground level, improved soils store and filter stormwater, allowing the surrounding area to slowly absorb It over time. Above ground level, native plants, basins, and water features create public green spaces that also help store water. Used effectively, rainscaping can reclaim stomtweter naturally, reduce sewer overflows, and minimize basement badcups. The purpose of the Rainscaping Program is to reduce the volume of stormwater In our combined sewer system by installing landscaping that helps capture rain where It fats, instead of allowing water to run off -site. Rainscaping can also be employed to solve a drainage problem, Increase aesthetic appeal, improve property values. and attract birds and butterflies, in addition to other benefits. Rainscaping practices can include features such as rain gardens, bioretention cella, pervious pavement, green roofs, etc to slow down, soak up and reuse the rainwater before it gets to the sewer. MSD Project Clear has designed and built a number of pilot projects predominately In MSD's Bissell Watershed focus area to analyze which features work best in specific geographic areas. The main objective for the MSD Project Clear Rainscaping Small Grants Program is to encourage the use of simple rainscaping techniques for the primary purpose of helping the public understand how stonnwatar impacts the combined sewer system, and how they can help be a part of the solution through the use of rainscaping on their properties_ A 2014 Model Round kicked off the program and provided a great audience for education about rainscaping features! A larger grant program, the 2015 Full Round, was available to landowners but is now closed for applications. MSD Project Clear and the Missouri Botanical Garden will work together to assist landowners with The projects. Find out if your property is in the focus area for the grant program(httpi/stimsd,maps.arcgls.com/appsNiewer findex.html7appid=4c26b6f53f1c4bb0a8145e6as84c7420. Just dick the drop down Updates - tpttp //www.pmjectclearstl.tag /updatesll Connect with us ‘&04: (httn:l/www.stlirsd.com) f (lprniaet- (https:!ltwitter.com /projectdearsti) (/contact!) Please call or email us: Billing -14 - 866-281-5737 ftel:0415737) Service - +1 314-768-6260 fte1:31476862601 Quifigmeatalklmasisara jmaitto:customersvctstlmsd.coml Sign up for email updates Enter your emaH addre Enter your ZIP code * we will nom share your hdoanalio n, and we wit wily we se Information to keep you up to date on project devetapnente. 1 of 3 6/22/2015 11;35 AM Rainscaping Small Grants Program - MSD Project Clear, St. Louis http://www.projectclearstl.org/get-the-rain-out/rainscaping-small-gran... arrow In the search bar, and choose ESRI World Ge000der. THE 2014 MODEL. ROUND IS NOW COMPLETE. View a summary of the 2014 model round (http://www.projectclearettorgi2014/12 /msd-project-dear-reinscaping-small-grants-program-project-set-pace-for-2015- grantees/). 111. tory To learn more, explore the links and Information below. Important program clarifications • Green Roof Blocks Company has been added to the Ilst of Participating Contractors In order to accommodate Green Roof Interest from applicants. • Multiple grants may be submitted and the criteria are as follows: o 1 grant per residential address, and up to 4 grants per commercial address. o Each individual address counts as a separate property, excluding individual buildings that have more than one address. o Only 1 representative must have attended a Landowner Orientation for each property or organization with multiple properties. o For multifamily or duplex properties with a single property owner, you may submit an application for the total number of units (up to 4). o If there are multiple owners, EACH OWNER may submit 1 application (up to 4) *NOTE - We do not recommend applying for a Green Roof for shared ownership of a multifamily home. o Each grant must be for a unique project, end each project must meet minimum requirements as applicable. For exempla, a rain garden covering 100 square feet would be one grant, a lawn alternative and pervious pavement area, with a combined area of 100 square feet would be a second grant A large rain garden covering 200 square feet would only be one grant Dates for the 2015 Full Round Grants Program • The Contractors' Workshop is oompleted end dosed for 2015. • The Landowrer Workshops are completed and closed for 2015. • Grant Applications Due: Mardi 27, 2015 • Project Notifications Out: April 20, 2015 • Planting Time: Spring and Fall 2015 • Project Receipts and Completion Forms Due: No Later Than October S, 2015 • Quality/Ground Truthing/Completion Forms Due- Within 6 Weeks of Receipt of Proect Completion Forms • Grant Funds Dispersed to Landowners. Within 12 Weeks of Receipt of Project Completion Forms Links fhttp//www.orolectclearsti.org Met -the -rain -out /stormwater- dLoconnectlons /#1etterlYou've got mall? If you received a letter from MSD, agis Otto://www.oroiectcieersti.org Met-the-rain-oy( /stormwater- discannecdoneiMetterl for important Info. 1. Rainscaping Small Grants Program Brochure (htlp:Nwww.projectclearsti.org /wp-wntent/uploadsl2015/02 /ralnscaping_small_grents_program brochure 020615.pdf) (PDF) 2. Rainscaping Small Grants Program Application (http://www.projectclearstl.org /wp-content/up[oads/2015/02 /rainscaping_amall_grants_irogram application 020615 02.pdf) (PDF) 3. Rainscaping Small Grants Program Landowner Guide (Mtp://www.projectclearstiorg/wp-content/uploads/2015/02 /rainscaping_amall_grants_program landowner_guk1e 020615_02.pdf) (PDF) 4. Rainscaping Small Grants Program Workshop Presentation (Landowner Orientation)(http://www.projectdearsttorfplwp-conten#fuploads/2015/03 /rainecaping_amallgrants_program landowner_orientation spring2015 030415_01.pdf) (PDF) 5. Full Round Landowner Orientation Q&A) (httpllwww.projectclearstt.org hrp-content/uploads/2015/03 ifull round landowner ortentation_ga_031815.pdf) (PDF) 6. Rainscaping Program Focus Area Map (httpJlwww.projectclearstt.org/get-the- raln-oul/rainscapingl) 2 of 3 6/22/2015 11:35 AM Rainscaping Small Grants Program - MSD Project Clear, St. Louis http://wwwprojectclearstl.org/get-thc-rain-out/rainscaping-small-gran... 7. Missouri Botanical Garden Native Plant List (httpJlwww.missouribotanicalgarden,orgMsitlfernlly-of-attracdonslshaw-nature- reserve/gardens-gardening-at-shaw-nature-reserve/native-landscaping-far-the- home-gardener!native-landscaping-manual.aspx) 8. Missouri Botanical Garden Rainscaping Guidance (htga://www.mobotorg w.mobot.org Irainscaptng) 9. Rainscaping Small Grants Program Participating Contractor List (hdp://www.prolectslearstIorgAvp-contentfuploads12015/03 /ralnscapIng_small_grants program participating_contractor list_o31815.pdf) (PDF) 10. Ralnscaping Small Grants Program Participating Contractor Application (httpJ/www.projectdearstLorg/wp-content/uploads/2015/01 lralnscaping_amail_grants_progrsm_participatln9 contractor application 010818.pdf) (PDF) t1. Rainscaping Small Grants Program Contractor Guide (http:11www.projectclearstl.orgfwp-conten1Juploads12015/02 /rainscapEng_small_grants_program contractor_,guide 020615.pdf) (PDF) 12. Rain Garden Maintenance(http://www.projectclearstlorgtwp-contentiuploads /2014Po8/rain_garden_maintenence brochure081414.pdf) (PDF) 13. Rain Garden FAQ on the Metropolitan St. Louis Sewer District Otfidal Site (http://www.stlmsd.comNvhat-we-do/what-cant-do/rain-gardens) 14. Contact Information: o Email: rainscaping©mobot.org (malita:rainscapingmmobot.org) o Phone 314-577-0202 Contact MSD Project Clear(http:dwww.proleciclearrtt.arg/contsctd) Pilvitoy Policy(Mtp:lfwww.pmjecictaensll.org/prmvaoy-pollcy/j Tema of Service (ttap:pwww.pro)actclearatl,orgiterms. of -service/) About MSD Project Clear(hltoJ/www.projectciearstt.orglabouV) An Initiative of M8D (Mtp:/lwww.atimed.aond) ® 2016 MSD Project Cleetr, St. Louis 3 of 3 6/22/2015 11:35 AM K A N S A S CITY MIS • O U KC WATER SERVICES Schedule of: Water & Sanitary Sewer Service Rates Stormwater Fees Meter Readings Billing Practices Bill Payment Guarantees Rates effective with billings on and after May 1, 2013 Cade of Ordinances Section Section 78-2. Section 78-5. Section 78-6. Section 78-8. Section 78-9. Section 78-10. Title VVater service generally. Residential meter rate. General meter rate. Fire protection rates. Temporary service rate. Suburban meter rate. Page 1 1 2 3 3 Section 78-11. Meter reading and billing generally. 4 Section 78-12. Bills for metered water service. 4 Section 78-13. Inclusion of sewer services charges on water bill. 4 Section 78-14. Late payment service charge for delinquent bills. 5 Section 78-14.1 Suit additional to other remedies. 5 Section 78-15. Termination of services for failure to pay charges. 5 Section 78-15.1. Property owner liability for water and sewer services; 5 delinquent charges; liens. Section 78-16. Charge for termination and restoration of service. 6 Section 78-17. Billing for services under fire protection rate. i Section 78-18. Bills for temporary service. Section 78-19. Charge for water temporarily unmetered. 7 Section 78-20. Bill payment guarantees. 7 Section 78-23. Water service disconnection. 8 Section 78-24. Water meters generally. 9 Section 78-25. Water meter settings. 9 Section 78-27. Sealing of water meters. 10 Section 78-28. Price schedules; permits for work on water service. 10 Section 60-2. Sewer charges for resident users. 11 Section 60-3. Sewer charges for nonresident users. 12 Section 60-5. Exemption from sewer charges. 13 Section 61-3. Stormwater Utility Division; applicability of stormwater fee. 13 Section 61-4. Collection and amount of stormwater fees. 14 Schedule of Fees and Charges May 2013 Section 78-2. Water service generally. (a) Availability. Water may be taken by any applicant for a license to use water, upon approval by the water services department, who shall first and at all times thereafter comply with the rules and regulations of the water services department and with all ordinances of the city relating in any way to the purchase of water and to facilities and conditions related to its use, and who shall pay for such water according to the established rates. (b) Notice to initiate, discontinue or transfer service. All notices to the city's water services department to initiate discontinue or transfer service shall be in writing. The city will attempt to act on oral orders taken in person or over the telephone by an employee of the water services department but assumes no liability for failure to act on the orders. Section 78-5. Residential meter rate. For all water purchased for use within the city by any residential accountholder (also referred to in this Chapter as "customer" or " consumer), a total charge, consisting of the sum of a service charge and a commodity charge, shall be computed monthly for each billing period, as prescribed under the general meter rate stated in section 78-6. Section 78-6. General meter rate. For all water purchased for use wholly and exclusively within the City by any accountholder, the total charge shall be the sum of the service charge and the commodity charge as follows: (a) Service charge. The service charge is a charge per meter or service connection, to cover, in part, the cost of various services including meter reading, meter maintenance, billing, collecting, accounting services and readiness to serve the customer, and shall be prorated per day during the billing period and shall apply whether or not any water is used; the service charge shall be based on meter size and billing frequency as follows: Meter size (inches) Monthly Billing 5/8 $11.90 3/4 12.80 1 15.65 1-1/2 19.50 2 30.00 3 102.50 1 Meter size (inches) I Monthly Billing 4 $129.00 6 192.00 8 278.00 10 365.00 12 430.00 (b) Commodity charge. The commodity charge shall be based on the total volume of water purchased by the accountholder as shown by all water meters connected to one or more water systems serving contiguous properties of the accountholder, where such properties are managed as a single enterprise that is not separated by a public thoroughfare, and shall be as follows per month for metered water: (1) Ordinary commodity charge. First 600 cubic feet at $4.02 per 100 cubic feet Next 4,400 cubic feet at $4.50 per 100 cubic feet Next 995,000 cubic feet at $3.65 per 100 cubic feet Over 1,000,000 cubic feet at $2.50 per 100 cubic feet (2) Seasonal off-peak commodity charges. For industrial customers with peak demand in the winter season: All usage at $2.48 per 100 cubic feet; The director of water services is hereby authorized to promulgate regulations to be used for determining the applicability of this subsection. (c) Manual meter reading charge — The service charges are based on use of the city's automatic meter reading system. In cases where the automatic meter reading system could not be installed due to action or inaction on the accountholder's part, including lack of access to the meter, improper meter setting, accountholder efusal, or other reasons, a charge of $16.00 for manual meter reading will be applied each time that a meter is to be read. (d) Definitions (as used in this section). (1) Residential accountholders shall refer to all one- and two-family dwelling water service accounts. (2) Commercial and industrial customers shall refer to all water service accounts other than one -and two-family dwellings. (3) Month or monthly shall refer to a time period of 30 days. Section 78-8. Fire protection rates. (a) The rate for an unmetered water service connection to hydrants, hose connections or sprinkling systems purchased and used solely and exclusively for fire protection purposes, including all water used for fire protection shall be as follows: I Size of Connection Rate per Annum 4 inch and less $100.00 6 inch 293.00 8 inch 625.00 Size of Connection Rate per Annum 10 inch $1,123.00 12 inch 1,815.00 16 inch 3,868.00 )) The size, location and arrangement of any fire protection seni ces are subject to the approval of the director of the water services department. (c) All meters, valves and hydrants controlling or in connection with such fire protection services shall be sealed by the water services department. A fee of $150.00 shall be charged for each meter, valve or hydrant requiring resealing in the absence of evidence that the meter, valve or hydrant seal was broken in operation against a fire or in operations pursuant to system testing by a fire underwriting agency and properly certified by such testing agency. (d) Direct connections between the fire protection and drain piping on all premises are not permitted, and drawings which show the location of all fire protection piping 2 may be required by the water services department. The repeated, unauthorized breakage of seals on any premises may be taken as evidence that water is being used without authorization, and in such case the water services department may require the installation of a meter designed for fire protection and in addition to other charges set out above also assess charges therefore in accordance with Section 78-6. (e) Fire protection services shall be billed to the owner of record of the real property. Section 78-9, Temporary service rate. There shall be a temporary service rate for unmetered water for temporary purposes as follows: (1) Swimming pools. The service fee for filling swimming pools shall be $467.50 plus payment of the commodity charge for the water used to fill the pool. In addition, a deposit shall be required for the hydrant meter assembly. (2) Other temporary purposes. For water purchased and delivered through a metered service or connection or fire hydrant for other purposes of a temporary nature, the charges therefore and the manner in which the service is to be rendered shall be prescribed for each service contract by the director of the water services department. Such charges shall conform generally to the cost of water as fixed by the applicable meter rate, plus the cost of any labor or materials required to render the temporary service. Section 78-10. Suburban meter rate. (a) For any and all water purchased wholly or partially for use outside the city by any customer, a total charge consisting of a service charge, a commodity charge, a repumping charge where applicable, shall be computed for each billing period and shall be as follows: (1) Service charge. A service charge, prorated per day during the billing period based on meter size, with such charge to be applied whether or not any water is used, shall be charged as follows: Meter Size (inches) Monthly Billing 5/8 $13.25 3/4 14.30 1 17.45 1-1/2 21.70 2 33.30 3 105.00 Meter Size (inches) Monthly Billing 4 $133.50 6 198.00 8 285.00 10 381.00 12 448.00 The service charges as established in this subsection may be superseded by any contract between the city and any other public water supply which provides for an interchange agreement. (b) Commodity charge. A commodity charge per month, based on the total volume of water purchased by the customer as shown by all water meters connected to one or more water systems serving the customers premises, shall be charged as follows: (1) Retail Customers. For customers purchasing water for use wholly by the customer 3 First 600 cubic feet at $3.74 per 100 cubic feet Next 4,400 cubic feet at $4.15 per 100 cubic feet Over 5,000 cubic feet at $3.25 per 100 cubic feet (2) Wholesale Customers. For customers purchasing water for resale: Unrestricted $2.00 per hundred cubic feet Restricted $1.94 per hundred cubic feet Wholesale Customers shall be classified as restricted or unrestricted based on water supply contract terms between the City and any other contracting entity. (c) Repumping charge. A repumping charge based on the quantity of purchased water repumped shall be charged to wholesale suburban customers only as follows: (1) From the pumping station at 75th & Holmes Street; from the pumping station at Highway AA, near the Village of Waukomis in Platte County, Missouri; from the Blue Ridge Pumping Station at 67th Street & Blue Ridge Boulevard; from the pumping station at Englewood Road & North Oak Trafficway; from Arrowhead Pumping Station NE 75th &Arrowhead Trafficway, and from the South Terminal Pump Station at Ward Rd. & Persells, per 100 cubic feet, $0.18 (2) From the pumping station at 131st and Prospect Avenue; from the High Grove Road Pumping Station, and from the Platte County Booster Pump Station at Camden Point Highway E and Interurban Rd., per 100 cubic feet, $0.25. (d) Definition. The term Month or Monthly, as used in this section shall refer to a time period of 30 days. (e) Applicability. Rates set forth in this section may not be applicable where such rates are established by existing or future contracts. Section 78-11. Meter reading and billing generally. (a) Water meters serving premises having monthly water consumption averaging less than 50,000 cubic feet of water per month, or when estimated by the director of the water services department to approximate that figure, may be read and bills for services may be rendered monthly, bimonthly or quarterly, at the discretion of the director. (b) Water meters serving all other premises shall be read and bills for services shall be rendered monthly. Section 78-12. Bilis for metered water service. Rills for metered water service shall be mailed to the accountholder as soon as possible after the meter is read. The bill shall include: (1) A designation for the bill as monthly, bimonthly quarterly or annually; (2) The meter readings showing the amount of water used and its cost; (3) The last meter reading date; (4) The billing date, which shall be as soon as possible after the last meter reading date. All bills are due and payable on the billing date; and (5) The delinquent date, which shall be not less than ten days after the billing date. Section 78-13. Inclusion of sewer services charges on water bill. All charges for sanitary sewer service shall be included on the water bill. Stormwater fee charges may be included on the water bill, or may be billed separately. The delinquent date for sanitary sewer service and stormwater fee charges shall be the same as for the water bill. Section 78-14. Late payment service charge for delinquent bilis. A late payment service charge in the amount of five (5) percent of the amount of the unpaid delinquent balance shall be applied to all metered water service, sanitary sewer service and stormwater fee bills remaining unpaid after the delinquent date. The director of water services may waive or adjust late payment service charges for a party that enters into an agreement with the city for the payment of unpaid water, sanitary sewer and stormwater charges. Section 78-14.1. Suit additional to other remedies. (a) In addition to any and all remedies, by sale or otherwise, provided in the Charter and this chapter, the city shall have the power to enforce the collection of unpaid water, sanitary sewer and stormwater charges, with all interest, costs and penalties thereon, by suit brought in the name of the city in any court of competent jurisdiction. (b) Ten percent on the amount of the judgment shall be added as costs in every proceeding for the collection of delinquent charges under this chapter, to be added and collected in the same manner as other costs in the case. Section 78-15. Termination of services for failure to pay charges. Water service, sanitary sewer service or combined water and sanitary sewer service shall be subject to termination without further notice if a bill for any or all of the above services remains unpaid 20 days after the delinquent date. However, the director of water services may order termination at any time upon a specific finding that payment for continued service is unlikely to be received. Any partial payment received may be applied proportionally to each of the applicable water service, sanitary sewer service and stormwater service accounts. Section 78-15.1. Property owner liability for water and sewer services; delinquent charges; liens. (a) Water and sanitary sewer services shall be deemed to be furnished to both the occupant and the owner of the premises receiving either or both of such services. Any delinquent charges shall be chargeable against any deposit held by the water services department for service to such premise. (b Any charges for metered water service pursuant to this chapter, for sanitary sewer service pursuant to chapter 60 or for stormwater fee pursuant to chapter 61, shall, if not paid by the due date, become delinquent and shall bear interest from the date of delinquency until paid. Delinquent charges shall be a lien upon the land so charged for such service, services or fee, upon the filing of a notice of delinquency with the recorder of deeds in the county where the land is situated. The lien hereby created may be enforced by suit or foreclosure. (c) The director of water services is authorized to file, on behalf of the city, the notice of delinquency as provided in subsection (b) of this section, subject to the following limitations: 1. For one -and -two-family residences, if the account is three months delinquent or the total amount of such delinquency is $500.00 or more; 2. For all other service classifications, if the account is three or more months delinquent, or the total amount of such delinquency is $1,000.00 or more. 3. The limitations provided by this subsection shall not prohibit the director of water services, or the council, from pursuing other remedies provided by statute or ordinance. (d) Upon the written request of any owner whose land has become subject to a lien as provided in subsection (b) of this section, within 30 days of the filing of such lien, the director of the water services department shall hold a hearing to ascertain all facts in the matter. The owner requesting such hearing shall be entitled to all rights applicable to a contested case under state administrative review and procedure law. The director shall prepare written findings and conclusions determining whether the amount of the charges was properly computed, whether such charges were delinquent, or whether the lien should be removed or released for any factual or legal reason. If, after hearing, the director finds and concludes the lien should be removed or released, the director shall take any necessary action to remove or release the lien from the property. The owner of such land must pay a $75.00 fee, to cover in part the cost of hearing the case, and preparing the written response. if upon finding that the lien should be removed or released the fee should be retumed or refunded to the property owner requesting the hearing. (e) When, subsequent to the filing of a notice of delinquency under subsection (b) of this section, the amount of delinquency charges, plus interest and any recording fees or attomey's fees, have been paid in full, the director of water services shall file with the appropriate recorder of deeds a notice that the delinquency has been satisfied. Section 78-16. Charge for termination and restoration of service. (a) The following charges shall be made for the termination of service after failure to pay for water service, after failure to have the meter readily accessible for reading on the regularly scheduled route on more than two successive occasions, after receipt of a accountholder request for termination or for any of the grounds set forth in Section 78-30: (1) For the first trip for termination of service, the accountholder will be charged $50.00. (2) When the service was not established as authorized by the Code of Ordinances, the accountholder shall be charged $150.00 for the trip for service, costs associated with failure to properly establish service, and a penalty. (3) When the service is found to be restored, but not by the water services department, the accountholder shall be charged $150.00 for the trip for service, costs associated with failure to properly establish service, and a penalty. For each subsequent termination of service when the service has been restored but not by the water services department, the accountholder shall be charged $500.00. (4) The term 'termination of service" shall not be construed to mean an immediate transfer of service from one accountholder to a subsequent accountholder. (5) For the trip for restoration of service, the accountholder will be charged $50.00. (b) Upon finding that water service, sanitary sewer service or combined water and sanitary sewer service has been established for a location in a manner not authorized by this Code of Ordinances, the director of water services is authorized to take appropriate action, including removal of taps to the water or sewer main or otherwise rendering the service line inoperable, to ensure termination of service. In addition to any permit, tap, or other charges restoration of terminated service after the water services department has removed a meter or a tap to the main shall be $550.00, but may be waived by the director of the water services department. Section 78-17. Bulling for services under fire protection rate. Water consumers served under the fire protection rate shall be billed annually in advance for this service. These bills shall be due within 15 days and delinquent 15 days after the due date. The service to premises having delinquent bills for service under these rates may be discontinued without further notice. Section 78-18. Bills for temporary service. Contracts for service under the temporary service rate for water delivered through a metered or unmetered service or hydrant connection for purposes of a temporary nature shall be accompanied by a cash deposit, and the accountholder shall make such additional cash deposits as required to maintain the deposit in excess of the estimated cost of the services rendered. When a temporary service contract is terminated, the director of the water service department shall refund the amount remaining on deposit after all charges for the service have been deducted, including any charges for repair or servicing of the hydrant or other city property. Section 78-19. Charge for water temporarily unmetered. The director of water services will promulgate rules for back billing consumers when there were problems with the meter, a meter was missing or other difficulties with the metering equipment. Section 78-20. Bill payment guarantees. (a) Required amount. The director of the water services department is authorized and directed to require each accountholder, before taking water under the general meter rate, the suburban water rate (except as provided for in water purchase contracts) and the fire protection rate, to make a cash deposit against which the water services department may charge any unpaid bills for the following: water service; meter, hydrant or valve resealing; termination of service; meter repair, sanitary and stormwater sewer service; or other authorized charges. For customers estimated to use less than 1,000 cubic feet per month, the deposit shall be $70.00. For customers estimated to use more than 1,000 cubic feet per month, the deposit shall be not less than the estimated cost of water and sewer service for two billing periods. Either interest shall be paid on cash deposits as required by state statute or deposits held by the director of the water service department shall be refunded after 2 years. (b) Additional deposit. An additional deposit above the amount required by subsection (a) of this section, not to exceed the estimated cost of four months' water, sanitary and stormwater sewer service, may be required by the director of the water services department for any customer whose account reflects a history of (f) (g) repeated delinquencies. Failure to provide the additional deposit authorized in this subsection shall constitute grounds for discontinuance of water service. (c) Refund; waiver of deposit. All bill payment guarantees taken shall be held for at least two years or until the account is terminated. The director of the water services department may waive deposits on additional accounts for an existing accountholder with known good credit. In cases where an accountholder has multiple properties or is between tenants, the deposit may be waived when the accountholder credit rating is good. (d) Transfer of service. When an accountholder transfers service from one location to another, the director of the water services department may waive any additional deposit. (e) Termination of service. When a contract for water service is terminated, the director of the water services department shall apply the deposit against any unpaid bills associated with the contract, and shall refund the remainder of the deposit, if the amount is $10.00 or above, to the depositor. Refunds in an amount under $10.00 will be made only upon written request of the customer. Bond in lieu of cash deposit. In lieu of a cash deposit, the director of the water services department may accept, as a bill payment guarantee, a corporate surety bond by a surety company authorized to do business in the state, in the amount of the deposit required but not less than $1,000.00. Such surety bond shall be subject to the approvals of the city attorney as to form and legality; of the director of the water services department as to the amount, terms and conditions of the bond; and of the director of finance as to the qualifications of the surety. The surety bond shall be filed with and kept by the director of the water services department. Commercial accounts. In addition to any bill payment guarantee, all commercial accounts shall enter into and execute a contract for service, on a form provided by the water services department, specifying the parties responsible for payment. These parties shall remain responsible of all water used until notification is received in writing of the date services is to be terminated. Section 78-23. Water service disconnection. (a) Disconnection when building razed or moved. If a building is razed or moved, the water service to the premises shall be disconnected at the main. The responsibility and expense for such disconnection shall rest with the owner of the land upon which the building is located. (b) Disconnection for unauthorized use of water. The water department is hereby authorized to disconnect a water service at the main if deemed necessary to prevent the unauthorized use of water, in which case the owner of the property served by the connection shall reimburse the water department for the expense of the disconnection. (c) Reuse of service. In those cases where a building is razed or moved, a copper, cast iron or ductile iron service to a property may remain connected to the main for a period of one year on the authority of the director of the water services department and subject to his approval of the written application of the property owner indicating that the service will be used again within one year and also providing that the property owner place a cash deposit with the water department equivalent to the cost to disconnect the service line at the main. The deposit shall be refunded if the service line is reused. If the service line is not reused in the time period provided, the deposit shall be used to pay the cost of disconnecting the service line from the main. (d) Reconnection. Services disconnected from the main may be reconnected to the main, subject to pertinent rules and regulations of the water department, provided a permit for such reconnection is obtained and such reconnection shall be made solely at the expense of the owner of the premises serviced. (e) Other service disconnections. A water service connection to premises not having a contract for water service may be disconnected at the main by the water department, and the cost of the disconnection billed to the owner of the premises, if: 1. The service line has not been used under a water service contract for one year; or 2. There is a leak on a service to a vacant building, dwelling or property in those situations where public safety or welfare may be affected. Section 78-24. Water meters generally. (a) Ownership; installation. All water meters installed for original service for any premises shall be city -owned meters installed and connected at the expense of the owner of the premises served. The connection charge shall be based on the current price of the meter installed and related appurtenances plus the current cost of such setting. Appurtenances include but are not limited to all components necessary forth reading and transmission of usage. (b) Maintenance and replacement. All water meters shall be maintained and replaced in accordance with section 78-25. (c) Authority of water department. The water department may purchase meters for resale to prospective consumers and may prescribe conditions under which meters may be purchased elsewhere for installation on services connected to Water Services Department mains. (d) Determination of consumption when remote register does not operate properly. If the remote register or other outside reading device does not operate properly, the reading on the actual meter located inside the premises shall determine the consumption on which the water and sewer commodity charges are computed. Section 78-25. Water meter settings. Water meter settings shall allow free and non -hazardous access to the meter for reading, removal, inspection or replacement, and shall be subject to the approval of the director of the water services department. All meters shall be set by the water department and charges therefore shall be assessed against the owner of the premises served as provided in Section 78-28. Meters shall be set after a payment has been made to the director of the water services department to cover the cost of connection charge based upon size of meter. Meters larger than one inch may be purchased by the owner in accordance with water services department specifications and the connection charge will be adjusted according to the current published list of meter charges as maintained by the water services department. If the meter is purchased by the owner it shall become the property of the city upon installation, and the maintenance and replacement of the meter shall become the responsibility of the water department under normal operating conditions. The acceptance of the title or of the care of the water meter by the water department as provided in this section or on city meters set under the connection charge shall not, however, relieve the accountholder of the responsibility for loss of meter, improper setting, heat damage, freezing or consumer fault or negligence. Section 78-27. Sealing of water meters. Water meters, when set, will be sealed in position and against access to the dials or mechanism. These seals shall be broken only by employees of the water services department in the proper exercise of their duties or by a licensed master plumber as defined in the building code. A charge of $165.00 shall be made for the replacement on any meter of a seal that has been broken in any other manner. Section 78-28. Price schedules; permits for work on water service. (a) Price schedules. That director of the water services department is hereby empowered and directed to prepare and maintain a schedule of prices governing the connection charge, sale, removal, test, repair and replacement of water meters; sale and operation of fire hydrants; and tapping charges. A copy shall be available for public inspection at the water services department director's office at any reasonable time. (b) Permit required for installation or maintenance of services. Water services shall not be installed or maintained except by permit issued by the water services department on the basis of an application for such permit made by the owner of the premises or his authorized agent as provided under sections 78-21 and 78-22. (c) Types of permit; permit fee. The director is hereby authorized to issue the following kinds of permits and to charge $82.50 per each such permit, where: 1. Taps are to be made and new services are to be installed. 2. An existing service is to be altered, extended, renewed or repaired from the first valve to the building improvement or fixtures, or appurtenances added thereto or detached therefrom. 3. An existing service is to be abandoned and replaced with a single larger service that requires a larger tap. 4. An existing service is disconnected at the main or is otherwise abandoned. (d) Duplicate permits. Whenever the original permit is lost, a duplicate permit must be secured. A charge of $10.00 will be made for the issuance of a duplicate permit. (e) Permit controls. Water service permits shall be issued and controlled in accordance with water services department rules and regulations. Plan Review. The director is hereby authorized to establish the following fees and charges for water service plan reviews: 1. A fee of $100.00 for water service plan reviews involving no more than 10 service connections. 2. For water service plan reviews involving more than 10 service connections, an additional charge of $11.00 for each connection greaterthan the 10 connections included in the charge referenced in subsection (f)(1). 3. A charge of $60.00 if plans are rejected and must be resubmitted for review due to deficiencies in the original plan. (f) Section B. This ordinance and the revised rates for charges for water services herein shall become effective May 1, 2013. 10 Section 60-2. Sewer charges for resident users. There are hereby levied charges against every person, partnership, corporation, association, and other entity within the city limits having an actual or available connection with the city's sanitary sewer system, or otherwise discharging sewage, industrial waste, water or other liquid into the system. All charges shall be prorated per day during the billing period. Such charges are to be the sum of charges for service, volume and high concentration charges to be computed and levied as follows: (1) Service Charges. a. Sanitary sewer. A service charge of $12.20 per month to defray in part the cost of various services including billing, collecting, accounting services, debt service, system availability and readiness to serve the customer, and shall be prorated per day during the billing period and shall apply whether or not any sewage or wastes are actually discharged to the city sewer during the billing period; such charges are to be made each month. b. Wastewater discharge permits. Commercial and industrial users shall pay for the cost of the wastewater discharge permitting program as described and authorized in article IV of this chapter. Permit application fees, permit maintenance fees and other miscellaneous charges as authorized in article IV of this chapter shall be billed and collected with the commercial or industrial users' normal water and/or sewer billing charges. (2) Volume Charges. A volume charge of $4.54 per 100 cubic feet based upon the total volume of water purchased by the customer during the billing period subject to the following adjustments: a. Water supplied from separate source. Where water is supplied by a separate and independent source, the sewage volume charge shall be based upon the volume of water used, where such information is available, and computed at the volume charge established herein. Where usage information is not available, the water services department shall determine an appropriate volume of water used and compute it at the volume charge established herein b. Residential accounts. Except as noted in (2)(a), residential service account (one- and two-family residences) volume charges for the bills generated during the months of May through December shall be based upon water used during the winter period, such winter period being the bills generated during January through April, (these are the billing periods that most closely correspond to the December through March usage); such charges shall be payable with each bill rendered throughout the year. Where residential water services accounts do not have an acceptable history of winter water use, the volume charge for bills generated during the months of May through December shall be the volume charge established herein, or $34.05 per month, whichever is the lesser. c. Commercial and industrial water accounts with diverted water uses. Commercial and industrial water accounts are all water service accounts other than one- and two-family dwellings. Diverted water uses are those where a significant portion of the water purchased is used in manufactured products such as ice, canned goods or beverages and the product is transported in containers away from the premises or where the water purchased is lost by evaporation or irrigation. The 11 Director of the Water Services Department or the Director's representative, shall make the determinations of fact as to the amount of water which is diverted, and shall have authority to adjust the sewer use volume billed on the basis of the facts ascertained. There is an application fee of $455.00 for site review, plan review and installation inspection. (3) Commercial and industrial water accounts with high concentration discharges. Commercial and industrial water accounts shall include all water service accounts other than one- and two-family dwellings. High concentration discharges are those in which the BOD (biochemical oxygen demand), SS (suspended solids), and/or O&G (oil and grease) concentrations are in excess of the maximum concentration of these components in normal sewage as defined in Article IV of this chapter. In addition to other sewer service and volume charges, a surcharge, as established by the formulae defined and set forth in Article IV of this chapter, shall be levied on high concentration discharges received from any customer under this section. For surcharge rate formulae calculation purposes, the following rates are hereby established: RB (surcharge per pound of excess BOD) = $0.303 RS (surcharge per pound of excess SS) = $0.181 RG (surcharge per pound of excess O&G) = $0.131 The director of water services is hereby authorized to promulgate regulations to develop various groups and classes to facilitate the equitable distribution of surcharge fees among like groups of customers. (4) Definition. a. Month or monthly, as used in this section, shall refer to a time period of 30 days. Section 60-3. Sewer charges for nonresident users. (a) There are hereby levied charges against every person, partnership, corporation, association, and other entity outside the city limits having a connection with the city's sanitary sewer system or otherwise discharging sewage, industrial waste, water or other liquids into the city's sewer system. All charges billed shall be prorated per day during the billing period. Such charges are to be the sum of service charges and volume charges to be computed and levied as follows: (1) Metered connections with municipalities and political subdivisions. Bulk flows through a metered interconnection with a municipality or other political subdivision shall be charged and pay a rate of $2.50 per 100 cubic feet (ccf), with no service charges. (2) Metered connections with municipalities and other political subdivisions directly connected to the treatment plant. Bulk flows through a metered interconnection with a municipality or political subdivision connected directly to the treatment plant shall be charged and pay a rate of $2.13 per 100 cubic feet (cot), with no service charges. (3) Unmetered connections with municipalities and other political subdivisions. Bulk flows through an unmetered interconnection with a municipality or political subdivision shall be charged and pay a rate of $3.21 per 100 cubic feet (ccf) 12 of actual water consumption for all residential, commercial and industrial customers, and shall also pay a service charges for each such customer of $9.90 per month for each such customer. (4) Unmetered connections with municipalities and other political subdivisions; no water consumption records. Where actual water consumption records are not available, bulk flows from a municipality or political subdivision through an unmetered interconnection shall pay a sewer charge of $34.50 per month per dwelling unit or equivalent dwelling unit. (5) Individual non-resident customers billed directly by the city. Individual non- resident customers billed directly by the city shall pay a service charge of $17.84 per month, plus a volume charge of $6.35 per 100 cubic feet (ccf). (6) Accounts with high concentration discharges. High concentration discharges are those in which the BOD (biochemical oxygen demand), SS (suspended solids), and/or O&G (oil and grease) concentrations are in excess of the maximum concentration of these components in normal sewage as defined in Article IV of the chapter. In addition to other sewer service and volume charges, a surcharge, as established by the formulae defined and set forth in Article IV of this chapter, shall be levied on high concentration discharges received from any non-resident user. For surcharge rate formulae calculation purposes the following rates are hereby established: RB (surcharge per pound of excess BOD) = $0.382 RS (surcharge per pound of excess SS) = $0.205 RG (surcharge per pound of excess O&G) = $0.133 The director is hereby authorized to develop various groups and classes to facilitate the equitable distribution of surcharge fees among like groups of customers. (b) Definition. Month or monthly, as used in this section shall refer to a time period of 30 days. (c) Applicability. This section may not be applicable where arrangements for sewer service and sewer service charges are established by an existing or future contract or cooperative agreement. Sec. 60-5. Exemption from sewer charges. All occupants of property not having a connection with the sanitary sewer system of the city and not having sewers available for connection shall be exempt from the sanitary sewer service charge and the commodity charge. Section B. This ordinance and the revised rates for charges for water services herein shall become effective May 1, 2013. Sec. 61-3. Stormwater Utility Division; applicability of stormwater fee. (a) There is hereby created a stormwater utility within the water services department under the control of the director of water services, who is empowered to implement the provisions of this article. (b) The stormwater utility hereby created shall be responsible for the management of the stormwater system. 13 (c) The stormwater fee shall be used for the sole purpose of stormwater system management, which includes catch basin maintenance, storm sewer and channel maintenance, flood protection system management and stormwater master planning. Section 61-4. Collection and amount of stormwater fees. There is hereby assessed a stormwater fee on every property within the city limits, that prevents stormwater from being directly absorbed into the underlying ground. The fee shall be based on the amount of surface ("runoff surface") on a given property. Such fees are to be computed and levied as follows: (1) Fee structure. The stormwater fee is based upon the amount of runoff surface on a property, not an actual or theoretical stormwater runoff. The fee structure considers runoff surface to be an indicator of a property's runoff contribution, but also considers the fixed costs of the stomiwater utility, which benefit all properties in the city. Fixed costs include program administration as well as maintenance of the storm drainage and flood protection systems. (2) Runoff surface. A "runoff surface" is an impervious surface area that does not allow rain or snow melt to be directly absorbed into the underlying ground. a. Runoff surfaces include, but are not limited to: Rooftops, asphalt or concrete driveways, patios, parking lots, tennis courts, swimming pools. b. Runoff surfaces do not include: 1. Wood decks located above a pervious (dirt, grass or gravel) surface area; or 2. Gravel/rock areas such as: rocked landscaped areas, or driveways or parking lots not required to be paved pursuant to code section 52-35. c. Updated runoff surface determinations shall be made through new aerial photographs or any other means available to the director of water services. It shall be the duty of a property owner to notify the director of water services of any changes in runoff surface if the owner desires a more frequent runoff surface determination. Runoff surface determinations shall not be retroactive without convincing documentation confirming the date that a runoff surface changed. (3) Fee amount. The stormwater fee shall be $0.50 per month for each 500 square feet ("runoff unit"), or portion of 500 square feet, of runoff surface on a property. Portions of a runoff unit shall be rounded up to the next highest runoff unit only when the portion is 0.5 runoff unit or greater. (4) Stormwater fee credits. a. Ratio credit Properties that have a large pervious area to help absorb runoff from the runoff surface will be given a ratio credit, if the ratio of the total property area to the runoff surface area is at least 30:1. Properties that qualify shall be granted a 50 percent stormwater fee credit. b. Detention credit. Stormwater detention structures are installed and maintained to reduce the peak flow of and runoff volume of stormwater from a drainage area, thereby reducing flooding and erosion downstream. Properties served by a privately owned, and properly maintained, detention structure shall be granted a stormwater fee credit. 14 The amount of the credit shall be based on the reduction of stormwater runoff provided by the detention structures and be calculated according to guidelines established by the director of water services. The minimum credit shall be 10 percent and the maximum credit shall be 50 percent. c. It shall be the duty of the property owner to apply for the ratio credit, detention credit, or both. If a property receives both a ratio credit and a detention credit, the ratio credit shall be applied first, and then the detention credit shall be applied to the remaining amount The combined credit shall not exceed 75 percent. (5) Appeals. Upon the written request of any owner whose property is subject to the stormwater fee, the director of water services, or a person designated by the director of water services, shall review the applicability or amount of the stormwater fee. Matters which shall be reviewed may include: a. Whether a surface is considered a runoff surface subject to the stormwater fee; b. Amount of runoff surface, or number of runoff units, subject to the stormwater fee; c. Bill payment responsibilities; and d. Amount and applicability of stormwater fee credits. (6) Billing procedures. a. Stormwater fee charges for properties with one water service or sanitary sewer service account shall be included on the water bill in the manner established by chapter 78 of the code of ordinances, subject to additional provisions of this subsection. b. For properties where the water or sewer service accounts are inactive, or for the properties which have no water or sewer service accounts, a bill shall be sent to the property owner. The director of water services shall determine the frequency of the billing. c. For new residential, commercial or industrial properties an estimated runoff surface may be established for billing purposes until such time as the actual runoff surface can be determined. If, after the actual runoff surface for the property has been established, it is determined that the property was overcharged, then a credit for the amount overcharged shall be applied to the account (7) No stormwater service charge shall be charged for any parcel of land that is void of any development; (8) Rules and regulations. The director of water services shall have power to promulgate reasonable rules, regulations, orders and direction as may be necessary and feasible to implement the provisions of this section. (9) Additional enforcement of collections. In addition to procedures established in this section, the fee may be collected and enforced under and pursuant to the provisions of chapters 60 and 78 of this code. 15 (10) Month or Monthly shall refer to a time period of 30 days. Bills greater or less than 30 days shall be prorated per day based on the billing period. Section 2. This ordinance shall become effective May 1, 2013. 16