HomeMy Public PortalAboutExhibit HBA 132 - EPA-Funding Stormwater Programs - April 2009Funding Stormwater Programs
EPA 901-F-09-004 April 2009
United States Environmental
Protection Agency New England
Executive Summary
This document is intended to assist local stormwater
managers to alleviate the significant expense of construction,
operation and maintenance of a municipal separate storm
sewer system (MS4). The costs of stormwater programs,
increased by regulatory requirements (stormwater Phase I or
Phase II), flooding concerns, water quality issues (including
total maximum daily loads, or TMDLs) and population
growth, may be subsidized through a stormwater utility or
various other methods detailed in this document.
Stormwater management can be costly, but it is a good
investment. There are new stormwater management
techniques, referred to as low impact development (LID), that
infiltrate, evapotranspire and reuse stormwater, thereby,
preventing polluted runoff from happening. This helps to
reduce the high costs of cleaning up the water quality
impairments from the polluted runoff. Additional benefits from
these techniques include increased ground water recharge,
flood control, and healthy aquatic ecosystems through
maintenance of base flow for streams. LID techniques need
to be sited and designed carefully, and used in conjunction
with traditional stormwater management techniques.
This fact sheet includes information on various stormwater
funding mechanisms and types of stormwater utilities; it also
describes how to create a stormwater utility and provides a
list of resources.
New England Case Studies
More than 800 communities or districts across the country
have adopted a stormwater utility to help fund the costs of
stormwater programs, including the costs of regulatory
compliance, planning, maintenance, capital improvements,
and repair or replacement of infrastructure. Examples of
utilities from two New England cities are discussed below.
South Burlington, Vermont
http://www.sburlstormwater.com
The South Burlington Stormwater Utility is the first of its kind
in Vermont. Six streams in and around South Burlington are
impaired from stormwater, resulting in water pollution,
erosion, flooding, and unstable streambanks. The utility was
established in 2006 to help mitigate the increasingly complex
issues associated with stormwater management, including
failing septic systems in older developments and phosphorus
runoff polluting Lake Champlain, which is the primary source
of drinking water for the Burlington area.
The municipal Stormwater Services Division administers the
utility, which pays for system maintenance, capital project
construction, enforcement, and customer outreach and
assistance.
An example of a capital project construction (a gravel wetland)
that was paid for by the stormwater utility in South Burlington,
Vermont.
User fees are based on the amount of impervious area on a
property. The monthly fee per equivalent residential unit
(ERU) was set using a scientific process. This process
determined that a typical single-family home in South
Burlington had 2,700 square feet of impervious surface. A
single-family home is assessed a fee of $4.50 per month,
whereas duplexes and triplexes are assessed fees of $2.25
and $1.50 per month, respectively. All other properties are
assessed a fee depending on the amount of impervious
surface. The utility funds a comprehensive program bringing
in more than $1 million annually.
Cities in New England with Stormwater Utilities
Chicopee, Massachusetts
Lewiston, Maine
Newton, Massachusetts
Reading, Massachusetts
South Burlington, Vermont
(as of December 2008)
EPA 901-F-09-004
Funding Stormwater Programs
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Newton, Massachusetts
http://www.ci.newton.ma.us/dpw/engin/stormwater.htm
A Stormwater Drain Fee was established in 2006. The utility
enables the city to manage and upgrade stormwater
infrastructure, protect nearby natural waterbodies (e.g.,
Charles River and Crystal Lake), provide technical
assistance with stormwater management issues, and provide
educational programs for residents and schools.
User fees are based on a flat rate. Residential properties are
assessed a fee of $6.25 per quarter, and all other properties
are assessed a fee of $37.50 per quarter. The Board of
Aldermen debated using a different fee structure but found
that the program’s operating costs would triple if the city had
to determine the rates on the basis of individual lot sizes.
Two hydraulically connected bioretention cells paid for by the
stormwater utility on Hammond Pond in Newton, Massachusetts
Stormwater Funding Mechanisms
The most common funding options for municipal stormwater
programs are discussed below.
Service Fees (including stormwater utilities)
Some communities include stormwater management costs
within their water or sanitary sewer system budgets, often
basing fees on metered water flow. However, a property’s
metered water flow usually bears no relationship to the
stormwater runoff it generates. For example, the stormwater
runoff from the impervious area of a shopping center’s
buildings and parking lots is significant, but its use of
metered water is relatively small.
Stormwater fees, which are typically based on property type
or area, provide for regulatory compliance and operation and
maintenance costs, and are charged to both tax-paying and
tax-exempt properties. The average quarterly fee for a
single-family home is $11, though some communities charge
as little as $2 or as much as $40 per quarter to a single-
family home.
Property Taxes/General Fund
Many communities fund stormwater management through
property taxes paid into their general funds, but in the
competition for general fund dollars, stormwater
management improvements are typically considered low
priority unless the municipality is reacting to a recent major
storm or regulatory action. This system is also not equitable,
because the basis for determining property taxes, assessed
property value, is irrelevant to the cost of stormwater
management for that property. Additionally, tax-exempt
properties, such as governmental properties, schools,
colleges, and universities, do not support any of the cost of
stormwater management, even though many of them are
major contributors of stormwater runoff.
Special Assessment Districts or Regional Funding
Mechanisms
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. Separate stormwater utility districts can
also be formed within a town or by bringing several towns
together to form a district.
There might be some cases where regional or multiple-
jurisdictional funding mechanisms would be useful. For
example, if an impaired stream has a fairly small watershed,
spanning parts of several municipalities, costs of stormwater
implementation could be shared among the municipalities
and the funding could be managed by an existing regional
authority such as a soil and water conservation district.
Funding could involve fees, as well as credits, for existing
best management practices (BMPs) or retrofits. The
regulatory authority could choose to issue conditions or a
general permit for discharges in the watershed, especially if a
watershed stormwater management plan has been prepared
(with specific nonstructural and structural BMPs). Parcel
owners, developers or permittees could be required to fulfill
their requirements by implementing the watershed plan.
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. In this way,
new customers buy into the existing infrastructure, and/or the
infrastructure expansion necessary to serve them. The
amount of the new customer’s SDC is typically based on an
estimated water demand of the new customer. Municipalities
could develop stormwater SDCs tied to the area of the
customer’s property.
Grants and Low-Interest Loans
Stormwater management grants might be available for
various types of projects on a state-by-state basis. Clean
Water or Drinking Water State Revolving Fund (SRF) dollars
could be used to fund development of a utility or related
capital projects. State environmental programs could
consider working with the legislature to set up a pool of funds
for towns to help set up districts, which could then be repaid
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Funding Stormwater Programs
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once the fees are established. Connecticut directed its
Department of Environmental Protection to use $1 million of
state grant funds that the legislature provided for wastewater
facility construction to be used by three communities to
develop stormwater utilities as pilot programs. The Maine
Department of Environmental Protection has provided a
small amount of grant money, to be matched by the
community, to help establish stormwater utility districts.
Stormwater projects that are not required as part of a
National Pollution Discharge elimination system (NPDES)
permit can be funded through the Clean Water Act section
319 nonpoint source grant program administered by states.
Types of Stormwater Utilities
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.
Equivalent Residential Unit (ERU)
The ERU method (also known as the Equivalent Service Unit
(ESU) method) is used by more than 80 percent of all
stormwater utilities. It bills an amount proportional to the
impervious area on a parcel, regardless of the parcel’s total
area. It is therefore based on the effect 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. 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 a 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—you pave, you pay. The number of billable ERUs
can be determined by limiting the parcel area review to
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 effect 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 (discussed below)
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, such as administration
and regulatory compliance unrelated to impervious area.
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 parcels, are
charged a fee. For developed parcels, fees are based on
their intensity of development, which is defined as the
percentage of impervious area of the parcel. Vacant or
undeveloped parcels contribute to runoff and are assigned a
lower fee. Rates are calculated for several ID categories and
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 square foot (ft2)
(or $1.60 for a 10,000 ft2 lot).
Category
(impervious percentage range)
Rate per month per
1,000 square feet of
total served area
(impervious plus
pervious)
Vacant/Undeveloped (0%) $0.08
Light development (1% to 20%) $0.12
Moderate development (21% to 40%) $0.16
Heavy development (41% to 70%) $0.24
Very heavy development (71% to 100%) $0.32
What is a stormwater utility?
A stormwater utility, operating much like an electric or
water utility, may collect fees related to the control and
treatment of stormwater that can be used to fund a
municipal stormwater management program.
Number of Stormwater Utilities
Created over time in the U.S.
0
200
400
600
800
1000
1960 1970 1980 1990 2000 2010
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Funding Stormwater Programs
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Advantages
The ID method accounts for stormwater from the
pervious portion of parcels. Therefore, it can be more
equitable than the ERU method. 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
The ID categories are broad, and 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 and impervious
areas need to be reviewed. It is also more complicated to
explain to customers than the ERU method. This method
might also discourage urban infill and inadvertently
encourage sprawl.
Equivalent Hydraulic Area (EHA)
Parcels are billed on the basis of the stormwater runoff
generated by their impervious and pervious areas, charging
impervious area a much higher rate than the pervious area.
Advantages
The EHA method accounts for flow from the pervious
portion of parcels. Therefore, it might be more equitable
than the ERU method. Like the ID method, it accounts
for undeveloped/vacant parcels and allows them to be
billed, but it is fairer than the ID method because parcels
are billed on the basis of individual measurements of
pervious and impervious areas.
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.
These are three basic methods that utilities can use to
calculate fees, but it is becoming clear that municipalities will
need to be creative to find what will work for their community.
In San Mateo County in California vehicle registration fees
were increased to address stormwater pollution issues
associated with vehicles and transportation infrastructure.
Creating a Stormwater Utility
The following are the typical steps involved in creating a
stormwater utility.
Develop a Feasibility Study
The first step is to develop a study that provides the
community with enough information to decide if implementing
the utility is sensible. The feasibility study will typically
address preliminary revenue requirements (usually from
current stormwater budgets) and assess 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.
Create a Billing System
If the municipality decides after the feasibility study to
develop a stormwater utility, it will then collect user and
parcel area data (such as ownership and impervious area for
each parcel) and develop a system to bill property owners.
The two most common stormwater billing systems are (1)
adding a stormwater utility fee onto an existing water/sewer
fee bill, or, (2) non-ad valorem assessments. Approximately
80 percent of stormwater utilities use the first approach
because it is inexpensive and simple to add on to the existing
billing system.
An example of a public meeting.
Roll Out a Public Information Program
A strong public education program is critical throughout the
stormwater utility development process. 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:
Identify key users and groups. Two potential groups to
target include (1) properties that generate a significant
amount of runoff and often receive high stormwater bills
(i.e., shopping malls) and (2) tax-exempt properties (i.e.,
schools and churches) that do not contribute property
taxes into the general fund (which has traditionally been
the source of stormwater management funding).
Establish an advisory committee. Include a cross-
section of the community including representation from
universities, businesses, non-profit organizations,
churches, developers, and shopping center owners.
Create a stormwater utility website. The website should
post appropriate progress documents and develop a
frequently asked questions page.
EPA 901-F-09-004
Funding Stormwater Programs
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Prepare pamphlets and presentations. Prepare a
brochure and an electronic presentation describing the
need for the stormwater utility, the rate method, and the
projected rates.
Meet with key user groups and the media. Give
presentations to civic groups and the media, and schedule
one-on-one meetings with customers projected to receive
the highest bills.
Distribute information before the initial billing. The
stormwater utility brochure should be sent to all customers
before billing. Include the customer’s actual projected bill,
if possible.
Adopt an Ordinance
An ordinance will provide legal authority for establishing the
utility. An example stormwater utility ordinance from Maine is
at
http://www.maine.gov/spo/landuse/docs/publications.ht
m
Provide Credits/Exemptions
Credits or exemptions built into the ordinance 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 BMPs
such as retention/detention basins, rainspout disconnections
or porous pavers, and educational programs for residents,
businesses and municipal employees. Municipalities that
calculate the utility using impervious area could offer an
exemption to undeveloped (100 percent pervious) land.
Implement the Utility
The first utility bill is the most important because many
customers do not focus on the new stormwater fee until they
actually receive their first bill. The municipality should notify
customers of their estimated fee several months before
billing begins. It should create a telephone hot line, e-mail
service and website to address questions and concerns. In
addition, the municipality should be prepared to address
legal challenges to its stormwater fee. The municipality
should be prepared to develop a process to update the billing
unit data for an existing customer or to enter the data for a
new customer.
Barriers to Creating a Stormwater
Utility
There are typically two barriers to creating a stormwater
utility: legal and political.
Legal Barriers
In EPA Region 1, all states provide legal authority to
establish stormwater utilities. A summary of the current or
proposed legal authority within EPA Region 1 states is
presented below:
Connecticut
In 2007, the Connecticut General Assembly authorized
three towns (New Haven, New London, and Norwalk) to
conduct pilot studies to explore the feasibility and
framework of stormwater utilities.
Maine
Stormwater utilities are authorized in the Maine
Constitution, Article VIII, and Title 30-A Maine Revised
Statutes Annotated §3001.
Massachusetts
MGL Chapter 83, Section 1 was amended in 2006 to
include the ability to establish stormwater utilities.
New Hampshire
Manchester was given special authority to form a utility in
2007. All municipalities were given the authority to
establish a stormwater utility in 2008 under amendments
to RSA 149-I.
Rhode Island
Chapter 45-61of the Rhode Island Stormwater
Management and Utility District Act of 2002.
Vermont
In 2003, 24 V.S.A. Section 3501(6) gave cities the ability
to establish sewage disposal charges for treatment and
disposal of stormwater. Also, 24 V.S.A. 1264 and 4407
have been amended to encourage the formation of
utilities.
Political Barriers
It usually takes at least one champion, often the mayor or
another senior local official, to create a stormwater utility,
especially in the face of local political opposition. A public
information program is needed to visually present the
inadequacies of the community’s current stormwater
management program and the benefits from stormwater
utilities in other communities to garner public support and
offset opposition to the fee. It is important to explain the
benefit of implementing a stormwater utility to the press,
because opposition from local news outlets sometimes can
turn public opinion against the utility, often by using
inaccurate terms such as a rain tax. When clearly informed of
the financial and environmental benefits (such as improved
flood control, fishing, recreation, and enhancement of future
drinking water supplies through increased recharge) of a
stormwater utility, the community will be more likely to
support its implementation.
Additional Resources
This fact sheet is one of a series of four prepared by EPA Region 1.
The others are listed below and are available on the EPA Region 1
website. http://www.epa.gov/region1/npdes/stormwater
EPA 901-F-09-004
Funding Stormwater Programs
6
Managing Stormwater with Low Impact Development Practices:
Addressing Barriers to LID
Incorporating Low Impact Development Into Municipal
Stormwater Programs
Restoring Impaired Waters: Total Maximum Daily Loads
(TMDLs) and Municipal Stormwater Programs
Charles River Watershed Association. Assessment of Stormwater
Financing Mechanisms in New England
http://www.crwa.org/projects/stormwater/swutility.html
Connecticut Department of Environmental Protection. The 2004
Connecticut Stormwater Quality Manual
http://www.ct.gov/dep/cwp/view.asp?a=2721&q=325704
Connecticut Department of Environmental Protection, Stormwater
Management.
http://www.ct.gov/dep/stormwater
Green Infrastructure Approaches to Managing Wet Weather with Clean
Water State Revolving Funds
http://www.epa.gov/OWM/cwfinance/cwsrf/green_if.pdf
Indiana University-Purdue University Indianapolis. An Internet Guide to
Financing Stormwater Management
http://stormwaterfinance.urbancenter.iupui.edu
Maine Department of Environmental Protection. Bureau of Land and
Water Quality
http://www.state.me.us/dep/blwq/docstand/stormwater/index.ht
m
Massachusetts Department of Environmental Protection. Water,
Wastewater and Wetlands
http://www.mass.gov/dep/water/wastewater/stormwat.htm
National Association of Flood and Stormwater Management Agencies.
Guidance for Municipal Stormwater Funding
http://www.nafsma.org
Natural Resources Defense Council. Funding and Gaining Support for
Stormwater Programs
http://www.nrdc.org/water/pollution/storm/chap4.asp
New England Environmental Finance Center. Stormwater Utility Fees:
Considerations and Options
http://efc.muskie.usm.maine.edu/docs/StormwaterUtilityFeeRep
ort.pdf
Pioneer Valley Commission. How to Create a Stormwater Utility
http://www.pvpc.org/resources/landuse/storm_util.pdf
Rhode Island Department of Environmental Management. Office of
Water Resources
http://www.dem.ri.gov/programs/benviron/water/permits/ripdes/
stwater/index.htm
University of Maryland, Environmental Finance Center.
http://www.efc.umd.edu
U.S. Environmental Protection Agency, Watershed Academy.
Catalog of Federal Funding Sources for Watershed Protection
http://cfpub.epa.gov/fedfund
U.S. Environmental Protection Agency, Watershed Academy.
NPDES Permits in New England
http://www.epa.gov/region1/npdes/stormwater/administration.ht
ml
U.S. Environmental Protection Agency, Watershed Academy.
NPDES Storm Water Program
http://www.epa.gov/region1/npdes/stormwater/index.html
Vermont Agency of Natural Resources. The Vermont Stormwater
Management Manual
http://www.anr.state.vt.us/dec/waterq/stormwater/docs/sw_man
ual-vol1.pdf
Vermont Agency of Natural Resources, Water Quality Division
http://www.anr.state.vt.us/dec/waterq/stormwater.htm
Contacts
EPA New England—Thelma Murphy
murphy.thelma@epa.gov
617-918-1615
Rob Adler
adler.robert@epa.gov
617- 918-1396
Connecticut—Nisha Patel
nisha.patel@ct.gov
Maine—David Ladd
David.Ladd@Maine.gov
Massachusetts—Fred Civian
Frederick.Civian@state.ma.us
New Hampshire—Eric Williams
eric.williams@des.nh.gov
Rhode Island—Margarita Chatterton
margarita.chatterton@dem.ri.gov
Vermont—James Pease
jim.pease@state.vt.us
NOTE: This document is not law or regulation; it
provides recommendations and explanations that
MS4s can consider in determining how to comply with
requirements of the Clean Water Act and National
Pollutant Discharge Elimination System permit
requirements.
General Disclaimer: References in this fact sheet to
any non-federal product, service, or enterprise do not
constitute an endorsement or recommendation by the
EPA.
Information Disclaimer: The information provided in
this fact sheet is only intended to be general summary
information to the public. It is not intended to take the
place of written laws, regulations, permits, or EPA
policies.
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