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Stormwater Utilities: A regional and national perspective on planning and implementation

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As part of an umbrella discussion about funding options to improve Michigan’s aging sanitary and stormwater infrastructure, OHM Advisor's Greg Kacvinsky provides an overview of stormwater utility fees. His presentation covers how they initially came into practice and have been used nationally, typical revenues and revenue uses, and planning and implementation tips and strategies.

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Stormwater Utilities: A regional and national perspective on planning and implementation

  1. 1. OHM-ADVISORS.COMOHM-ADVISORS.COM Storm Water UtilitiesStorm Water Utilities Regional / National Perspective Planning and Implementation Regional / National Perspective Planning and Implementation ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  2. 2. * Source: 2012 Stormwater Utility Survey – Western Kentucky University ** Source: 2010 Stormwater Utility Survey, Black & Veatch * Source: 2012 Stormwater Utility Survey – Western Kentucky University ** Source: 2010 Stormwater Utility Survey, Black & Veatch Storm Water Utilities in the United States Storm Water Utilities in the United States Over 800 utilities nationwide (EPA, 2009) Today, more than 1,310 confirmed utilities* 80% of surveyed utilities are City-based** 20% of surveyed utilities are County- or Regional- based** Over 800 utilities nationwide (EPA, 2009) Today, more than 1,310 confirmed utilities* 80% of surveyed utilities are City-based** 20% of surveyed utilities are County- or Regional- based** OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  3. 3. Source: 2012 Stormwater Utility Survey – Western Kentucky UniversitySource: 2012 Stormwater Utility Survey – Western Kentucky University OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  4. 4. History & Evolving NeedHistory & Evolving Need Clean Water Act (1972) NPDES Phase I (1993) NPDES Phase II (2003) 2010 and beyond Clean Water Act (1972) NPDES Phase I (1993) NPDES Phase II (2003) 2010 and beyond OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  5. 5. History & Evolving NeedHistory & Evolving Need Unfunded MandateUnfunded Mandate OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  6. 6. It is not just about MS4s Other regulatory programs & municipal obligations: National Flood Insurance Program TMDLs Public safety / public health Passable roadways Detention ponds Aging utilities Bond debt It is not just about MS4s Other regulatory programs & municipal obligations: National Flood Insurance Program TMDLs Public safety / public health Passable roadways Detention ponds Aging utilities Bond debt OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS. History & Evolving NeedHistory & Evolving Need
  7. 7. Common reasons for implementing a stormwater utility Major flood event (Fort Collins, CO / Austin, TX / Champaign, IL) Old infrastructure (Cincinnati, OH) Capital Improvement Plan / Asset Management Plan Combined sewer Long Term Control Plans (Lansing, MI, Bloomington, IL) Mounting debt service for previous stormwater projects (Champaign, IL) Increased regulatory costs (NPDES / MS4) Common reasons for implementing a stormwater utility Major flood event (Fort Collins, CO / Austin, TX / Champaign, IL) Old infrastructure (Cincinnati, OH) Capital Improvement Plan / Asset Management Plan Combined sewer Long Term Control Plans (Lansing, MI, Bloomington, IL) Mounting debt service for previous stormwater projects (Champaign, IL) Increased regulatory costs (NPDES / MS4) History & Evolving NeedHistory & Evolving Need OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  8. 8. MS4 component of stormwater utility programs Downers Grove (IL) <5% Normal (IL) 18% Urbana (IL) 5% Champaign (IL) 4% Pewaukee (WI) 3% Racine (WI) 15-20% Medina (MN) 18% MS4 component of stormwater utility programs Downers Grove (IL) <5% Normal (IL) 18% Urbana (IL) 5% Champaign (IL) 4% Pewaukee (WI) 3% Racine (WI) 15-20% Medina (MN) 18% MS4 costs are a legitimate but often minor component of a typical stormwater program MS4 costs are a legitimate but often minor component of a typical stormwater program History & Evolving NeedHistory & Evolving Need OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  9. 9. Fort Collins, CO (Flood of 1997) $250 million in property damage 6 deaths 62 injuries Fort Collins, CO (Flood of 1997) $250 million in property damage 6 deaths 62 injuries History & Evolving NeedHistory & Evolving Need OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  10. 10. Champaign, IL Recurring flooding in neighborhoods Failing infrastructure Detention ponds Bond debt from 10 years of flood control projects Annual bond debt payment of $2.3 million Champaign, IL Recurring flooding in neighborhoods Failing infrastructure Detention ponds Bond debt from 10 years of flood control projects Annual bond debt payment of $2.3 million History & Evolving NeedHistory & Evolving Need OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  11. 11. What drives the need for funding? What justifies the need for a dedicated funding source? Public safety Public health Reduce risk for loss of private property Regulatory (NPDES / FEMA) What drives the need for funding? What justifies the need for a dedicated funding source? Public safety Public health Reduce risk for loss of private property Regulatory (NPDES / FEMA) NPDES isn’t just stormwater…it’s also sanitary and combined sewer work (source reduction) NPDES isn’t just stormwater…it’s also sanitary and combined sewer work (source reduction) Footing Drain Disconnections Footing Drain Disconnections Sewer Separation Sewer Separation History & Evolving NeedHistory & Evolving Need OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  12. 12. Typical Utility RevenuesTypical Utility Revenues OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  13. 13. Storm Water Utility Revenues - Midwest Storm Water Utility Revenues - Midwest User fees vary by community and local infrastructure need Typical rate: $4-$5 per month per single-family resident Actual rate can vary significantly, based on local need and commercial/industrial land use User fees vary by community and local infrastructure need Typical rate: $4-$5 per month per single-family resident Actual rate can vary significantly, based on local need and commercial/industrial land use OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  14. 14. Storm Water Utility Revenues - Midwest Storm Water Utility Revenues - Midwest OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  15. 15. Storm Water Utility Revenues - Midwest Storm Water Utility Revenues - Midwest OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  16. 16. Midwest Stormwater UtilitiesMidwest Stormwater Utilities Revenue PatternRevenue Pattern OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  17. 17. Revenue comes from the following sources Single family residences Commercial Industrial Schools / Higher Education Revenue comes from the following sources Single family residences Commercial Industrial Schools / Higher Education Revenue SourcesRevenue Sources OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS. Midwest Stormwater UtilitiesMidwest Stormwater Utilities
  18. 18. Communities with healthy mix of residential, commercial and industrial Residential rate payers account for only 30%-40% of total revenues Non-residential rate payers account for bulk of revenue (60% - 70%) Communities with healthy mix of residential, commercial and industrial Residential rate payers account for only 30%-40% of total revenues Non-residential rate payers account for bulk of revenue (60% - 70%) Revenue SourcesRevenue Sources OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS. Midwest Stormwater UtilitiesMidwest Stormwater Utilities
  19. 19. Revenue SourcesRevenue Sources OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  20. 20. Revenue SourcesRevenue Sources OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  21. 21. Midwest Stormwater UtilitiesMidwest Stormwater Utilities Revenue PatternRevenue Pattern OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  22. 22. Berkley, MI Population ~15,000 Major upgrades to George Kuhn Drain Primarily residential Revenue per capita: $133/year Berkley, MI Population ~15,000 Major upgrades to George Kuhn Drain Primarily residential Revenue per capita: $133/year Revenue SourcesRevenue Sources OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  23. 23. Indiana Over 63 cities Indiana Over 63 cities Storm Water Utilities in the Midwest Storm Water Utilities in the Midwest OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  24. 24. Wisconsin Over 100 cities Wisconsin Over 100 cities Storm Water Utilities in the Midwest Storm Water Utilities in the Midwest OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  25. 25. Ohio Over 70 cities Ohio Over 70 cities Storm Water Utilities in the Midwest Storm Water Utilities in the Midwest OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  26. 26. Illinois 3-4 years ago, about 6-8 cities had utilities Today, over 20 utilities and growing quickly Illinois 3-4 years ago, about 6-8 cities had utilities Today, over 20 utilities and growing quickly Storm Water Utilities in the Midwest Storm Water Utilities in the Midwest OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  27. 27. Michigan Only 9 cities Only one utility (Jackson) created in the last 15 years Michigan Only 9 cities Only one utility (Jackson) created in the last 15 years Storm Water Utilities in the Midwest Storm Water Utilities in the Midwest OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  28. 28. Establishing a Stormwater Utility Establishing a Stormwater Utility OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  29. 29. How to Plan & Implement a Stormwater Utility How to Plan & Implement a Stormwater Utility Phase 1 – Planning and Public Involvement Phase 2 – Implementation and Rollout Phase 1 – Planning and Public Involvement Phase 2 – Implementation and Rollout SRF Funding: Phase 1 should fall under the “development of a funding structure” component of an Asset Management Plan SRF Funding: Phase 1 should fall under the “development of a funding structure” component of an Asset Management Plan OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  30. 30. Storm Water Utilities: Phase 1 - Planning Storm Water Utilities: Phase 1 - Planning Sets foundation for fee justification Staffing Equipment / materials Capital projects Permit compliance Accurate estimate of revenue requirements Sets foundation for fee justification Staffing Equipment / materials Capital projects Permit compliance Accurate estimate of revenue requirements OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  31. 31. Master Plan / Asset Management Plan Storm Water Advisory Committee (SWAC) Communicate with key rate payers Develop rate model(s) for preferred billing methods Develop Rate Ordinance Timeframe: 6-9 months Master Plan / Asset Management Plan Storm Water Advisory Committee (SWAC) Communicate with key rate payers Develop rate model(s) for preferred billing methods Develop Rate Ordinance Timeframe: 6-9 months Minimum 4-5 meetings SWAC members appointed by municipality Representative cross section of rate payers Meeting Evolution Intro to stormwater management Program prioritization exercise Explore funding options Policy statement Minimum 4-5 meetings SWAC members appointed by municipality Representative cross section of rate payers Meeting Evolution Intro to stormwater management Program prioritization exercise Explore funding options Policy statement Storm Water Utilities: Phase 1 - Planning Storm Water Utilities: Phase 1 - Planning OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  32. 32. Buy-in achieved by demonstrating Importance of stormwater system Need for improvements (PHOTOS) Cost of non-compliance with NPDES requirements Cash flow requirements (5-10 years) Buy-in achieved by demonstrating Importance of stormwater system Need for improvements (PHOTOS) Cost of non-compliance with NPDES requirements Cash flow requirements (5-10 years) Storm Water Utilities: Phase 1 - Planning Storm Water Utilities: Phase 1 - Planning OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  33. 33. Rates and Cash Flow Set rate to achieve existing and future needs (rate model) Include tie-in to CPI, automatic annual rate increases Use cash flow analysis to justify rate Rates and Cash Flow Set rate to achieve existing and future needs (rate model) Include tie-in to CPI, automatic annual rate increases Use cash flow analysis to justify rate Storm Water Utilities: Phase 1 - Planning Storm Water Utilities: Phase 1 - Planning OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  34. 34. OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  35. 35. Storm Water Utilities: Phase 2 - Implementation Storm Water Utilities: Phase 2 - Implementation Develop Master Account File Develop / finalize credit manual Integrate into existing billing system Initial mailing (first bill) Customer service / hotline / website Timeframe: 6-9 months Develop Master Account File Develop / finalize credit manual Integrate into existing billing system Initial mailing (first bill) Customer service / hotline / website Timeframe: 6-9 months OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  36. 36. Achieve Local Buy-in Before Proceeding Achieve Local Buy-in Before Proceeding Storm Water Advisory Committee Key Rate Payers: face-to-face meetings CIP - include projects across all watersheds Appropriate billing framework Storm Water Advisory Committee Key Rate Payers: face-to-face meetings CIP - include projects across all watersheds Appropriate billing framework Churches Chamber of Commerce School District / University HOA Rep Business Owner(s) Key Rate Payer(s) Churches Chamber of Commerce School District / University HOA Rep Business Owner(s) Key Rate Payer(s) Storm Water Service X.XXStorm Water Service X.XX OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  37. 37. Rate Payer Involvement - ChurchesRate Payer Involvement - Churches OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  38. 38. Roll-OutRoll-Out Shovel-ready projects Fully designed and bid Ready to go as first bills to out Involve local press Customer service Website / FAQ Shovel-ready projects Fully designed and bid Ready to go as first bills to out Involve local press Customer service Website / FAQ OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  39. 39. Use of RevenuesUse of Revenues Communities with stormwater utilities can realize long-term infrastructure strategies: Flood control Sewer rehab / depreciation Sustainable infrastructure Stream / channel restoration Footing drain / sump pump disconnections GIS: system mapping Enterprise Fund (restricted use of revenues) Communities with stormwater utilities can realize long-term infrastructure strategies: Flood control Sewer rehab / depreciation Sustainable infrastructure Stream / channel restoration Footing drain / sump pump disconnections GIS: system mapping Enterprise Fund (restricted use of revenues) OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  40. 40. Use of RevenuesUse of Revenues Stormwater revenue reduces strain on the General Fund, stretching tax dollar to help pay for more: Roadway improvements Needed improvements to municipal facilities Stormwater revenue reduces strain on the General Fund, stretching tax dollar to help pay for more: Roadway improvements Needed improvements to municipal facilities OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  41. 41. Legitimacy of Stormwater Utilities Legitimacy of Stormwater Utilities Storm Sewer Conveys stormwater Limited lifetime (50-80 years) Regulated by Clean Water Act Storm Sewer Conveys stormwater Limited lifetime (50-80 years) Regulated by Clean Water Act Sanitary Sewer Conveys wastewater AND stormwater Limited lifetime (50-80 years) Regulated by Clean Water Act Sanitary Sewer Conveys wastewater AND stormwater Limited lifetime (50-80 years) Regulated by Clean Water Act OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.
  42. 42. Storm Sewer Benefits Public safety Public health Flood control Storm Sewer Benefits Public safety Public health Flood control Sanitary Sewer Benefits Public safety Public health Sanitary Sewer Benefits Public safety Public health OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS. Legitimacy of Stormwater Utilities Legitimacy of Stormwater Utilities
  43. 43. Stormwater Utilities and Litigation Stormwater Utilities and Litigation About 65 legal challenges to date Represents less than 5% of 1,310 known utilities Majority of cases (36) decided in favor of the utility 14 cases - unfavorable decision (about 1% of known utilities) Remaining cases pending / unknown outcome About 65 legal challenges to date Represents less than 5% of 1,310 known utilities Majority of cases (36) decided in favor of the utility 14 cases - unfavorable decision (about 1% of known utilities) Remaining cases pending / unknown outcome OHM-ADVISORS.COMOHM-ADVISORS.COM ARCHITECTS. ENGINEERS. PLANNERS.ARCHITECTS. ENGINEERS. PLANNERS.

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