Jim Proce has worked with community to implement stormwater utility programs in Texas and Florida. This particular presentation was a briefing for the city council illustrating the financial impact analysis for the revision to the structural components of the fee basis.

1. Drainage Utility Fees
(STORMWATER) August 19, 2015
Jim Proce, Assistant City Manager

2. Discussion on:
• Current drainage utility fee structure
• Purpose of drainage utility
• Provide some background
• Proposal for updating
• Benefits anticipated
• Seek Council direction

3. Drainage Utility Fees
• Municipalities are authorized to implement
a stormwater utility fee by Local
Government Code 552, Subchapter C
• (Municipal Drainage Utility Systems Act)
• The Act allows municipalities to establish a
service fee for users of the municipal
storm system
• Provided the basis for the fee is “directly
related to drainage” and the fee is
• “reasonable, equitable, and non-
discriminatory.”

4. History
• Drainage Utility - adopted on March 19,
2002 by Ordinance 3-19-02E
• The established fee is based upon water
meters servicing occupied properties.
• The fees are collected through the Utility
billing process which ensures reliable
collection.
• Drainage Utility Fund provides for several
components of the various stormwater
related programs, inclusive of staff,
supplies, capital improvements, debt
service, and administrative & overhead
transfers.

5. Historical Needs &
Requirements
• Stormwater study 2006 identified over 230
projects.
• The City has addressed approximately 75 projects.
• The initial cost to address all identified needs is
over $40 million.
• Staff is currently working on updating the content
of the 2006 study with the intent of publishing a
revision.
• When complete we will publish the result and
develop action plans based upon the most urgent
needs and requirements
• National Pollution Discharge Elimination System
(NPDES) and the Municipal Separate Storm Sewer
System (MS4) (EPA requirements)

6. Current Structure
• The City currently assesses a monthly fee
per water meter.
− $5.50 per residential water meter
− $13.50 per non-residential water meter
• After review of the existing structure and
state statutes staff is recommending a
revision to the structure to meet the state
goals

7. Goals
• Provides a more equitable rate structure that would be
based upon the proportionate impervious area
• Provides better alignment with the State definition to be
reasonable, equitable, and non-discriminatory
• Generates additional revenue to fund the stormwater
program and its related mandates
• Establishes strategic initiatives with regard to city-wide
stormwater needs which may include a tiered residential
system of billing, funding of components of the stormwater
master plan, and potential credits to encourage best
management practices with regard to stormwater practices;
• Apportions existing components of current operations to this
revenue source potentially offsetting expenses not currently
covered by the Drainage Utility Fund
• Ensures that all components of the Municipal Separate Storm
Sewer System (MS4) permit are adhered to and meet the
requirements of the NPDES, remaining adequately funded
while meeting all of the prescribed goals.

8. Current Revenue Structure
Existing Stormwater Fee Structure Revenue (Water-Meter Basis)
Property
Type
Fee/Month
# of Water
Meters
% of
customers
Monthly
Revenue
Annual
Revenue
Residential $5.50/meter 18,341 96.7% $100,875 $1,210,500
Non-
Residential
$13.50/meter 613 3.2% 8,276 99,312
Totals 18,954 $109,151 $1,309,812

9. Equivalent Residential Unit
Basis (ERU)
• An ERU is Equivalent Residential Unit
• It is a unit of measure used to equate non-
residential or multi-family residential
usage to a single-family residence.
• It is defined in this evaluation as the
average impervious area in the City.
• Based on a representative sample of 100
randomly selected properties within the
City limits, an ERU in Rowlett is calculated
to be 4,600 square feet of impervious area.
• This measure varies from city to city and is
not standard. It is specific to each
community.

14. So why go to an ERU Basis?
• If the revenue structure is designed around
the impervious area basis, it better meets
the State requirement of being
“reasonable, equitable, and non-
discriminatory.”
• This revenue structure ensures
− that the impacts to the stormwater system are
dealt with within the state law,
− addresses equitable distribution of the impacts
to the system (currently 3.2% of the customers
generate 23.9% of the run-off)
− results in an augmentation of the existing
potential revenue source consistent with
practices in other cities and regions.

15. ERU Based Rate Structure
Projected Stormwater Utility Fee Revenue by Impervious Area Basis
Property
Type
Impervious
Area (SF)
Impervious
Area (ERUs)
% of
Run-Off
Projected
Monthly
Revenue
Projected
Annual
Revenue
Residential 86,480,000 18,800 76.1% $103,400 $1,240,800
Commercial 27,091,790 5,890 23.9% 32,395 388,740
Totals 113,571,790 24,690 $135,795 $1,629,540
1 ERU = 4,600 square feet impervious area

16. Meter/ERU Comparison
Summary of Revenue Effects of Fee Structure Modification to Impervious
Area Basis
Existing
(Water Meter Based)
Projected
(Impervious Area Based)
Property
Type
Fee/Month
Annual
Revenue
Fee/Month
Annual
Revenue
Residential $5.50/meter $1,210,500 $5.50/residence $1,240,800
Commercial $13.50/meter 99,312 $5.50/ERU 388,740
Totals $1,309,812 $1,629,540
1 ERU = 4,600 square feet impervious area

17. Other Considerations
• Changes in the base rate of the ERU. This will be based upon
program needs and Council approval of the proposed rates.
Rates could be apportioned to retain the same revenue
stream resulting in a reduction of the impacts to residential
customers.
• Potential tiered structuring of the residential component to
identify additional equitable subcategories within residential
billing structure.
• Credits for stormwater attenuation and best management
practices providing for opportunities for property owners
receive credits for well maintained and constructed
attenuation.
• Costs for actual program needs weighing the capital and
maintenance components of the drainage activities budget.
• Development of an equitable appeals process for any billing
or methodology conflicts that occur within the
measurements of the impervious areas (specifically for non-
residential properties.)

18. Next Steps
• Complete a thorough analysis of the impervious areas
for all commercial (non-residential) properties subject
to the fees
• Complete a cost of service analysis to “right-size” the
ERU structure
• Complete a parcel to utility association for residential
property if a tiered structured is desirous
• Draft a revision to the current ordinance for adoption
and implementation
• Develop process to capture new development as it
occurs
• Engage a public outreach campaign to educate the
public on the revision to the plan
• With Council direction work towards January 2015
implementation

19. Council Direction
Council direction required
Does Council want staff to proceed with the evaluation and analysis
as discussed herein to formulate the drainage utility funding
structure? (aligns program with state objectives of “reasonable,
equitable, and non-discriminatory”)
Does Council want staff to explore a tiered fee structure for
residential properties? (apportions residential rates to home sizes)
Does Council wish to staff to works toward a January 2015
implementation date? (aligns with business FY)
Does Council wish to retain the base rate (generates more revenue
for projects) or adjust the rate to retain a similar revenue stream?

20. ANY OTHER QUESTIONS
?????????????????????????????????????????????????????????????????????????????????

21. Reference materials