DR9302-CS 911013FLNA.NCIaNG STOriMWATER MANAGEMENT
Ex/THE 1990'S AND BEYOND
Nilo Priede, P.E.
Senior Technical Consultant
Camp Dresser & Mc. Kee Inc.
Iacksonville, Florida
During the 1990's, municipalities will be faced with developing and
implementing stormwater management programs to control urban runoff
and its impact on water quality. As a result of the 1987 Clean Water Act
Amendments, municipalities with populations of 100,000 or more will be
required to obtain National Pollutant Discharge Elimination System (NPDES)
permits for their storm sewer systems, and they will have to manage
stori~xwater runoff to control water quality impacts to receiving water bodies.
The final rule is expected by August 4, 1990, with permit submission
deadlines as early as 2 years from that date.
Historically, stormwater management has been largely Hmited to the
planning, design, and implementation of storm drainage improvements.
Water quality controls were not required. The new comprehensive
stormwater management approach, however, seeks to control both the
quantity and quality of stormwater runoff, so that the total stream system is
protected from flooding and water quality degradation.
A critical element in a comprehensive stormwater management program
is generating sufficient finandal resources to cope with the water quality
issues and drainage infrastruc~re needs. The financial resources needed to
meet the typical backlog of drainage corrections and the new water quality
considerations can be substantial. Although the State Revolving Fund (SliP)
Loan Program, which replaced the federal construction ~ants program for
water pollution control projects, makes loans available below market rate and
extends eligibility to nonpoint source control; projects, local governments
must still bear ball financial responsibility for their ongoing stormwater
management programs. One financing option that some communities are
already implementing is the stormwater utility, which relies on user fees
rather than traditional tax revenues to ~nd stormwater management.
Like a wastewater or water utility, the stormwater utility, is user-oriented,
with costs allocated according to the services received. Charges are related to a
given land parcel's stormwater runoff. Thus, each parcel of la.nd within a
local government's jurisdiction is assessed a fee based on its runoff
characteristics. The user fee system must be tailored to each community. It
must be calibrated to local goals and conditions such as soil types, depth to
groundwater, land use, and financial needs.
In developing the utility program, it is essential to consistently
demonstrate the system's functional needs (i.e., correction of existing
drainage problems, additional capacity required to accommodate charioted
conditions, water quality considerations, operation and maintenance
requirements) to municipal governing entities and the public. A well
planned and executed public information program is critical to gain popular
support for the stormwater utility.
Fairness and equity for all rate payers must be the primary, focus for
establishing the rate base. To accomplish this objective, each element of the
rate structure must be carefully determined.
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The key elements for analysis are:
I. User Rate Base
a. Impervious Area/Parcel
b. Platted-Vacant Land
c Undeveloped Land
2. Cost Recovery
a. Commercial/Industrial
b. Development
c Retrofit
Each of these components has a wide range of applications, and each
community must be evaluated on its specific needs and conditions.
USER RATE BASE
Impervious Area/Parcel
The typical sto~mwater utility rate structure is based on the total
impervious area (roof area, patios, driveway, etc.) of each land parcel. The fee
structure is generally based on the average impervious area of a typical
residential unit. "
There are two basic options for determining the impervious area element
of the rate structure. In the first, all detached single family dwellings are
charged a flat rate of one single family unit (SFLD, while all other parcels (i.e.,
multifamily, institutional, commercial, industrial, etc.) are charged on the
basis of the total impervious area on tl~e individual parcel divided bv the
single family unit square footage. Based data processed to date for the 35
stormwater utility studies conducted by Camp Dresser & Mc. Kee Inc. (CDM),
the average SFU contains approximately 2,460 sq ft of impervious area.
The other option bases the fee structure on an "equivalent residential
unit" (ERU), which is derived by totalling the impervious area of all dwelling
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types (i.e., single family, multifamily, condominiums, and mobile homes),
and dividing by the total number of dwelling units. Figure 1 illustrates these
different rate base optiorm.
There are four prima.-/factors that support the fa/mess and equi .t'y of the
ERU-based fee structure:
~1 Directly connected impervious area factor for each land use;
~ Increased revenue;
~ Construction cost versus density of development; and
'2 Billing system sav'i, ngs.
The best estimate of a parcel's runoff contribution is the directly connected
impervious area (DCYA) on the parcel. DCIA is that impervious area that
drains directly to a gutter or drainage channel. Driveways are generally
included in DCIA because they drain directly to the street (gutter). Roof tops
and patios generally are not included in DCIA because they drain to a
pervious surface (the law'n) where the runoff has an opportunity to infiltrate
into the ground before it reaches the gutter or drainage channel.
Using DCIA to estimate runoff contribution supports the El(U-based rate
structure. This can be illustrated by comparing the runoff contribution from a
single family dwelling versus a multifamily dwelling, condominium, or
mobile home. The average single family dwelling has an impervious area of
about 2,400 square feet (roof area, patios, driveway, etc.), but ordv 30 to 40
percent of this impervious area is directly connected. Thus, if we apply a
DCIA factor of 0.3 to 0.4. the contributing impervious area averages 840 square
feet/unit. The average condominium, apartment, or mobile home has 1,000
square feet of impervious area/unit, but a greater portion of this impervious
area (70 to 90 percent) is directly connected. Therefore, we apply a DCIA factor
of 0.7 to 0.9, and the contributing impervious area averages 800 square
4 ,
.SING LE
MULTIFAMILY
CONDOMINIUMS
MOBILE HOMES
ERU !ASE
SFU BASE
FIGURE 1
TWO OPTIONS FOR SETTING
STORMWATER MANAGEMENT
UTILITY RATE BASE
Table 1
Comparison of Rate Bases for Equivalent Residential Units vs. Single Family Units
Communit.~
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Average Single Family
Total Residential Residential Percent Average
Number of Dwelling Unit Dwelling Unit Increase Residential
Parcels ~ERUs) (SFLIs) ERU vs. SFLI Dwelling Unit
Number of Records to Maintain
243,097 186,000 116,000 60.3 5,316
217,627 185,350 144,700 28.1 6,339
78,788 377,960 237,960 58.8 22,055
08,524 120,000 108,800 10.3 3,585
79,921 233,766 129,721 80.2 8,218
65,924 106,500 78,500 35.7 3,630
25,655 97,204 . 72,424 34.2 2,367
23,941 32,000 23,400 36.8 1,980
22,168 59,319 43,650 35.9 2,103
17,078 41,800 33,000 26.7 1,967
13,927 26,137 18,650 40.1 909
11,21 8 29,600 17,600 68.2 1,430
9,910 14,200 10,900 30.3 603
9,368 9,821 9,100 7.9 3,143
8,611 15,800 7,900 100.0 1,032
Single Family
Residential
Dwelling Unit
53,161
92,796
107,246
53,886
96,168
46,93O
4,377
16,633
15,834
9,344
10,312
10,330
10,379
4,885
7,775
Platted-Vacant Lot
iii w
Equivalent Residential Unit
I ! I
Assuming Both Parcels Are The Same Size:
Monthly Charge = Q~ x $/ERU Monthly Charge -- 1 x $/ERU
Q2
If the Platted-Vacant Parcel is Larger than A1:
Monthly Charge= Q1 x AD x$/ERU
Q2 A1
FIGURE 2
ASSESSING USER FEES FOR
PLATTED-VACANT LAND
Table 2
Effects of Induding Vacant Platted Property
in the Stora-~water Utility Rate Structure
Including Excluding
Total Number Vacant Land Vacant Land
Community of Parcels (ERUs), / (ERUs)
16 133,672 134,500 39,500
17 76,919 133,186 32,980
18 74,089 115,200 33,400
19 12,664 33,600 28,000
Percent Increase
by Including
Vacant Land
241
304
245
2O
feet/unit, not significantly different from the DCIA of the single family
dwelling.
In the non-residential categories (i.e., commercial, industrial, etc.), the
DCIA factor is equally applicable since these land uses ty-piCally demonstrate a
h/gh (0.8 to 0.9) DCIA factor. The DCIA factor in and of itself usually supports
a rate structure that is based on the EI'<U.
The use of the EI~U-based structure also typically results in a significant
increase in the revenue generated by the stormwater utility, as illustrated in
Table 1. The increase obtainable through the use of the ERU base versus the
5FU base is ,typically ~ to 35 percent. However, in communities with large
numbers of multifarnily and condominium units, increases of 60 to 100
percent can be realized. The only example in Table 1 that did not show a
significant increase by using the EP, U base (Community 14) was almost
exclusively a single family housing development.
Typically, the cost of constructing sto,~,~water management facilities in
high density areas will be considerably greater than in low density, single
family residential zones. This is particularly true when retrofitting these
fadlities for water quality compliance because construction can be complicated
by interference with existing utilities and roadways. In the EI'tU-based rate
structure, the higher the development density, the greater the ERU tota/.
Therefore, the users in high density areas pay for their fair share of the cost
recovery, of stormwater management ~adlities in an E1KU-based utility.
The billing system savings of the ERU-based fee structure are also
illustrated in Table I. The number of accounts for which detailed impervious
area information must be maintained is greatly reduced when the ERU base is
used versus the SFU base. In larger systems, the number of accounts for
which site-specific information or a tailored bill must be prepared is reduced
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by 80 to 90 percent. This is a major factor in considering the base unit to be
used in the program. Keeping the system as simple as possible while
maintaining fairness and equity must be the goal of any utility program.
The ERU base has been implemented successfully in dozens of
communities with stormwater management utilities; however, each
community's local conditions and policies must be carefully evaluated when
choosing a rate structure. Experience has shown that a thorough analysis of
optional base structures is crucial to the public's acceptance of the user fee
based u~ity.
Platt~d-Vac:,nt Land
Some communities have incorporated a user fee for platted-vacant land in
their stormwater mana. gement utility. Computing an equitable fee for the
platted-vacant land use category involves consideration of soil characteristics,
depth to groundwater, and the design storms selected by the community to
provide drainage and water quality protection. Typically, including the
platted-vacant parcel in the customer base has been supported in
communities with limited large tracts of-undeveloped property, a significant
number of platted-vacant parcels, and limited possibilities for the expansion
of the jurisdiction's limits.
The method of assessing the contribution from this platted-vacant land
surface is illustrated in Figure 2. The evaluation is based on the average sized
residential parcel (ERU-based) in the community. The ratio of runoff from
two identically sized parcels, one with an average residential unit (derived
from the impervious area analysis) and the other platted-vacant, is used to
determine the appropriate charge for platted-vacant proper .ry. The ratio of the
two runoff quantities (Q1/Q2) represents the factor (R) applied to the platted-
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vacant parcel. For those parcels that are larger than the average residential
lot, the charge is area-weighted (Ap/Al).
The revenue enhancement that can be achieved from this sub-component
can be significant. Table 2 presents the results from four communities that
use the platted-vacant area sub-component.
Undeveloped Land
The undeveloped land component of the user rate base is not commonly
used in communities that have large open areas (i.e., agriculture,
silvaculture, etc.). The exception has been in rapidly developing
communities ,trying to maintain the integrity of their water resources and
naturai environment. In these cases, a major focus of sto,,~xwater
management is water conservation and aquifer recharge. Tl'ds broader
mission provides the technical rationale for including undeveloped property
in the rate base. When incorporating undeveloped property in the user base,
it is extremely important to define the water resource objectives being
supported by the user charges.
To illustrate this procedure (dubbed the building block method), let us
address each of the user classes noted: (I) impervious area, (2) platted-vacant
land, and (3) undeveloped property. The cost elements of a stor~water
management program a_re:
~2 Organization and administration.
~ Operation & maintenance - primary..
C2 Operation & maintenance - secondary,.
'~ Capital improvement program - small projects.
'~ Capital improvement program - major projects.
~ Replacement and renewal.
The cost allocation to each class of rate payer works as follows:
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Zl Impervious Area - partidpates in the recovery of all cost components.
Q Platted-Vacant - normally would participate in all cost elements, but at
a reduced rate that corresponds to the runoff factor (R) previously
noted.
Zl Undeveloped Land - normally would partidpate only in the cost
recovery of the organizational cost element. The rate charged would
also be adjusted to correspond to the characteristics of the undeveloped
property.
COST RECOVERY
C0mmercial/Indu~triaI
The cost of implementing the proposed NPDES permit program for storm
sewer systems has been estimated to average $500,000 (at a minimum) for
communities serving a population of 250,000 or more. A major portion of
th.is cost is related to the commercial/industrial component of the proposed
application process. The inventory of all commercial/industrial activities
plus the identification of i/licit discharges within the system is a major task.
The cost of carrying out these site-specific investigations should, to the
maximum amount possible, be borne by the contributing
commercial/industrial entities. The use of special permit fee(s) to recover the
cost of establishing and maintaining the N'PDES permit process is essential. A
similar procedure has been established by most major communities in
implementing the federal industrial pretreatment program for wastewater
management systems.
In administering the stormwater management utility, all cost elements
must be fairly allocated. Cost accounting by functional elements (i.e., time
and effort required to sam,'ice a spedfic task within the program) and an
accurate inventory of spedal (commerdal/industrial) users provide the
documentation needed to establish the permit fee(s) charge.
Typically, permit categories are established that relate to the general level
of effort required to service the commercial/industrial entity. For example,
the simple sites (parcels) for which minimal field verification is needed are
grouped into one class, while the complex sites would be classified differently.
The unit charge per class is staged to reflect the recovery cost for that budget
year. Care must be taken not to allow the process to get so complex that a
detailed cost analysis is required for each permit. The dasges should be held
to a minimum, typically no more than three subdivisions.
Development
In communities with significant growth, the long-term success of the
stormwater management program depends on well established requirements
for new developments. A stormwater management ordinance that sets levels
of service for flood protection and water quality goals should be established to
guide stormwater master planning and ensure that new development meets
stormwater management requirements. For example, the municipality may
require that peak runoff rates after development not 'exceed pre-development
levels and may set permit requirements for new development and
redevelopment. The ordinance may also specify the design criteria for the
stormwater management fadlities. The responsibilities of the munidpality,
the users (property owners), and deveiopers are defined, and a legal
framework is established for financing and operating the stormwater
management system.
New development can be required either to construct stormwater
management facilities that meet runoff quality and quantity control
requirements or pay an up-front fee to participate in regional or basin-wide
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stormwater management facilities. This "front-end" developer capital
contribution (fee-in-lieu-of) can be negotiated based on the services (facilities)
rendered. The entire process of managing the capital contribution fro'm
development interests is critical to the protection of the user rate base.
Retrofit
Significant capital is required to retrofit existing sto~:u-~water management
facilities to meet water quality requirements. The two basic options available
for this cost recovery, process are: (1) including an annual capital
improvement program in the rate base and (2) levying a special assessment.
In the first option, the cost of improving the system is recovered through
the user rate base with all users paying equally, This approach is fairly
common in communities where stormwater (quantity and quality) problems
are found thzoughout the system. Cost recovery in this manner places the
responsibility of bringing the existing system up to an acceptable standard for
all of the utility's custome~ In developing the utility's rate structure, cue
must be taken to define the program's objectives and goals clearly, so that the
public can understand Se benefits derived from their user fees. Public
information efforts should inform constituents of the public safety and
environmental quality benefits of comprehensive stormwater management
as well as site-specific drainage improvements. Other .types of utilities (i.e.,
water, Wastewater, and solid-waste) have successfully defended a user rate
structure that integrates capital recovery costs for system improvements
within the base rate paid'by all users. The-essential point is that the overall
integrity'of the system is the responsibility of the entire community, not
simply those customers served bv a specific element of the system.
Stormwater quality and quanti .ty impacts may not limited to the basin in
which a facility is placed.
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The second option for recovering the capital cost of repairing or
improving the existing system is through the use of special assessments. The
allocation is typically'based on contributing area, i.e., if your property
represents 10 percent of the service area, you wOuld pay 10 percent of the
capital cost of the project. The variations are many. Special assessments are
seldom viewed well by the affected property owners. The common goal must
be paramount.
REVENUE POTENTIAL
Substantial revenue can be generated from a stormwater management
utility. This revenue stream is (1) dependable (user fee), (2) renewable (not in
competition with general fund needs, such as sodal services and law
enforcement), and (3) leveragable (revenue bonds).
Table 3 presents revenue information to illustrate these three
characteristics. The communities noted in the (a) category are in operation
and have limited their charge to developed property with impervious areas,
and each has selected the ERU base over the SFU base. The communities
noted in the (b) category are those that'have the platted-vacant property and
the ERU ba~e impervious area integrated into their customer system. The
unit rate calculated in this table is $3.00/ERU/month. Typically, the rates
selected in recent years have ranged from $2.50 to $4.50/ERU/month. In the
early years of the programs, the starting rates were usually much lower, i.e.,
$1.00 to $2.00/ERU/month.
In Community 3 (a large County), the utility generates $I3,606,500
annually, while their previous general fund commitment to the program had
been approximately $3,600,000 annually. This substantial revenue boost (3 to
5 fold) is typical for communities that have opted.for a user fee system versus
tax-based general funds. The larger increases are generally found in the small
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Table 3
Revenue Potential of Storntwater Management Utility
Community
· Total Number
of Parcels
Total
Population
l(a) 243,097 200,512
3(a) 178,788 504,145
5(a) 79,921 369,007
7(a) 25,655 125,545
9(a) 22,168 64,022
I 1 (a) 13,927 34,687
I3(a) 9,910 15,252
15(a) 8,611 28,551
16Co) 133,672 57,773
17Co) 76,919 42,345
18CO) 74,089 52,452
19CO) 12,664 44,100
Annual Revenue
@ $3.00/ERU/Month
6,696,000
13,606,500
8,415,576
3,499,344
2,135,484
940,932
511,200
568,800
6,292,800
4,794,696
4,147,200
.1,209,600
(a) Ei'{U Base with no charge for platted-vacant land.
Co) ERU Base with platted-vacant land included.
communities because their general funds provided only minimal revenue
for stormwater management.
The revenue boost obtainable by incorporating platted-vacant property
into the rate base is even more dramatic. Of the four communities presented
in Table 3 that include platted-vacant propertY in their fee structure, three
contain a large number of platted-vacant parcels Community 16, a city of less
than 60,000, will be generating $6,292,800 annually, a four-fold increase over
their existing program ($1,514,000 annually). Each of these is uniquely suited
for this added rate class because the services provided are identifiable within
this added group of parcels.
The impact of adding the undeveloped property to the rate base can be
significant. As noted earlier, the communities that are considering the
inclusion of undeveloped properties into their rate base are seeking to protect
their water resources (water conservation and aquifer recharge), as well as
provide typical stormwater (surface water) management. Care must be taken
to assure that the cost recovery system instituted can track the services, or in a
broader view, the resource benefits that 'are attributable to the entire
community.
The significant new revenue produced by the utility user fee system places
the community in a positive position to leverage this reliable revenue stream
into revenue bonds. These bond programs provide the ability to implement
large-scale remedial and new stormwater facility projects in a timely fashion.
Detailed financial planning is critical to optimize the revenues available to
meet the communitv's stormwater management needs.
The community will demand demonstrated stormwater management
improvements if the utility is to receive the sustained support required to
issue revenue bonds, and revenue bonds area must for a comprehensive
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communities because their general funds provided only minimal revenue
for stormwater management.
The revenue boost obtainable by incorporating platted-vacant property
into the rate base is even more dramatic. Of the four communities presented
in Table 3 that include platted-vacant property in their fee sWacture, three
contain a large number of platted-vacant parcels Community I6, a dry of less
than 60,000, will be generating $6,292,800 annually, a four-fold increase over
their existing program ($1,514,000 annually). Each of these is uniquely suited
for this added rate class because the services provided are identifiable within
t. his added group of parcels.
The impact of adding the undeveloped property to the rate base can be
significant. As noted earlier, the communities that are considering the
inclusion of undeveloped properties into their rate base are seeking to protect
their water resources (water conservation and aquifer recharge), as well as
provide typical stormwater (surface water) management. Care must be taken
to assure that the cost recovery system instituted can track the services, or in a
broader view, the resource benefits that ~are attributable to the entire
community.
The significant new revenue produced by the utility user fee system places
the community in a positive position to leverage this reliable revenue stream
into revenue bonds. These bond programs provide the ability to implement
large-scale i'emedial and new stormwater facility projects in a timely fashion.
Detailed financial planning is critical to optimize the revenues available to
meet the community's stormwater management needs.
The community will demand demonstrated stormwater management
improvements if the utility is to receive the sustained support required to
issue revenue bonds, and revenue bonds are'a must for a comprehensive
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