ORGANIZING A STORMWATER UTILITY 2006 SESWA Stormwater Utilities and NPDES Permitting Seminar ORGANIZING A STORMWATER UTILITY Stephen R. Lienhart, P.E. Water Resources Program Director URS Corporation Daryl Hammock, P.E. Water Quality and Environmental Program Manager City of Charlotte, North Carolina

Starting With an End In Mind

Charlotte Before the Program General fund paid for projects in City right-of-way. (Although solutions are watershed-wide) Private property owners could participate through watershed assessment. Most projects were not constructed due to lack of support from citizens. Projects constructed were “segmented” in City right-of-way.

Charlotte Before the Program 1985 NCSU Water Resources Research Institute Study 1987 City Council Awareness Raised by staff Clean Water Act / Phase I Rules coming 1989 City Council endorsed development of a comprehensive program including service fee 1989 Storm Water Advisory Task Force; Staff, consultant, & citizens

Storm Water Task Force Key Policies Council Adopted Policy: 1991 Fund SW service with SW revenues Already spending 5.5m in several areas Meet NPDES requirements; improve water quality Address the existing backlog of repairs within 10 years – defined as problems coming in faster than can be repaired Routinely clean and maintain system Complete master planning in 5 years

Storm Water Task Force Key Policies Educate public about SW services and activities Distribute cost to rate payers in accordance with their contribution to the problem (impervious area) Simplify rate structure for single-family residential customers Maintain initial fee rate for 5 years Coordinate (and eventually consolidate) with Mecklenburg County Charge fee to all public properties including streets, roadways, highways

Extrapolations About Infrastructure: Forming Goals Basis for Funding level 2400 miles of storm drainage 170,000 storm drains 10,000 were >80 years old 50,000 were >30 years old 2,500 were broken 9,700 were blocked Replacement of inadequate system will cost between $100 and $500 million Would need funding program / fee structure to provide this…

What We Thought We Needed More on the fee in a moment…

Public Education Efforts

Public Education Efforts Early Public Education Efforts Ongoing Public Education Efforts Customers with service requests Individual project communication General Public & NPDES requirements Program Measures

Early Public Education Efforts Utility created in 1993 Massive education campaign started Continued justification of program Bills are coming! Charlotte Observer newspaper articles on projects and visible benefits of the fee

Financial and Implementation Realities

What We Thought We Needed

Developing Financial Options From goals and revenue requirements, Determine Revenue Sources Residential accounts(114,000 homes) Commercial accounts(14,500 acres) State / City accounts? Service fee or some sort of tax? Set out to answer these questions

Developing Financial Options Get guidance from Elected officials through choices !! Minimal Recommended Expedited Maintain Current Efforts Meet NPDES Provide Maintenance Provide Capital Improvement

The Fee vs. Tax Illustration Single Family Residential @ 2500 Sq. Ft. Impervious $.06 Property Tax Value Monthly Fee(’93) Tax Increase $ 71,000 $3.55 $3.55 $ 50,000 $3.55 $2.50 $150,000 $3.55 $7.50

The Fee vs. Tax Illustration Commercial/Industrial Accounts @ Variable Impervious Square Footage $.06 Property Customer Monthly Fee Tax Increase Bank of America $ 120 $15,000 (1.9 acres) Eastland Mall $4,800 $ 2,900 (78 acres)

Charlotte’s Initial Storm Water Fee Determined fee needed to generate revenue from accounts Original proposal: $3.07 variable + $.48 fixed City Council made two major fee-reducing decisions: City-owned impervious fee: $2.5 million in 1993 1 cent Property tax contribution; $2.5 million in 1993 Final proposal: $2.12 variable + $.48 fixed

Early Revenue Projections

Reality of New Utility – Early 90’s Awareness of new program was high & Charges began appearing on bills Citizens began becoming very assertive in requesting service The utility induced new demand for drainage repairs 10-year goal of high priority repairs could not be met Master Planning as envisioned was never completed Changes to financing strategy were needed

Reality of New Utility – Early 90’s An “accelerated” program was introduced Council directed staff to begin “Balanced Portfolio” to meet wider range of needs Committed funding to numerous high priorities, instead of all to flooding Included some funding for Neighborhood Improvements, Economic Development Investments, Transportation Projects, Water Quality and Stream Stabilization Master Planning as envisioned was never completed

The Acceleration Proposal Six years of 10% fee increases beginning in FY97 Bond Funding became a huge part of the accelerated program Through high citizen awareness and expectation, City Council supported this accelerated program

The Acceleration Proposal

Success Factors and Flaws

Mistakes That Can Be Avoided Not realizing affect new fee has on citizen expectations, goals, and projections Evaluate State legislation on; Ability to have a utility at all Ability for local utility fees to be applied to NPDES requirements – 1999 Durham, NC case Operation of a utility in a County as well as a Town Ability to establish Post-Construction Ordinance that meets local drivers Specific long term plans rarely hold true – Plan on “Adaptive Management” Realize that things are going to cost more than you think - Allow some cushion

Successes Comprehensive Fee model Early and often public communication Helps to have combination of flooding/infrastructure drivers in addition to NPDES drivers SWAC – Citizen Advisory Committee trust and support Consider combinations of financial options Simple and strong ranking system – Just say NO to squeaky wheels Street water qualifies…and get elected official buy-in Impervious basis to fee

Successes: Balanced Portfolio Capital Strategy Modern Version Repairs to Storm Drains Channel Projects Flood Control Neighborhood Projects Transit/Transportation Projects Economic Development Pollution Control Stream Restoration

Challenges of Success Expenditures lag behind appropriations May cause significant buildup of funds Causes concerns with accountants Retrofits are much harder than new construction Stop using fee model as a cash flow tool Use Fee model for long term budgeting Use Cash flow model for month to month

Our Future Success Programmatic Goals Complete the backlog of large capital projects and erosion problems Meet federal mandates, support City goals Continue transition from reactive, to proactive repairs Maintain a Balanced Portfolio of activities Integrate water quality into projects Financial Goals Revenue bonds to complete backlog Stop selling bonds; reduce debt service, become PAYG-supported Fee increases = minimal, inflation after all backlog complete

Questions and Answers