Financing Stormwater Green Infrastructure in Washington DC Brian Van Wye District Department of the Environment 1

Presentation Outline Background and Cost of Stormwater in the District. Major Funding Sources. Voluntary Programs to Install Stormwater Retrofits. SW Regulations as Key Driver of Retrofits. Stormwater Retention Credit Trading. Getting the Most Out of Limited Funding. SRC Trading:L Leveraging Regulations Enhancing Sustainability Creating New Opportunities to Drive Retrofits 2

Imperviousness in the District 43% of District’s land area is impervious. A single 1.2 inch storm falling on this area produces about 525 million gallons of stormwater runoff. 3

Stormwater Quality Stormwater washes trash, sediment, oil, grease, pet waste, and other pollutants into District sewers and waterbodies. 4

Stormwater Quantity Its sheer volume erodes stream channels, toppling trees, washing sediment downstream, and severely degrading aquatic habitat. 5

Estimated Cost Combined Sewer System Separate Storm Sewer Sys 3.2B gal. per year of CSOs. $2.6B tunnel project. Expected completion 2025. Funded by rate payers. Separate Storm Sewer Sys Rough cost estimate – $7B+ GI build-out. $10B+ traditional infrastructure. Funding of @ $17M per year. CSS MS4 3.2 bln gallons of raw sewage mixed with sw in Anac and Potomac and Rock Creeks 6

Impervious Surface Retrofits Key to solving stormwater impacts from MS4. Retain runoff on site to mimic natural land cover. Retention retrofits gradually make District “spongier.” 7

MS4 Funding Sources for Retrofits DDOE stormwater impervious fee - $12M per year. Bag law fees – $2.5M per year. Federal Grants - $3M per year. Total = Approx $17.5 Mill / Year The Challenge - Create a paradigm of progressive regulations and incentives that balance environmental benefits, practical constraints and smart growth objectives 8

Voluntary Retrofit Programs Revising Stormwater Management Regulations Emphasis will be on LID practices Incorporate volume reduction by requiring no stormwater release from developed areas for small rain events Green Building Act New District-owned and/or Publicly-financed buildings require LEED Silver Certified as of 2009 New Private buildings will require LEED Silver certified beginning 2012 Stormwater Management Enhancement Act Revised Stormwater Fees – Based on impervious area as direct corrolation of each property’s stormwater runoff volume Provided incentives for LID – stormwater fee discount program being developed for properties that reduce runoff through retention using LID and harvest/re-use. Revised MS4 Permit Issued by EPA as the District is not a delegated state. The draft Permit would place significant new requirements on the District’s stormwater management program and would serve as a model for the region. Requires the use of green infrastructure and low impact development (LID) practices to reduce stormwater runoff from new development and redevelopment Requires retrofitting existing impervious surfaces Volume Reduction Standards Non federal projects must retain first 1.2” of rainfall Federal projects must retain first 1.7” of rainfall Non-complying projects shall utilize off-site mitigation or make in-lieu payment Retrofit 18 Million SF of impervious surface to meet retention standard, of which 3.6 Million SF shall be in DDOT right-of-way during 5 year permit period Install 350,000 SF on new green roofs during 5 year permit period Develop and implement plans to reduce pollutant loading with interim milestones to be met by end of permit cycle 9

RiverSmart Homes BayScaping Rain Barrels Rain Gardens Cost share with owners Rain Gardens Permeable Pavement Shade Trees 10

RiverSmart Schools Retrofit impervious & create outdoor living classrooms RiverSmart Schools create outdoor living classrooms with impervious removal strategies that use on site stormwater management for edible gardens, native habitats, rain gardens, and bioretention. 11

RiverSmart Rooftops $5/sf subsidy to incentivize green roof installation. 2 million SF constructed. 2nd only to Chicago!! Green Roof subsidy program $7 per square foot subsidy for large (over 4,000 square feet) retrofit projects $615,000 in ARRA Stimulus funding $5 per square foot subsidy open to any applicant i.e. new or retrofit, public or private $280k in funding between FY07 and FY10 DDOE initiating new subsidy program in FY11 at $5/SF utilizing local and grant funding. 1425 K Street Human Rights Campaign ASLA Office 12

Other Voluntary Retrofit Programs RiverSmart Communities – Condo associations, etc. Municipal buildings, parking lots, and roads. Green roofs, bioretention, stormwater harvest, porous pavement, etc. Enhanced Street Sweeping Green roofs LID in Right of Way 13

Other Voluntary Retrofit Programs RiverSmart Rewards – Discount on Stormwater Fees Maximum discount for retention of 1.2 inch storm. Improves equity for ratepayers. Not expected to drive retrofits on large scale by itself. Expected to provide additional incentive layered on other voluntary and regulatory programs. Projected Yearly Savings on Stormwater Impervious Fees 1.2 in. retention for 1 ERU   Rate 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 10-Year Total DC Water Max. Discount 4% $5 $6 $8 $10 $11 $12 $13 $14 $15 $107 DDOE Max. Discount 55% $18 $26 $33 $273 Enhanced Street Sweeping Green roofs LID in Right of Way 14

Revised Stormwater Regulations Major land-disturbing activity 5,000 sf or more of land-disturbing activity. Required to retain the first 1.2” of rainfall. Major substantial improvement activity Renovation for which: Cost exceeds 50% pre-project value of structure & Combined footprint of structures & land disturb ≥ 5,000 sf. Required to retain the first 0.8” of rainfall. Retention achieved with Green Infrastructure. 15

Green Roofs Row house retrofit, DOI retrofit, Pepco utility substation retrofit, ASLA retrofit 16

Stormwater Tree and LID Boxes Development Parcel Scale… New construction restores public space with curbside and interior sidewalk sw facilities 17

Rainwater Harvesting for Non-potable Uses 18

Regulated Development Key Driver of Retrofits Most regulated development in District is redevelopment. Scale of development makes it biggest driver of retrofits and key part of the solution: Gradual transformation of DC’s 43% impervious land cover. Total area subject to SWM regulations annually (15 Mill SF - @ 1% of land) Total area retrofitted with retention via DDOE direct investment annually : 10 1 19 .

Leveraging Regulations with SRC Trading Problem of imperviousness is opportunity for trading to: Maximize cost savings & flexibility for regulated sites. Increase retention and accelerate restoration of waterbodies. Increase socioeconomic benefits, with more GI retrofits (health, aesthetics, environmental justice, green jobs). Leveraging Regulations Enhancing Sustainability Creating New Opportunities to Drive Retrofits

Trading’s Potential to Increase Retention Same retention for 1.2” storm: Strict On-Site Trading 5,000 + 5,000 = 10,000 gallons 10,000 gallons 21

Trading’s Potential to Increase Retention Greater retention for storms smaller than 1.2” Example – 0.6” storm: 90% of storms in Washington DC are less than 1.2”. This scenario yields 57% increase in annual retention. Strict On-Site Trading 5,000 gallons 5,000 + 5,000 = 10,000 gallons 22

Benefits to District Waterbodies Increased annual retention District-wide. Increased capture of first- flush volume. Shift retention BMPs to most vulnerable tributaries and improve socioeconomic outcomes. 23

Allowable Use of Off-Site Retention Free to go off site after achieving 50% of required retention on site. Two off-site options: In-lieu fee payment to DDOE = $3.50/gallon of ret/year. Use of privately tradable Stormwater Retention Credits (SRCs). SRC=1 gallon of retention for 1 year. Off-site volume is an ongoing obligation that can be: Met on yearly or multi-year basis. Met with a mix of fee & SRCs and mix can change. Reduced in the future by increasing on-site retention.

Generation of Stormwater Retention Credits DDOE is sole SRC-certifying authority. DDOE will certify up to 3 years’ worth of SRCs every 3 years for eligible retention capacity. SRC-retrofits not permanently obligated to that use: No maintenance covenant required. Maintenance obligation can be ended by forfeiting SRCs or purchasing replacement SRCs for DDOE to retire. Failure to maintain retention capacity for time of SRC certification results in: Original SRC owner must pay ILF, plus late fee. No additional certification of SRCs.

Example SRC Transaction Grocery parking lot voluntarily retrofits w/4,000 gal BMP to generate 3 years of SRCs or 12,000 SRCs.* Church parking lot voluntarily retrofits w/2,000 gal BMP to generate 3 years of SRCs or 6,000 SRCs. Regulated site has 3,000 gal yearly offsite obligation & purchases total of 18,000 SRCs to comply for 6 years. By end of 6-year period, regulated site purchases additional credits or pays in-lieu fee. *Note: Opportunity for discount on stormwater impervious fee provides layered incentive for retrofit. 26

Potential Financial Return on SRCs Projected Financial Return on Stormwater Impervious Fees 1.2 in. retention for 1 ERU   Rate 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 10-Year Total DC Water Max. Discount 4% $5 $6 $8 $10 $11 $12 $13 $14 $15 $107 DDOE Max. Discount 55% $18 $26 $33 $273 Projected SRC Value* $1.25 $888 $917 $949 $981 $1,014 $1,048 $1,083 $1,120 $1,158 $1,197 $10,354 Enhanced Street Sweeping Green roofs LID in Right of Way *SRC value based on projected cost to recoup costs, not market analysis. Costs include capital, maintenance, land, and return on investment. 27

Other Benefits of SRC Market New incentive for maintenance of GI. District can purchase and retire SRCs to drive retrofits and achieve requirements and goals at lower cost. District exploring adaptation of Property Assessed Clean Energy (PACE) to stormwater retrofits. Marketing SRCs as socially conscious option for reducing a property or event’s stormwater footprint. Leveraging Regulations Enhancing Sustainability Creating New Opportunities to Drive Retrofits

Getting the Most out of Limited Funding Vast impervious areas in critical need of costly retrofits. Importance of regulatory tools. Prefer performance basis in regulations established: By District and For District. Funding decisions driven more by performance, cost effectiveness, & long term goals – less opportunistic. Leveraging Regulations Enhancing Sustainability Creating New Opportunities to Drive Retrofits

QUESTIONS? Brian Van Wye Branch Chief – SW Management Program Implementation District Department of the Environment Brian.VanWye@dc.gov To download the District’s Proposed Rule on Stormwater Management, draft Stormwater Management Guidebook, & related resources, visit: ddoe.dc.gov/proposedstormwaterrule 30