1. 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

2. Starting With an End In Mind

3. 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.

4. 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

5. 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

6. 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

7. 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…

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

9. Public Education Efforts

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

11. 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

12. Financial and Implementation Realities

13. What We Thought We Needed

14. 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

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

16. 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
$ 50,000 $ $2.50
$150,000 $ $7.50

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

18. 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

19. Early Revenue Projections

20. 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

21. 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

23. 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

24. The Acceleration Proposal

25. Success Factors and Flaws

26. 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

27. 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

28. 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

29. 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

30. 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

31. Questions and Answers