Stormwater management practices in the United States have a varied past, shifting from considering the water as a “common enemy” and moving it as quickly across property as possible with little thought to the quality of water, to recent practices of managing the quantity, quality, and volume of stormwater runoff. The result of this shift is that today, just as communities routinely complete master planning for their water and wastewater collection systems, they are also master planning capital and asset management activities focused on the creation of efficient and coordinated approaches to stormwater and drainage management.
It is generally accepted in the industry today that there are essentially two stormwater management techniques that are employed on a regular basis:
- Peak Rate Control – which is essentially flood control predicated on public safety and a function of the individual drainage characteristics of a municipality or watershed.
- Water Quality Management – which is more often than not driven by the requirements of the National Pollution Discharge Elimination System (NPDES) regulations.
As a result of these evolving and more infrastructure-intensive stormwater management practices, more cities have created stand-alone utilities for stormwater management, and have implemented specific stormwater utility fees. In the United States today, it is estimated that more than 1,300 communities have Stormwater Utilities (Campbell, 2012). An annual survey completed by Western Kentucky University students under the guidance of Professor Warren Campbell identified the active stormwater utilities in 2012 (Figure 1). Since 2007, Professor Campbell’s floodplain management students have annually compiled user fee data for stormwater utilities nationwide. Their annual reports can be found by clicking here.
Figure 1: 2012 Stormwater Utilities reported by Western Kentucky University (Campbell, 2012)
Looking specifically at the North Central Region, the number of stormwater utilities is highest in Minnesota, Iowa, and Wisconsin, which is likely a reflection of the population density and number of federally regulated communities based on population thresholds within the NPDES program. A look closer at Professor Campbell’s data indicates that these numbers are growing. For example, Professor Campbell’s study estimates that in 2012, there were 159 stormwater utilities in Minnesota while only 106 were reported in 2008, a 50 percent increase in only four years. The number of utilities reported in Montana, North Dakota, and South Dakota, however, showed little growth over the same time period.
Financial and Legal Challenges
Historically, it has been common for communities to use general municipal funds (tax dollars) to address stormwater expenses. In this manner, residents have paid for stormwater management based on property value. In the 1990’s when many stormwater utilities first began implementing fees, there were a variety of mechanisms employed to determine the fees. Where stormwater management expenses have been addressed through general municipal funds, utility proponents are challenged to educate the public as to the benefit of the service provided with those tax dollars. It is now widely recognized that the most appropriate assessment of drainage-related charges is a fee basis directly tied to the demands a property places on the drainage system. Contributions to the drainage system are related to the size of the property, the amount of impervious area, and the permeability of the soils. It is common to establish an Equivalent Residential Unit (ERU) based on average values for these factors. Using this approach, a fee per ERU is established and the fees for all other properties are scaled in relation to the number of ERUs.
In general, as the water sector has made great efforts to promote fair and equitable rate setting, fees have been challenged, and utilities have taken measures to most appropriately set fee structures to be commensurate with the estimated impact that individual properties or property types place on the stormwater system. Cited literature indicates that fees are most successfully and appropriately implemented when based on the drainage needs of a property rather than the value of the property.
Stormwater utilities have faced legal challenges, and at times have been overturned. In some states, cities have been slow to implement stormwater fees due to legal challenges of such fees as a tax. It is important to note that a stormwater fee is distinguishable from a tax if:
- It serves a regulatory purpose;
- It is proportionate to the cost of service;
- The property owner has the ability to reduce the charge by implementing control measures for credit.
Stormwater Utilities Closer to Home
Figure 2 presents historical stormwater utility data from the AE2S North Central Region Utility Rate Survey. The graphic illustrates the number of stormwater utilities reported in the survey area (Minnesota, Montana, North Dakota, South Dakota, and Wyoming) and the range of reported monthly stormwater charges for residential properties since 2006. It should be noted that the results reflect only those systems that reported a monthly stormwater charge as part of the utility bill. If stormwater fees were included with annual property taxes, they were not considered stormwater utility charges and are not shown in Figure 2. As indicated in the figure, the maximum and average monthly residential stormwater utility fees reported have been steadily increasing since 2006. In the 2012 AE2S rate survey, the average monthly stormwater fee was $3.89, which is less than the average 2012 value of $4.20 reported in the Western Kentucky University study. Figure 2 shows that the total number of AE2S survey respondents reporting a stormwater utility was down in 2012 (this is a reflection of the fact that not all communities participate in the survey on an annual basis).
Figure 2: Historical Stormwater Utility Rate Survey Data
Development of a comprehensive stormwater management plan for a community can serve as an important basis for the development of a stormwater fee structure.
Stormwater management planning defines the limits and components of the system, as well as the means for collecting revenue to fund the utility. The benefit of implementing a stormwater utility fee is the ability of the community to fairly charge each property owner based on the runoff the property contributes to the drainage system. Communities contemplating the formation of a stormwater utility should verify that the legal authority is in place to do so. Community leaders should develop a comprehensive Stormwater Management Plan that includes the method of assigning cost and appropriately assessing fees to properties within the utility boundaries.
If you have questions, your state regulatory office can be helpful:
- Minnesota Pollution Control Agency: 1-800-657-3864
- Montana Department of Environmental Quality: Brian Heckenberger at 406-444-5310
- North Dakota Department of Health: Dallas Grossman at 701-328-5242
- South Dakota Department of Natural Resources: Andrew Renner at 1-800-SD-STORM (1-800-737-8676)
In addition, feel free to contact AE2S Water Resources Group Manager Jeff Hruby, PE, atJeff.Hruby@ae2s.com or 701-221-0530. For questions related to specific stormwater utility fee methodologies, contact Shawn Gaddie, PE, at Shawn.Gaddie@ae2s.com or 701-746-8087.
Campbell, C. Warren (2007). Western Kentucky University 2007 Stormwater Utility Survey, Western Kentucky University, Bowling Green, 27 pp.
Campbell, C. Warren (2008). Western Kentucky University 2008 Stormwater Utility Survey, Western Kentucky University, Bowling Green, 42 pp.
Campbell, C. Warren (2012). Western Kentucky University 2012 Stormwater Utility Survey, Western Kentucky University, Bowling Green, 57 pp.
Guidance for Municipal Stormwater Funding (2006), National Association of Flood and Stormwater Management Agencies, 140 pp.
The Value of Stormwater Utilities for Local Governments in the Chicago Region, Chicago Metropolitan Agency for Planning (CMAP), January 2013.