United States
Environmental Protection
Agency
Office of Water
(WH-550G)
EPA440/6-89-00-
June 1989
&EPA Local Financing for
Wellhead Protection
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LOCAL FINANCING FOR WELLHEAD PROTECTION
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF WATER
OFFICE OF GROUND-WATER PROTECTION
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ACKNOWLEDGMENTS
This document was prepared for the U.S. Environmental Protection Agency, Office of Ground-Water
Protection (OGWP), with support under contract 68-C8-0003. Agency personnel responsible for planning
and project management were Mr. Stephen Roy, Work Assignment Manager, and Dr. Norbert Dee Project
Officer, OGWP. J
Marian Mlay, Director
Office of Ground-Water Protection
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EXECUTIVE SUMMARY
"Local Financing for Wellhead Protection" provides information to State and local managers of water
quality and water supply about a variety of financing approaches available to support wellhead protection
initiatives. This information may help managers match funding options to protection activities during the
development and financial planning of their own Wellhead Protection Programs.
The following summary provides an overview of wellhead protection activities and the sources of funds
and institutional arrangements that can be used to implement those programs. This summary covers four
topics: wellhead protection initiatives; sources of funds; institutional options; and case studies of five
Wellhead Protection Programs.
WELUHEAD PROTECTION INITIATIVES
The 1986 Amendments to the Safe Drinking Water Act (SDWA) established a new Wellhead
Protection Program to protect ground waters that supply wells and weflfields that contribute drinking water
to public water supply systems. Under SDWA Section 1428 each State must prepare a Wellhead Protection
Program and submit it to EPA by June 19, 1989. Although the law requires that every State Wellhead
Protection Program must contain specific elements, EPA recognizes that States should be allowed flexibility
to tailor program details to best suit their individual needs and circumstances.
A comprehensive Wellhead Protection Program comprises several distinct and essential elements. At
a minimum, each State's Wellhead Protection Program must: specify roles and duties of State and local
government entities and public water suppliers; delineate the Wellhead Protection Area for each wellhead;
identify sources of contaminants within each Wellhead Protection Area; develop management approaches
to protect the water supply, develop contingency plans for each public water supply system; site new wells
properly, and ensure public participation hi the Wellhead Protection Program.
Options for financing wellhead protection initiatives are generally very closely linked to the
characteristics of the initiatives themselves. Most Wellhead Protection Programs combine one or more of
the following types of initiatives: construction of capital facilities; land acquisition; regulation of potentially
polluting commercial, residential, and industrial activities; and related management measures.
Although capital facilities and land acquisition have high initial costs, they have benefits that accrue
over a long period of time. Accordingly, grants and loans (bonds or bank loans) are well-matched for such
investments. They enable a large capital expenditure at the outset of an initiative, with repayments over
an extended period.
Regulatory measures include zoning; performance controls for commercial or industrial activities; and
operating permit programs that control the generation, management, or disposal of contaminating
substances. In many Wellhead Protection Programs, these regulatory measures are generally funded from
fees assessed against the regulated community. Hence, revenues are matched to levels of program activity
and timed to coincide with the administrative burden of reviewing permits and conducting inspections.
Management measures include public education, technical assistance, monitoring, data collection and
mapping, and contingency planning. Because the benefits of these measures accrue at least to all water
users and potentially to the community at large, broad-based revenue sources, such as general revenues, are
appropriate to fund them.
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SOURCES OF FUNDS
Matching sources of funds to their intended uses addresses the issues of equity, efficiency, and political
acceptability. Although the research for this report documented many variations, die four basic sources of
funds for Wellhead Protection Programs included own-source revenues (dedicated taxes and fees), private
expenditures, intergovernmental grants, and loans (bonds and bank loans). Frequently, Wellhead Protection
Programs mixed these sources and/or changed them slightly to suit their particular needs for spreading costs
equitably, timing collections to meet short- versus long-term goals, or meeting specific concerns of local
governing bodies or States.
la most instances, taxes and fees were found to be the principal sources of funds for Wellhead
Protection Programs. Managers adjusted tax and fee structures in response to concerns over who should
pay (water users, potential polluters, or general taxpayers), anticipated levels of revenue, the stability of
revenues from year to year, implementation costs, and/or incentives or disincentives for private activities
affecting ground water.
A selection of taxes and fees that have been used to finance Wellhead Protection Programs include the
following:
• Almost all kinds of taxes, which are dedicated to wellhead protection initiatives
(real estate transfer, ad valorem taxes, sales taxes, tax surcharges, personal property
taxes);
• Impact fees, which are fees assessed against developers to recover the costs that
their projects or activities impose upon public facilities and services;
• Permit fees, which are fees assessed against permittees to recover the costs of
permit processing;
• Fines and penalties levied against polluters who violate legal restrictions;
• Excise taxes, which are levied against the exchange of a particular good or service;
• Unit charges, which are paid by the direct user of a facility in proportion to use
(metered water or sewer charges, for example);
• Access fees, which are payments by users of a facility for the privilege of use, such
as a connection fee or general facilities charge; and
• Service fees, which are mandatory payments by the recipients of a public service
in accordance with individual benefit received.
Private financing appears to be less common than public financing for Wellhead Protection Programs.
In some communities, however, private utilities funded Wellhead Protection Programs in lieu of public
programs. In one instance, the research identified a publicly administered system where local commercial
and industrial developers financed ground-water quality monitoring initiatives. To a public Wellhead
Protection Program, the advantage of private expenditures is that they offset limited public resources, which
can then be used hi other programs.
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Grants, bank loans, and receipts from the issuance of tax-exempt bonds have been used effectively to
meet the up-front capital costs of building new facilities or acquiring land. Public loans or bonds are
secured with a pledge of future taxes and/or fees covering periodic payments of interest and repayment of
principal, generally over the useful life of a facility.
INSTITUTIONAL OPTIONS
No one institution is ideally suited to administer all types of Wellhead Protection Programs. Where
water supply is integrated within city or county governments, it probably makes sense to create a separate
division of that government to oversee wellhead protection activities. In this case, it would be simplest to
finance program administration from the general fund through the annual appropriations process.
In other cases, water supply is administered separately from general local government, under a public
authority chartered by statute or a special district created by public referendum. Such arrangements usually
are funded through mechanisms outside the normal budget/appropriations process. In many instances, the
finances of special districts are handled with an enterprise fund (a trust fund with dedicated revenues and
uses restricted to wellhead protection). Such an arrangement can provide more secure, consistent funding
for wellhead protection and enable those who pay for wellhead protection a broader role in making
program decisions.
CASE STUDIES
Hve case studies illustrate the care and creativity used to select funding options and institutional
arrangements for local Wellhead Protection Programs. In each case, particular attention was given to
finding a fair and politically acceptable formula for distributing the cost burden among benefiting water
users, potential polluters, and general taxpayers. These cases also illustrate the variety of institutions that
can oversee Wellhead Protection Programs effectively.
In the Town of Littleton, Massachusetts, three departments administer separate activities that together
form a regulatory program for wellhead protection. Activities include mandatory installation of monitoring
wells, with ground-water quality testing paid by commercial and industrial developers; well monitoring
financed by water users and commercial and industrial facilities; and a runoff control program financed by
taxes.
Metropolitan Dade County, Florida, uses permit fees to finance a regulatory program designed to
prevent polluting activities within Wellhead Protection Areas. Technical studies, monitoring, planning, and
enforcement in Wellhead Protection Areas - activities that benefit all water users - are financed through
service fees levied as a surcharge on water bills. Service fees are placed in a trust fund and dedicated to
wellhead protection.
The Santa Clara Valley Water District is a public authority chartered by the State of California that
operates a water supply enterprise (fully self-financed through dedicated fees). The District manages surface
and ground water conjunctively through storage and artificial recharge. Accordingly, the District collects
wholesale revenues by selling water to retail water utilities and by using service fees based on the actual
withdrawals of recharged ground water from direct users who pump from their own wells. Revenues are
used to finance technical studies, monitoring activities, and manage the ground-water recharge program.
In 1985 the State of Washington enacted the Washington Ground-Water Protection Act. The Act
authorizes counties to create Aquifer Protection Areas and to levy two types of fees in these areas: a septic
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tank use service fee, and a ground-water pumping service fee. At least two counties are using the authority
of the Act to implement coordinated programs of interceptor sewer construction and ground-water
protection activities.
To finance its coordinated program, the County of Spokane is supplementing the two fees with access
fees, a dedicated sales tax, and a real estate transfer excise tax. In Thurston County, a public authority
(LOTT) was chartered by intergovernmental agreement among three cities and the County to manage
wastewater collection and treatment. LOTT will oversee the construction of new interceptor sewers,
financed with revenues from a septic tank use service fee, user access fees, and sewer user charges. - LOTT
also will provide funds to the County's Health Department for its ground-water protection program.
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TABLE OF CONTENTS
INTRODUCTION 1
PARTI
OPTIONS FOR FINANCING AND MANAGING WELLHEAD PROTECTION PROGRAMS 2
WELLHEAD PROTECTION INITIATIVES IN PRACTICE 4
Land Acquisition 4
Capital Facilities 4
Regulatory Measures 4
Management Measures 5
SOURCES OF FUNDS FOR WELLHEAD PROTECTION PROGRAMS 7
Local Taxes and Fees 7
Private Expenditures in Lieu of Revenues 14
Capital Financing Sources 14
INSTITUTIONAL OPTIONS FOR FINANCING WELLHEAD PROTECTION 16
General Purpose Unit/General Fund 16
Public Enterprise . 17
Trust Fund with Dedicated Revenues 18
Special Financing Area 18
Public Authority 19
Special District Created by Referendum 20
SOURCES OF FURTHER ASSISTANCE TO THE WELLHEAD PROTECTION
MANAGER 21
PARTH
CASE STUDIES OF FINANCING FOR WELLHEAD PROTECTION 23
LITTLETON, MASSACHUSETTS: POLLUTERS, BENEFICIARIES, AND TAXPAYERS
SHARE THE COSTS OF WELLHEAD PROTECTION . 24
.METROPOLITAN DADE COUNTY, FLORIDA: INDEPENDENT REVENUE SOURCES
ARE KEY TO EFFECTIVE WELLHEAD PROTECTION 27
SANTA CLARA VALLEY WATER DISTRICT CALIFORNIA: USERS FINANCE A
SYSTEM FOR COORDINATED WITHDRAWAL OF SURFACE AND GROUND-WATER
RESOURCES 32
COUNTY OF SPOKANE, WASHINGTON: A SPECIAL FINANCING DISTRICT
PROVIDES THE FINANCING WHEREWITHAL 37
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TABLE OF CONTENTS
(Continued)
LOTT OPERATING AGENCY, WASHINGTON: LOCAL COORDINATION FOR
WASTEWATER TREATMENT AND AQUIFER PROTECTION
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PARTm
APPENDICES
SUMMARY OF EXAMPLES OF WELLHEAD PROTECTION FUNDING 48
GLOSSARY OF FINANCIAL TERMS 53
GENERAL REFERENCES 56
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LIST OF FIGURES AND TABLES
TABLE 1 COMPARISON OF LOCAL REVENUE SOURCES FOR WELLHEAD
PROTECTION
TABLE 2 EPA REGIONAL GROUND-WATER REPRESENTATIVES
22
TABLE 1-1 EXAMPLES OF FUNDING FOR WELLHEAD PROTECTION AND GROUND-
WATER PROTECTION VMVWWIW
49
FIGURE 1 LOCATION OF WELLHEAD PROTECTION EXAMPLES
52
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Pagel
INTRODUCTION
This report presents the finding; of a nine-month study of alternative ways to finance Wellhead
Protection Programs. The study consisted of two parts: (1) an examination of how the principles of public
finance can be applied to wellhead protection initiatives, and (2) documentation of five case studies of how
Wellhead Protection Programs were created and financed.
Part I of this report discusses options for financing and managing Wellhead Protection Programs. It
provides the following information:
• An overview of wellhead protection initiatives as contemplated by amendments to
the Safe Drinking Water Act in 1986;
• Options for financing the full array of Wellhead Protection Programs, including a
review of the advantages and disadvantages of each option;
• Options for matching wellhead protection initiatives to the institutions that manage
them and selecting the appropriate fund management techniques to support
program administration; and
• Additional sources of State and Federal technical assistance for Wellhead Protection
Programs.
Part n of this report presents five case studies of funding for wellhead protection or ground-water
protection with applicability to Wellhead Protection Programs. Each example combines different wellhead
protection initiatives, financing alternatives, management institutions, and financial management mechanisms.
Each case study reviews the following topics:
• Origin and development of the program, including authorizing ordinances and laws;
• Program implementation and results, including documentation of revenue sources
and uses;
• The name and address of a point of contact; and
• References for additional information.
This report also presents three appendices: a summary of the financing components of 22 Wellhead
Protection Programs, a glossary of financial terms, and a bibliography of source materials.
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PARTI
OPTIONS FOR FINANCING AND MANAGING
WELLHEAD PROTECTION PROGRAMS
Wellhead protection - the protection of limited geographic areas around wells and wellfields that
provide public water supplies - is a preventive approach to drinking water protection that is taking hold
across the country. Because local water supplies need to be protected, the success of wellhead protection
depends on local implementation actions.
Although the threats to public health from contaminated ground water are better understood every day,
funds for protection programs are, and will remain, scarce. As a result, local officials responsible for
protecting underground drinking water sources will increasingly find it useful to consider the full range of
options available for obtaining and managing the funds needed for this important mission. The key to a
successful Wellhead Protection Program often lies in finding equitable, efficient, and politically acceptable
solutions to funding problems.
As an aid to finding workable solutions, this document illustrates available funding options — in theory
and in practice. However, it is not intended to prescribe particular financing approaches, nor provide all
of the information — such as implementation costs for options — needed to select an option. The
references listed in Appendix 3 may provide more detailed information on particular programs or financing
alternatives. In addition, other EPA publications will be helpful in understanding program needs, especially
the Guidance for Applicants for State Wellhead Protection Program Assistance Funds Under the Safe
Drinking Water Act.
The 1986 Amendments to the Safe Drinking Water Act anticipated most of the initiatives commonly
included in local Wellhead Protection Programs. This section reviews the relevant portions of the Act and
uses its mandates as background to a discussion of alternative ways to finance and manage wellhead
protection initiatives.
Concerned that public wells and wellfields were not adequately protected from local sources of
pollution, the Congress enacted Section 1428 of the 1986 Amendments to the Safe Drinking Water Act
(SDWA), which requires that each State establish a Wellhead Protection Program. Although each State
may tailor wellhead protection initiatives to its circumstances, the Act requires that each program:
• Specify roles and duties of State agencies, local governments, and public water
suppliers in the development and implementation of Wellhead Protection Programs;
• Delineate the Wellhead Protection Area for each wellfield providing public water
supplies, based on reasonably available hydrogeologic information and any other
information the State deems necessary;
• Identify sources of contamination within each Wellhead Protection Area, including
all sources derived from human activities that may have any adverse effects on
health;
• Develop management approaches to protect against contamination of water supplies
including technical assistance, financial assistance, implementation of control
measures, education, training, and demonstration projects;
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• Develop contingency plans for each public water supply system indicating the
location and provision of alternate drinking water supplies to be used in the event
of well or wellfield contamination;
• Site new wells property to minimize potential contamination and maximize yield;
and
• Ensure public participation in the Wellhead Protection Program.
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WELLHEAD PROTECTION INITIATIVES IN PRACTICE
Both the literature and a review of 22 examples of Wellhead Protection Programs (see Appendix 1)
suggest that most wellhead protection activities fall into four basic categories: land acquisition, capital
investments, regulatory measures, and management measures. This last category can be broadly defined to
include public education, data collection and mapping, and contingency planning. Each of these four
wellhead protection initiatives is described in more detail below.
LAND ACQUISITION
Buying land outright or buying the development rights on land around public water supply wells can
help prevent ground-water contamination by foreclosing potentially harmful land uses overlying recharge
areas. The land can then be protected from intensive agricultural production and the potential seepage of
chemical pesticides or fertilizers into drinking water aquifers. Similarly, industrial development can be
prevented along with the potential for chemical spills and ground-water contamination.
Among the 22 examples studied for this report, a number involve land acquisition. The States of
Massachusetts, Vermont, and New York have established local financial asssistance programs for land
acquisition. Local units of government of all types have also established programs. Examples include a
special district (Bourne Water District), a town (Nantucket), a county land acquisition (Suffolk, New York),
and a water utility (South Central Connecticut Regional Water Authority).
CAPITAL FAOLrnES
Capital facilities are investments in plant, equipment, or other structures that improve real property.
They are characterized by high initial costs and long useful lives, over which the initial investment may be
repaid.
An example of capital facilities for wellhead protection is the construction of sewer lines to replace
septic systems in recharge areas. The LOTT Agency, Washington, and the County of Spokane are each
spending about $100 million on sewer construction for aquifer protection. A second example is the
construction of canals to create a hydraulic barrier between a welffield and potential contaminants, such as
undertaken by Metropolitan Dade County with support from the South Florida Water Management District.
REGULATORY MEASURES
Regulations can be designed to prevent certain land uses in Wellhead Protection Areas that have a
significant potential for ground-water contamination. If such activities are already in place, regulations can
be used to limit the probability of contamination through a system of permits, inspections, and enforcement
actions. Ground-water quality monitoring programs can support these regulatory efforts, as well as
protection planning and ground-water modeling activities.
Land-Use Controls
Land-use controls, such as zoning, can help limit or eliminate certain types of industrial, commercial,
or residential development. Typically, these controls seek to reduce the potential for surface contamination
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within Wellhead Protection Areas and eventual seepage of surface pollution to, the underlying ground water
The facilities most commonly addressed in land-use controls include commercial development (eg, dry
cleaning, auto salvage), waste management facilities, chemical manufacturing plants, landfills, or <£olke
-
Performance Controls
Typically, performance controls are tied to types of development and specify in permits limits on the
discharge of storm water or spedfications for the proper operation of septic systems. Sometimes,
performance controls are specified for certain parcels of land based on their physical characteristics and
preferred land uses. In such instances, performance standards are specified in zoning ordinances, and can
restact the number of septic tanks per acre, the area of built space or imperviouTsurface peT'acre; rS
volume of storm-water runoff, or the volume of discharge to septic tanks. Performance controls are often
overlaid" in speoal zones such as Wellhead Protection Areas, and supplement traditional land-use controls.
°f
Pr0gramS '
°f Sp0kane'
f°r this report opted to control potential
7 ' 5^0^ controls "critical materials" in an
Sensitive Area Overlay Zone" and sets strict septic tank construction standards in areas that will
not be served by sewer lines within five years. The Town of Littleton, Massachusetts, has established
overlays for both recharge areas and wellfields. In these areas potentially contaminating uses must obtain
a special permit, and special rules are enforced for septic tank discharges, imperviousTurface, storm-waS
^ «« 3PPr0aCheS « - » «- <*-* *-*
Operating Controls
Operating permits attempt to minimize the chances of ground-water contamination by allowine
potency polluting activities in Wellhead Protection Areas, but monitoring their effects fcoug? «££S
limitations ground-water quahty monitoring and testing, facility inspections, and enforcement actions. For
example, Metropolitan Dade County, Florida, issues renewable, revocable operating permits in Wellhead
Protection Areas to industrial and commercial activities that use, handle, treat, or dispose of contaminating
' t0 **
MANAGENfENT MEASURES
Communities support a wide variety of management activities that contribute to wellhead protection
Deluding public education, data collection and mapping, and contingency planning. The annual cost of
these measures depends on the level of effort.
Most Wellhead Protection Programs have an accompanying public education program designed to
increase public awareness and appreciation of wellhead protection measures. Techni cal aiistance^ograms
also are common, especially in Wellhead Protection Programs that rely on private activities or diejoint
actions of several subdivisions of government.
n.M-A PT amSi°f ^^ C°Un!y ^ ^ L°1T 0peratiDg **>*"*> Washmgt°a, for example, include
pubhc education, planning, and regulatory coordination activities. The Town of Littleton, Massachusetts.
conducts a waste minimization technical assistance program in conjunction with its regulatory program for*
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Data collection, mapping, and modeling ground-water resources can help identify Wellhead Protection
Areas, pinpoint easting sources of contamination, and monitor the quality of water at the wellhead and m
the Fleeted area. In Iturston County, Washington, local. State, and Federal agencies are sharing the
costs of a $2.4 mfflion ground-water study, mapping, and modeling program.
In another example, the Santa Clara Valley Water District in California manages surface reservoirs and
the underlying aquifer together as an integrated storage system, and monitors both groun^r ciuahty and
groun^S^qu-Ltity b making decisions on water prices, water deliveries, and levels of effort HI aquifer
recharge.
While contingency planning for new supplies in the event of contamination is recognized in the SDWA
as an^egrTcSpTneTofWellhead ProLtion Programs, our research suggests that few communities
pursue this option.
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SOURCES OF FUNDS FOR WELLHEAD PROTECTION PROGRAMS
From the local perspective, revenues to finance Wellhead Protection Programs can come from three
sources! ~°~
• Local taxes or fees;
• Private sector investments; and
• Intergovernmental assistance (grants and/or loans).
needs of capital-intensive construction projects or land acquisition
., - . of funds k ti™6* enabling large capital investments today that will
ad over 20 to 30 years with taxes or fees. y
LOCAL TAXES AND FEES
Managers of Wellhead Protection Programs use taxes and fees to support their programs in two ways
S r? °1!! K Tit0 ?anCe ?Crating Pr0grams °n a "Payas-you-go" basis, with annual administrative
costs balanced by dedicated annual tax receipts or fee revenues. Second, taxes/fees can support the
financing of capital projects if they are pledged to repay the principal and interest on tax-exempts or
r.nf
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TABLE 1
COMPARISON OF LOCAL REVENUE SOURCES FOR WELLHEAD PROTECTION
REVENUE
SOURCE
TAXES
IMPACT FEES
PERMIT FEES
FINES/PENALTIES
EXCISE TAXES
UNIT CHARGES
ACCESS FEES
SERVICE FEES
WHO PAYS®
TAXPAYERS
POLLUTERS
POLLUTERS
POLLUTERS
VARIES
BENEFICIARY
BENEFICIARY
BENEFICIARY
REVENUE
YIELD®
HIGH
HIGH
LOW
MOD.
MOD.
HIGH
HIGH
HIGH
PREDICT-
ABILITY®
HIGH
LOW
LOW
LOW
MOD.
HIGH
MOD.
HIGH
COST®
LOW
HIGH
MOD.
HIGH
MOD.
LOW
LOW
LOW
INCENTIVE
EFFECTS®
WEAK
STRONG
STRONG
STRONG
MOD.
MOD.
STRONG
MOD.
0) Indicates whether the funding burden falls primarily on polluters, beneficiaries of wellhead
protection activities, or general taxpayers.
® Indicates whether the revenue yield from a particular funding source will be high, medium, or low
relative to other sources.
® Indicates the relative stability and predictability of revenues from a particular funding source from
year to year.
Indicates the relative administrative costs of a particular funding source.
© Indicates whether the incentives for changing behavior (e.g., water conservation) are relatively strong
or weak for a particular funding source.
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The adequacy of revenues over time addresses the functional efficiency of a tax or fee. If revenues fafl
short of projections, for example, programs comld be suspended and benefits lost
The stability and predictability of revenues is important both for efficiency and for political acceptability
Taxes are generally predictable - total tax receipts can be forecast with reasonable certainty - but they are
not necessarily a stable source of funds for Wellhead Protection Programs. Many programs are designed
to avoid the potential interruption of funds that sometimes accompanies the annual appropriations process.
They do so by securing tax or fee revenues dedicated to their programs or by establishing distinct
institutions - special ground-water protection districts, for example - with authority to levy taxes or collect
fees.
The costs of administration are important to ensure that tax/fee-based financing is operationally efficient.
It makes little sense, of course, to spend more to administer a tax/fee program than is taken in as program
revenues. The key to an efficiently run program is often good planning. All the costs of program
administration, not simply the direct staff costs, should be balanced against projected revenue streams.
Incentives to change behavior, particularly changes that reduce polluting activities, can be as important
as raising revenues in setting tax/fee structures. Performance-based fees, those that charge on a sliding scale
depending on the quantity or toxicity of discharge, can be particularly effective in reducing discharges. Of
course, revenues should be expected to decline if such a program is successful.
Taxes
The principal taxes levied by most governments are ad valorem and personal property taxes, sales taxes,
and income taxes. Income, sales, and personal property taxes comprise the principal source of revenue for
most State governments. Under ad valorem taxes, real estate owners pay a tax based on the assessed value
of their property. Examples of such financing systems include:
• The South Florida Water Management District finances water use permits, recharge
programs, drought contingency planning, and ground-water production, as well as
surface water controls, from an ad valorem tax.
• The County of Suffolk, New York, sets aside, in a dedicated account, a portion of
its sales tax receipts equal to 0.25 percent of the value of all taxable goods and
services exchanged in the County. Currently, this account assists financially ailing
sewer systems, but the County plans to redirect these tax receipts to land
acquisition.
• The County of Spokane, Washington, dedicates a portion of its sales tax receipts
equal to 025 percent of the value of taxable goods and services to the development
of interceptor sewers and treatment facilities, monitoring programs, and provision
of services in a special protection area.
• The County of Collier, Florida, the Edwards Underground Water Conservation'
District, Texas, and the Town of Littleton, Massachusetts, all use or propose to use
general revenues derived from a variety of property and sales taxes to finance
performance control programs in Wellhead Protection Areas.
Taxes are most suited to activities that create benefits that are widely distributed and difficult to
apportion among individuals or groups of users, The common forms of taxes are usually cost effective to
administer, widely accepted, and have potentially high revenue yield. Income and ad valorem taxes are
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more progressive than sales and personal property taxes. The assignment of tax revenues to Wellhead
Protection Programs is subject to the competitive pressures within local budget processes. Hence, while tax
revenues are predictable, they should be viewed as somewhat unstable. While some State or local
governments do not make it a common practice, one way to enhance the stability of taxes is to dedicate
them to Wellhead Protection Programs.
Broad-based taxes on income, sales, or property generally offer weak incentives to modify behavior.
Instead, they are designed to raise a reliable stream of revenues intentionally free from targeting a single
activity or narrow group within the community.
Impact Fees
Developers pay impact fees to local governments to finance the public facilities needed to serve their
developments. TypicaUy, impact fees are paid at the time of application for a building permit. Many
communities in California, Florida, Texas, and Maryland have used impact fees to finance roads, sewers,
schools, and parks. For example, developers in San Bernardino County, California, are charged impact fees
based on the type of development; a portion of the proceeds is used for ground-water monitoring and
administration of a permit program for new wells. The County of Spokane, Washington, assesses septic
tank use fees on aU new residential developments that are not hooked up to the public collection system.
Revenues are used to recover the public costs of water treatment, monitoring, and corrective action in
aquifers contaminated by seepage from septic tanks.
A legislative proposal in the State of Arizona would require all individuals whose operation or activity
results in any subsurface discharge to obtain an aquifer protection permit. The cost of the permit will be
based on the type of discharge, and will reflect the relative adverse impacts of each type of discharge.
Permits for industrial activities, for instance, will cost more than those for residential septic tanks.
Impact fees are said to be equitable in that they charge polluters proportionate costs of either
prevention or cleanup. In expanding economies characterized by widespread building, impact fees can net
substantial revenues. But they are relatively unstable, because they would drop off rapidly in the event of
an economic downturn. Establishing accurate measures for the impacts of different activities can be costly.
Depending on the strength of the real estate development sector, impact fees can be politically unpopular.
While impact fees generally are not used to change behavior, they can have the effect of shifting the
location of development from a region that imposes fees to another that does not.
Permit and Inspection Fees
Permit and inspection fees commonly finance the administrative costs of regulatory programs. A
permit fee is a one-time fee that charges each applicant the appropriate share of the costs of permit
administration. A related fee, the inspection fee, is charged with each inspection to recover the costs of
inspection, testing, and monitoring. These types of fees are commonplace in Wellhead Protection Programs:
• Metropolitan Dade County, Florida, collects plan review fees for each new
development permit. A portion of the proceeds is allocated to the Department of
Environmental Resource Management to reimburse its plan review costs. The
Department also administers an operating permit program for activities in Wellhead
Protection Areas, collecting fees on an annual basis from permittees.
• The Light and Water Department in the Town of Littleton, Massachusetts, conducts
semiannual tests of samples from monitoring wells at industrial and commercial
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facilities. Property owners must reimburse the Light and Water Department for
its costs.
• The County of San Bernardino, California, the City of Tacoma, Washington, and
the County of Ocean, New Jersey, also collect permit fees in association with
permits for activities affecting ground water and Wellhead Protection Areas.
Permit and inspection fees are generally viewed as fair because they assign the cost of control to
potential poUuters. Few such systems, however, raise substantial amounts of revenue; most cover much less
than the full cost of permit or inspection programs. Like impact fees, permit fees are relatively unstable
sources of revenue as they respond to the uneven demands for new facilities from year to year Inspection
fees are more reliable. Both permit and inspection fees can have the effect of improving compliancVwith
performance controls or other types of regulations.
Fines and Penalties
^•i TO better Suked t0 modaymg behavior than raising predictable revenue streams
While the dollar value of some fines can be substantial, the costs of enforcement and potential litigation
can be equally high. Some fines are dedicated to continual support of regulatory programs. Others are
dedicated to environmental cleanup funds or trust funds for land acquisition. Some accrue directly to State
general funds for redistribution within the budget process.
As an example, in 1988, EPA fined the Commonwealth of Massachusetts and the sewer authority
serving metropolitan Boston $25 million for violations of the Clean Water Act. The court ordered the
defendants to deposit $2 million of the fine into the newly established Boston Harbor-Massachusetts Bay
Environmental Trust Fund for use in restoring wetlands, beach cleanup, water quality monitoring, and
scientific studies in support of continued protection of the Bay.
Excise Taxes
Excise taxes, like general taxes, are compulsory and are applied throughout a governmental unit's
jurisdiction. They are somewhat more limited, however, in that they apply only to the sale or exchange of
certain goods (commodities) or services. Examples of these targeted taxes abound throughoutjublic
finance: real estate transfer taxes; tobacco, liquor, and other "sin" taxes; taxes on hunting and fishing
equipment; taxes on automotive or marine fuels; taxes on restaurant and hotel income; severance taxeTfor
minerals.
Depending on the commodity or service to be taxed, an excise tax can function as a general tax, an
indirect tax on polluters, or an indirect tax on beneficiaries. The Federal Superfund tax on petroleurTand
chemical feedstocks is one example of an excise tax on polluters. The Washington State Utter control tax
K another. Beneficiaries also pay excise taxes, such as those associated with public water supply
Examples include State and local excise taxes on plumbing fixtures, lawn sprinkling equipment, and water
consumption, the latter being the most widespread.
The real estate transfer tax is a popular form of excise tax for financing environmental programs,
particularly land acquisition. Three examples of its use for wellhead protection are as follows:
• The State of Vermont recently passed legislation that doubles its real estate transfer
tax to 1 percent. The revenue will be distributed to towns and regional planning
commissions to strengthen land-use planning and land acquisition, including
acquisition for wellhead protection. ^^
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Page 12
• In Nantucket, Massachusetts, the proceeds of a local land transfer tax are used for
land acquisition. Although the Nantucket Land Bank was developed primarily for
shore and estuary protection and restoration, select parcels are acquired for aquifer
protection.
• The County of Spokane, Washington, relies in part on a transfer tax to finance
sewers, treatment works, monitoring, and other activities in a special aquifer
protection area.
As Table 1 suggests, excise taxes are moderately well suited to finance Wellhead Protection Programs
in terms of revenue yield and predictability, cost of administration, and incentives to modify behavior. A
distinct advantage of excise taxes is their flexibility - they can be adapted to satisfy most local goals without
sacrificing equity, efficiency, or acceptability.
Unit Charges and Access Fees
Unit charges for water consumption are the rates on water and sewer bills that all customers pay.
Unit charges can vary substantially, and can include rate structures such as the following:
• Hat fees (so many dollars per month or year);
• Flat rates (so many dollars per 1000 gallons consumed);
• Increasing block rates (rates per unit usage that step up as use increases);
• Decreasing block rates (rates per unit usage that decline as use increases); and
• Two-part fees (a flat fee plus a charge per unit consumed above a certain level).
Most Wellhead Protection Programs are supported at least in part with unit charges. In the literature
survey and preparation of case studies for this report, there were identified many public water companies,
departments, and authorities that finance wellhead protection from customer revenues including the
Littleton Light and Water Department, Massachusetts; the Easton Public Water Company, Massachusetts;
the South Central Connecticut Water Authority, Connecticut; and the LOTT Agency, Washington. Unit
charges financed an equally wide variety of protection activities in these locations including land acquisition,
the construction of sewerage and treatment works, land-use and performance controls, monitoring, and
management activities.
Since water users are the beneficiaries of pure sources of drinking water, most view unit charges for
water supply as a fair way to finance that protection. Some would argue with this premise as it applies to
sewer unit charges, Aiming that benefits of clean waterways flow downstream of immediate users who pay
for wastewater treatment through unit charges. Nonetheless, unit charges are cost effective to administer,
vridety accepted, and easy to implement. Revenues are substantial and predictable, and can be used to
finance virtually all types of wellhead protection activities.
Most local water suppliers supplement unit charges with access fees. These fees are paid by new
customers as access is provided to water supply or wastewater treatment services. Types of access fees
include:
-------
Connection fees for water and sewer lines providing localized service, such as the
F^&yjL"* Water °-« ^^ ^ - <*•*
• General facilities charges for capital costs that can be allocated to each added user
c?Z ?S? <*argeS umay bdude a Iocal connection comP°'*<* and a
component that recoups the cost of system-wide improvements. The LOTT
Operating Agency, in Washington, levies general facilities charges on new sewer
users*
Service Fees
wj? °f BeUe^ Wa^OD> CTeated a m°del utility for storm-water drainage,
which levies service fees to recover the cost of drainage improvements. FeeTare
based on acreage and percent impervious surface.
Santa Clara Valley Water District levies pumping fees at the wellhead, based
on die volume of water withdrawn. Fees are set to recover the District's cost of
rechargmg ground-water supplies. The District manages its funds from this
other sources as an enterprise.
-------
. The Department of Environmental Resources Management in Dade County,
MdTSTa service fee in the form of a surcharge on water *ft* reve^ to
coveTthe costs of its Wellhead Protection Program. The County of Tacoma,
Washington, is evaluating the feasibility of such a surcharge.
PRIVATE EXPENDITURES IN IJEU OF REVENUES
from the public balance sheet
ST. =
public sector assumed all program responsibilities.
development will pose no threat to ground water.
other programs, the private sector is required, at fceir own expense, to modtfy leaking storage tanks,
retention structures, or provide land easements or nghts of way
CAPITAL FINANCING SOURCES
revenues in capital accounts for future capital investments.
Bonds and Loans
For both bonds or loans, the borrower promises to repay principal and interest (if any) over tune.
The S mu?t £ repaid ^revenues - the sle revenue sources discussed » the previous sector,
-------
Giants
Retained Earmngs
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iNsrrrunoNAL OPTIONS FOR FINANCING WELJLHEAD PROTECTION
that follow in Part H and the examples documented rn Appendix 1.
The simplest institutional structure for wellhead protection is a general purple
and a SPS financing area in which localized improvements or services are provided.
for
w OT intergovernmental agreement and a special district created by public referendum.
Institutional options for managing wellhead protection activities differ chiefly in the Mowing ways:
. The breadth of the institution's powers to regulate or undertake improvements for
wellhead protection purposes;
. The relationship between the institution's geographic jurisdiction and the geographic
distribution of program benefits or potentially contaminating activities;
. The breadth and composition of the institution's authorized revenue base with
unplicaSTfor the predictability and certainty of revenues and the distribution of
program costs among groups; and
» The applicability of tax and fiscal limitations.
.FUND
purpose units havetST broadest authority to carry out wellhead protection activities.
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Page 17
In
appropriations (moving funds into the proper accounts for spending according to program priorities).
other models, budgets are the appropriating instruments.
There are advantages for a general purpose unit to finance its Wellhead Protection Program from the
general fund. First, budget decisions are politically accountable and wellhead protection is balanced with
other needs. Also, the breadth and scope of the government offer flexibility in selecting revenue generation
and financing mechanisms. Another advantage is that a broad revenue base gives stability to the budget
and offers choices in financing,
Among the disadvantages of financing wellhead protection from the general fund are the inequities that
may result if no strong link exists between the taxpayers who bear the cost of protection activities and the
water users who benefit from them.
A second concern is the continuity of funding. Uses of the general fund must compete annually for
available funds, and continuous funding cannot be assured in light of changing budget priorities, limited
revenues, and tax and fiscal limitations. Some activities, such as land acquisition, may be implemented in
increments and can tolerate interruption. However, for others, such as regulatory and capital improvement
programs, continuity in funding is a key consideration.
PUBLIC ENTERPRISE
The research for this report found several examples of Wellhead Protection Programs that are operated
as publicly owned utilities. They sell services such as water supply and wastewater treatment and manage
funds on an enterprise basis, much like an investor-owned utility. The funds of a public enterprise are not
commingled with the general fund, but are segregated into an "enterprise account" or "enterprise fund." The
enterprise is designed to be self-financing. Its sole sources of funds are user charges and borrowing.
Revenues from sales to customers are deposited in the enterprise account or fund and are used to finance
investment, operations, and debt service.
Enterprise or public utility models are generally viewed as equitable in that they assign financing
responsibilities for wellhead protection to the water users, who benefit from such activities. Moreover,
enterprise funding for wellhead protection promotes funding certainty for two reasons. First, revenues
cannot be diverted to non-utility operations. Second, a public enterprise may have significant rate-making
autonomy, which assures adequacy of funding.
In some of the cases reviewed for this report, it appeared that the public utility enterprise lacked
sufficient authority to carry some of the needed wellhead protection activities, such as regulatory programs.
In addition, an autonomous public utility whose rates receive limited public scrutiny may be less politically
accountable than a non-enterprise municipal operation.
Three examples of enterprise funding are found in the States of Washington, Connecticut, and
California:
• The LOTT Agency in Washington is proposing to operate the area's wastewater
treatment plant and develop interceptor sewers to protect the area's aquifer. These
activities are to be supported by sewer connection and unit charges levied in the
service area.
• The South Central Connecticut Water Authority is financing public education and
land acquisition from its water revenues.
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Page 18
• The Santa Clara Valley Water District operates its water supply facilities on an
enterprise basis. Tax sources authorized by law for the water supply function are
used exclusively for water supply, the flood control services are operated from an
entirety separate fund.
TRUST FUND WITH DEDICATED REVENUES
Many communities that manage wellhead protection activities with a general purpose government
choose to insulate wellhead protection funding from the needs of other programs by establishing a trust
fund or a dedicated account Trust funds are also suitable for accumulating funds for high-cost, capital-
intensive uses, such as capital improvements or land acquisition.
In the most insulated type of trust fund, proceeds from a dedicated revenue source are deposited
automatically in the fund, and the administrative agency has broad powers to expend the accumulated funds.
These "funds require onty one legislative action - creation of the trust fund and dedication of the revenues -
- and provide the greatest revenue security. Less insulated variants require the legislative body to
appropriate money into or out of the fund.
The dedicated revenue source may be any tax or revenue source. As such, revenues are not necessarily
dosety linked to prospective polluters or beneficiaries. Common revenue sources include excise taxes, set-
asides from general taxes, and irregular sources such as impact fees and fines. For example, the State of
Vermont, under a legislative formula, allots the proceeds of a real estate transfer tax among a number of
funds. Another example is Suffolk County, New York, which places the proceeds of a dedicated sales tax
in a fund that currently finances rehabilitation of wastewater systems. The County has proposed to use the
fund to finance land acquisition for aquifer protection once pressing rehabilitation needs are met.
Metropolitan Dade County, Florida, assigns the proceeds from a water supply utility surcharge to a
trust fund dedicated to wellhead protection. This arrangement assures that the utility surcharge is
defensible as a service fee rather than a tax, by providing a strong link between the distribution of benefits
and the distribution of costs, and by providing a mechanism to dedicate proceeds from the tax to provision
of the services for which wellhead beneficiaries are paying.
Because trust funds are insulated from the general fund, they may limit political and budget
accountability to some extent Also, the stream of revenues may vary from year to year, depending on the
revenue source.
SPECIAL FINANCING AREA
It is common for local general-purpose governments to designate by ordinance special service areas
and provide special services or improvements within their boundaries, and pay for them with revenues
collected onfy from within the service area. A special service area is suitable for providing both capital
investments and other, non-capital public services. Options for sources of revenue include service fees or
service taxes; special assessments for local improvements; and tax increments resulting from tax increment
financing.
The rationale for using a special financing area is that the general taxpayer need not bear the-cost of
activities of a special benefit. In addition, special finanring areas promote certainty of funding by dedicating
the revenues obtained in that geographic area to improvements or services that will benefit it.
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! Page 19
The County of Spokane, Washington, for example, has created a special service area for aquifer
protection. To finance services in the protection area, the County levied a ground-water pumping service
fee and a septic tank use fee for those within the area.
Special assessments and tax increment financing, the other two options, have more limited applicability
since they work best for capital investments. Tax increment financing involves repayment of debt for
localized public improvements with the increment in tax proceeds from the benefited area.
Special assessments are levied by units of government against properties benefited by local
improvements" or improvements of localized benefit The assessment is a Ken against the property until
the required payment is made, and it generally reflects the distribution of benefits among assessed
properties. Procedures for authorizing and implementing a special assessment may be difficult and time
consuming. Creation of an assessment roll or a referendum among affected property owners are two
possible procedures.
PUBLIC AUTHORITY
A public authority is a unit of government created (chartered) by a general purpose unit of
government through State legislation, county or city ordinance, or intergovernmental agreement. Examples
include port authorities and water management authorities.
Authorities have independently appointed boards and independent revenue sources. The powers and
functions of each authority are tailored to its requirements, and may be modified over time as needs
change. An authority's implementation powers may be very broad, and may include utility functions (such
as the provision of water supply) as well as regulatory or management functions.
An authority charged with wellhead protection responsibilities can assure reliable funding since the
scope of its operations is limited; revenues may be spent only on authorized uses; and its revenue sources
are independent of control by the general purpose unit. Additionally, an authority may not be subject to
the statutory and constitutional restrictions on taxation, debt, and expenditures that affect general purpose
units.
The revenue base of an authority may be broad, affecting the extent to which the beneficiary or
polluter pays. An authority may be subject to less budget scrutiny and provide less political accountability
to the general public than does a general purpose government.
Five authorities that either are or could be used for Wellhead Protection Programs include (see
Appendix 1 for details):
• Legislation in Florida (Chapter 373 of Florida State Laws) gives a number of
broadly empowered water management districts responsibility for water resources
management.
• Similar districts were created in Nebraska to manage water resources on a
river-basin basis.
• In California, water districts such as the Santa Clara Valley Water District were
chartered one at a time and given responsibilities for water supply, flood control,
and associated functions.
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r
Page 20
• The LOTT Operating Agency, Washington, is to be created by intergovernmental
agreement among three cities and a county for the purposes of collecting and
treating wastewater that would otherwise enter a sole source aquifer from septic
tanks.
• The Edwards Underground Water Conservation District is one of sixteen water
conservation districts created in Texas. The Edwards district plans to enter into
an agreement with the State's Water Commission to carry out certain delegated
monitoring and enforcement functions.
SPECIAL DISTRICT CREATED BY REFERENDUM
A special district created by referendum is a limited purpose unit of government that differs from an
authority largely in the method of creation. Special districts are created by local referendum pursuant to
State enabling legislation. For instance, the Bourne Water District in Massachusetts is one of a number
of water management districts created by referendum and subsequently approved by the legislature of the
Commonwealth. The Bourne District is acquiring land in Wellhead Protection Areas.
Each district is an independent unit of government, and every district created under the same
legislation has the same powers. Because these powers are limited, they may not be sufficient in every
location to provide adequate wellhead protection. However, the geographic jurisdiction of each district may
be tailored in its creation to the distribution of resource problems it will manage. This option promotes
fairness, since unaffected interests outside the area are not required to pay.
The revenue base of a special district is likely to be limited. Most special districts have the power to
incur debt and levy taxes. Depending on the source of revenue, a limited revenue base may promote a
close link between funding source and polluter or beneficiary, but may also lead to variability in revenues
from year to year or the inability to finance major capital improvements.
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Page 21
SOURCES OF FURTHER ASSISTANCE TO THE WELLHEAD PROTECTION MANAGER
This report provides an overview of the choices available to wellhead protection managers for program
financing, and details these choices with descriptions of five case studies of wellhead protection funding.
To be sure, this report is not the sole resource available. Also available are other sources of assistance that
have proved valuable in the development and funding of related environmental programs.
The U.S. Environmental Protection Agency has designated a lead office for ground-water protection
in each of its regional offices. A list of the regional ground-water protection representatives appears on
the following page in Table Z
Each State is developing, or has developed, a Wellhead Protection Program through its water quality
or environmental protection agency that coordinates and provides consistency among the wellhead
protection activities throughout the State. The EPA regional representatives can provide information on
specific contacts for each State.
The local government affairs agency or municipal league in each State can provide technical assistance
on program financing. The list of references in Appendix 3 also provides further information about
particular financial options.
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Page 22
TABLE 2
EPA REGIONAL GROUND-WATER REPRESENTATIVES
Robert Mendoza
Ground-Water Management and
Water Supply Branch
Water Management Division
US EPA Region I Room 2113
JFK Federal Building
Boston, MA 02203
(617) 565-3600
John MaHeck
Office of Ground-Water Mgmt.
Water Management Division
US. EPA Region H Room 805
26 Federal Plaza
New York, NY 10278
(212) 264-5635
Stuart Kerzner
Ground-Water Protection Br.
Water Management Division
US. EPA Region HI
841 Chestnut Street
Philadelphia, PA 19107
(215) 597-2786
Staffings HaweH
Ground-Water Protection Br.
Water Management Division
US EPA Region IV
345 Courtland Street, N. E.
Atlanta, GA 30365
(404) 347-3866
Jem-Anne Garl
Office of Ground Water
Water Management Division
US. EPA Region V
230 S. Dearborn Street
Chicago, EL 60604
(312) 886-1490
Erlece Alkn
Office of Ground Water
Water Management Division
US. EPA Region VI
1445 Ross Avenue
Dallas, TX 75202
(214) 655-6446
Timothy Amsdea
Office of Ground-Water Protection
Water Management Division
US. EPA Region VH
726 Minnesota Avenue
Kansas City, KS 66101
(913) 236-2970
James Dunn
Office of Ground Water
Water Management Division
US EPA Region m
999 18th Street, Suite 500
Denver, CO 80202-2405
(303) 293-1703
Patricia Ekhmd
Office of Ground Water
Water Management Division
US. EPA Region K
215 Fremont Street
San Francisco, CA 94105
(415) 947-0831
William Mullen
Office of Ground Water
Water Management Division
US. EPA Region X
1200 6th Avenue
Seattle, WA 98101
(206) 442-1216
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EARTH
CASE STUDIES OF FINANCING FOR WELUffiAD PROTECTION
' ** general discussion of financing options in Part L The case studies
are intended to illustrate the wide variety of choices that are available for financing wellhead protection S
ground-water protection. "
Each case study description begins with a summary of 'lessons learned" and of funding sources Next,
the case study description provides background information on the origin and development of the program
CCGed° ™** detfl
™~ Tf •^CCGedfS^°^. V™** detafl«* descriptions, including quotes from enabling
ordinances and legation, of the funding sources for each technical activityV wellhead protection
Concluding sections provide a point of contact and references for further information.
The xase studies show that the decisions on the technical composition of a Wellhead Protection
Program, the allocation of implementation responsibility, and the methods of funding technical elements are
" ^ * *"• CT6ativity *" """""fr been aPPHed at ^ local ^vel to solve the
The
sources'
• A regulatory program, administered by a town utility and financed by commercial
and industrial developers, water rate payers, and the taxpayers;
• A county environmental protection department whose Wellhead Protection Program
is virtually self-financing from utility surcharges and permit fees; !
• A State-chartered water authority that derives revenue from users of both surface
and ground water to finance its water supply and water quality monitoring and
protection programs;
• A county that developed an integrated regulatory, construction and management
program for aquifer protection, then developed a mix of funding sources, including
seeking State legislation to enable the levying of charges against septic tank owners
and ground-water users; and
• A regional wastewater management agency that also functions as a ground-water
protection agency by financing sewers to take septic tanks out of service and by
providing funds to a county wide ground-water quality monitoring and planning
program. j F &
' ! •
The dollar amounts stated in the Mowing case studies should not be considered absolute values but
rather dose approbations of the revenues actually generated Since most of the revenue sources fluctuate
due to the amount of water used, house sales, sales tax revenues, new connections, etc, the actual arnoS
of revenues received by the agencies will vary accordingly. ">>,»* «""<" amoum
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Page 24
CASE STUDY NO. 1
LITTLETON, MASSACHUSETTS:
POLLUTERS, BENEFICIARIES, AND TAXPAYERS SHARE THE COSTS
OF WELLHEAD PROTECTION
INTRODUCTION
To protect its sole source aquifer, the Town of Littleton, Massachusetts, adopted a comprehensive
wellhead protection bylaw in 1981 that creates special protection areas for wellfields and aquifer recharge
areas.
The program is administered by the Planning Board, the Light and Water Department, and the Health
Department. The activities of the Planning Board and Health Department are financed from general
revenues of the Town, and the activities of the Light and Water Department are financed from user
charges, chiefly water use charges and connection fees.
The bylaw's two major components are financed differently. All residents pay property taxes that
support site plan performance controls. Residents using Town water (through their water bills) and real
estate developers (through reimbursements to the Town) finance the installation of monitoring wells and
testing of samples from those wells.
AcnvrrY
Well installation
Well monitoring
Site performance
controls
Aquifer land
acquisition program
REVENUE SOURCE
Developer (new
development)
Water rate payers
(existing deveL)
Developer (new
development)
Water rate payers
(existing deveL)
General revenues
and assessments
to developers
State grant
REVENUES
NA (all expenses borne
by developer/owner)
NA
$70,000/yr.
$10,000/yr.
NA
$435,000
Jfe
ca
The Wellhead Protection Program melds the planning capabilities of the Planning Board, the technical
ipabilities of the Light and Water Department, and the regulatory powers of the Health Department.
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' ' '. • Page 25
Because the program's financing structure imposes costs on the private sector, a similar financing
structure may be limited to localities that have a diversified revenue base and face little competition for
job-creating industries.
BACKGROUND
The Town of Littleton, Massachusetts (population 7,000), has experienced rapid industrial and
commercial growth over the last ten years. The industrial development in and around Littleton poses some
risk to ground-water supplies, the sole source of the Town's drinking water.
In 1981, nearfy three-fourths of the wells in the neighboring town of Acton were found to be
contaminated beyond use, allegedly as the result of improper industrial waste disposal practices. This
incident prompted Littleton to develop a ground-water protection program to prevent similar incidents hi
their Town. As a result, Littleton adopted the Aquifer and Water Resources District Bylaw hi 1981.
SITE PERFORMANCE CONTROLS
The Bylaw creates four Aquifer (wellhead protection) Districts - two for existing wells and two for
future wells - and two Water Resources (aquifer protection) Districts. Within these districts, new
commercial and industrial facilities are subject to engineering and site performance controls, including:
• Limits on discharge from septic tanks to sk gallons per 1000 square feet of site,
concurrent with a State-mandated limit of 35 gallons per day per 1000 square feet
of built space;
• Limits on impervious surface to 20 percent of a site;
• Mandatory detention and recharge of storm water; and
• Stiff requirements for design of underground storage tanks.
The Bylaw outlines 17 industrial and commercial activities within the two types of districts that are
either prohibited or conditioned with performance controls, as specified hi special permits. Performance
standards are more stringent in the Aquifer Districts, since contamination overlying an aquifer would
degrade drinking water supplies faster than would similar activities in the more remote Water Resources
Districts. Developers can obtain a variance from these performance standards by demonstrating, through
hydrogeologic modeling, that their activities pose no threat to the aquifer or that site contamination pre-
dated their ownership of the property. Permits for permissible activities are issued by the Planning Board,
based on the findings of an assessment report by the Light and Water -Department
Potential contamination from facilities that predate the Bylaw remains a problem. The Light and
Water Department, supported by the enforcement authorities of the Health Department, has been working
with owners of these facilities to reduce the production of hazardous wastes and to undertake corrective
actions at a fraction of the cost of litigation. The next challenge for the community wiU be to develop
performance standards for package treatment plants serving new residential developments.
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Page 26
WELL INSTALLATION AND MONITORING
Section 4335 of the Bylaw requires each industrial and commercial permittee in the Aquifer and Water
Resources Districts to install monitoring weBs and reimburse the Town for monitoring expenses.
Monitoring reports are used to help enforce a Town ordinance that ground water meet the standards for
drinking water promulgated by the Massachusetts Department of Environmental Quality Engineering.
The Light and Water Department supervises the design and installation of the monitoring wells, which
are installed at the owners' expense. The Department collects and tests samples from the wells semi-
annually, submitting the results to the Health Department and invoicing the owners for the costs of testing.
Approximately 30 percent of the costs of design supervision and fixed costs of testing (the cost of
equipment, for example) are borne by the customers of the Town water utility (rate-payers), through their
water bflls. In addition, in a few locations, the costs of installation and testing at facilities that predate the
1981 Bylaw are borne by the rate-payers. These sites also include monitoring wells at the municipal landfill
and surface water testing locations. Of the $80,000 annual cost of the monitoring program, $70,000 is
reimbursed, and $10,000 is not reimbursed.
The monitoring is the most costly activity in Littleton's Wellhead Protection Program, averaging from
$400 per year for sites with only one well and testing for only one contaminant, to $10,000 per year for
sites that require seven wells and testing for a large number of potential contaminants. These costs include
analytical fees, personnel time for sampling, and a. twenty percent overhead factor for administrative and
management activities.
The Town requires that water at the property line of these developments within the aquifer district to
meet the standards for drinking water promulgated by the Massachusetts Department of Environmental
Quality Engineering. The monitoring program is useful in making this determination. To obtain a
variance, uses that violate the standard must demonstrate that the contaminant predated their acquisition
of the property and that their activities will not degrade the water quality further. Otherwise, the owner
is responsible for remediation. This aspect of the monitoring program dovetails with a Commonwealth law
(Section 21e) that requires an assessment of contamination before commercial and industrial properties can
change hands.
ADDITIONAL INFORMATION
Mr. Savas Danos
Assistant General Manager
Light and Water Department
Town of Littleton
P.O. Box 2406
Whitcomb Avenue
Littleton, Mass. 01460
(508)486-3395
REFERENCES
Office of Town Clerk, Town of Littleton, Aquifer and Water Resources District Bylaw. Amended 1986.
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Page 27
CASE STUDY NO. 2
METROPOLITAN DADE COUNTY, FLORIDA:
INDEPENDENT REVENUE SOURCES ARE KEY TO EFFECTIVE WELLHEAD
PROTECTION
SUMMARY
Metropolitan Dade County's Department of Environmental Resources Management (DERM) provides
wellhead protection for all public water supplies,in the County as part of its water quality protection
program. The program is financed largely by a water and sewer utility service fee, the proceeds from which
are managed through a trust fund dedicated to water quality protection. In addition, DERM collects fees
from businesses that operate under permits that ensure proper waste management and guard against
groundwater contamination. These proceeds are placed hi a second trust fund dedicated to protection of
both water quality and air quality. A third source of funds - plan review fees - are used to support
DERM review as part of the permitting process for proposed industrial and commercial developments.
ACTIVITY
Planning, Studies,
Monitoring,
Enforcement
Operating Permits
Plan Approval
REVENUE SOURCE
Service fee
(utility surcharge)
Permit fees
Permit fees
REVENUES
$3.2M/yr.
$1.7M/yr.
$1.7M/yr.
In Metropolitan Dade County, both water users and owners/operators of regulated activities pay for
water quality controls, including wellhead protection. The permit fees and utility service fees impose a
certain equity on the finance of Wellhead Protection Programs, because they pass costs forward to water
users who benefit from pure ground water and to the regulated community to prevent contamination of the
County's water.
Moreover, these fees generate significant revenues (approximately $6 million in the County) and are
relatively simple to compute and administer. These water service and permit fees could be implemented by
a variety of types of institutions under almost any government setting. In Florida, local government has the
authority to levy fees, but is restricted in its ability to impose taxes. Since these fees are related to services
and placed in separate funds, they are not considered a tax in Florida, nor are they subject to rate review.
BACKGROUND
In Metropolitan Dade County, Florida, planners developed a Wellhead Protection Program at the same
time that they developed independent revenue sources to support the agency responsible for wellhead
protection — the Department of Environmental Resources Management - with the result that a finding
source that is both fair and secure is available for wellhead protection.
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Page 28
Rapid population growth and economic development have placed increasing demands on the Biscayne
Aquifer - the County's sole source of potable drinking water - and has placed the aquifer increasingly at
risk of rapid drawdown and saltwater intrusion. Because the aquifer is larger/ cavernous limestone,
rainwater percolates easily and readily recharges the groundwater. Unfortunately, surface contamination can
also percolate easily.
Over 90 percent of the County's population is served by 23 water utility companies. The Miami-Dade
Water and Sewer Authority operates half of the facilities and provides 90 percent of the publicly supplied
water. '
From 1975 to 1984, the Authority planned and developed the Northwest Wellfield as the principal
source of water supply to the residents of the County. During planning for this facility, contamination from
surface sources was discovered and remedied at nearby existing public wellfields. Concerned that then-
current zoning and environmental protection regulations would not protect the new facility from a nearby
industrial park and resource recovery facility, nor assure quality water from future wellfields to the West
and Southwest, the Board of County Commissioners instructed the Planning Department and DERM to
develop a wellfield protection program. The resulting program was adopted hi 1981 as amendments to Part
24 of the Code of Metropolitan Dade County, which provide for protecting ground-water quality.
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; Page 29
assigned to development of needed systems in the Wellhead Protection Areas. Connecting on-site systems
to a munrcroal treatment plant can prevent poorly operating septic tanks from contaminating ground water
Similarly, collecting and treating storm water can prevent ground-water contamination from this source
WATER AND SEWER UTILITY SERVICE FEE
Section 24-42 of the Code of Metropolitan Dade County states that
;"Each water or sewer utility shall collect from its customers and pay to die County a county
service fee equal to two dollars ($2.00) per each one hundred dollars ($100.00) of the receipts
of said utility derived from its water and/or sewer utility operations conducted within the
County to cover the cost of providing certain environmental services to and certain
environmental regulation of said water or sewer utilities. Receipts from bulk water and
sewage service to other water or sewer utilities shall be excluded from the imposition of the
county service fee provided for herein, Said service fee shall be due and payable to the
county annually and shall be based upon receipts from water and/or sewerage service for the
period from the first of October through the thirtieth of September of the Mowing year
The fee shall be paid to.Metropolitan Dade County no later than the first of December of
each year for the period 'ending September 30 of that year."
By agreement, the Miami-Dade Water and Sewer Authority remits the surcharge receipts to DERM
monthly. ,DERM may impose penalties for failure to submit fee revenue on time and may require each
utility to submit verification of annual receipts.
Section 24-42 of the Code also establishes that collection of the service fee by utilities does not
constitute a rate increase for purposes of County regulation of utility rates.
"Said county service fee imposed by this section shall be deemed a pass-through cost as
defined by section 32-64(b)(3) of the Code of Metropolitan Dade County, but no hearing
shall be required of any water and sewer utility before the Metropolitan Dade County Water
and Sewer Board, nor shall the approval of the Metropolitan Dade County Water and Sewer
Board be necessary for the imposition of this fee by the utility upon its customers."
Each utility passes the cost of the surcharge through to its customers as it sees fit. Most choose to
identity the surcharge as a separate line item m the water bin.
In order to avoid the pitfalls of fiscal and tax limitations, the County was eager that the service fee
not be construed as a tax. Although the County can easily demonstrate that it is providing an actual service
(water quality protection) and that there is a proportionate relationship between cost burden and benefit,
the County also felt it important that the proceeds from the fee be dedicated to the service of water quality
protection. n }
Consequently die Code in Section 24-42 provides that the proceeds from the surcharge be deposited
in a trust tund and that the proceeds:
"Shall be used exclusively by the department of environmental resources management (sic)
to pay for the costs of the following environmental services to and environmental regulation
of said water and sewer utilities:
• Monitoring and evaluating water and sewer systems of said water and sewer utilities.
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Page 30
• Responding to and attempting to resolve citizen complaints against said water and
sewer utilities.
• Investigation, preparation, and prosecution of enforcement actions pursuant to
Chapter 24 of this Code, to protect the ground water, surface water and drinking
water.
• Ambient monitoring of ground water and surface water.
• Special studies of ground water, drinking water, and surface water when deemed
necessary by the director to protect the ground water, surface water and drinking
water.
• Water supply protection, planning, and programming.
• Laboratory analyses of ground water, surface water, drinking water, wastewater and
other effluent affecting water quality."
A significant share of the fee proceeds have been allocated to wellhead protection. For example, a
network of monitoring wells has been installed at the Northwest Wellfield.
PLAN REVIEW AND OPERATING PERMIT FEES
Operating permits are required for 15 types of industrial and commercial activities. One classification
of activity is the treatment, storage, or disposal of liquid waste or the handling of hazardous material in a
Wellhead Protection Area. Section 24-35.1 of the Code states that:
"No person shall operate a public water system, public sewerage system or any of the
following pollution sources without a valid operating permit issued by the director of the
department of environmental resources management (sic) or his designee or hi violation of
any condition, limitation, or restriction which is part of an operating permit. Such operating
permits shall not be required for tha-Jacflities, systems, and plants easting on the effective
date of this section until one hundred twenty (120) days from the effective date of this
section. All applications for permits issued pursuant to this section shall be on a form
prescribed by the director and accompanied by a fee which shall be established by
administrative order of the county manager and approved by the board of county
commissioners. The permit fee payable hereunder shall be deposited in a separate county
fund and shatt be used exclusively by the department of environmental resources management
to pay for the costs of...environmental services to, and environmental regulation of, the
aforesaid facilities, systems and plants."
Annual fees vary among regulated activities. The annual fee for activities generating industrial effluent,
for example, ranges from $400 to $2,000, depending on the volume and characteristics of the effluent.
Annual fees for hazardous material users and generators range from $150 for body shops to $400 for junk
yards.
The operating permit trust fund can be used for all of the purposes authorized for the utility surcharge
trust fund, plus air pollution control and "restoration of the air, water, property, animal life, aquatic life,
and plant life to their condition prior to any violation."
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Page 31
There are also 15 types of activities regulated under plan review. DERM'S participation in plan review
is designed to assure that new projects or proposed activities adhere to performance standards that
"d «*•*- of *- fees
Bade County department of environmental resources management (sic) shall charge and
collect fees at the rates established by separate administrative order, which shall not become
effective until approved by the board of county commissioners (sic). To preclude duplication
of coDection responsibility, fees to be collected for services of the public works department
and the department of environmental resources management for one and the same project
may be jointly collected if and as des^nated within the administrative order."
The fees range from $45 for tree removal to $15,000 for construction projects costing over $1 million.
ADDITIONAL INFORMATION
Dr. Douglas Yoder
Assistant Director
Metropolitan Dade County
Dept. Environmental Resources Management
111 N.W. 1st Street, Suite 1310
Miami, FL 33128-1971
(305) 375-3303
REFERENCES
Department of Environmental Resources Management, Metropolitan Dade County, Florida, Code of
Metropolitan Dade County. Sections 24-8, 24-12.1, 24-35.1, 24-42, 1988.
Envir0mnental Resour«* Management, Metropolitan Dade County, Florida, 1987-88 Fee
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Page 32
CASE STUDY NO. 3
SANTA CLARA VALLEY WATER DISTRICT CALIFORNIA:
USERS FINANCE A SYSTEM FOR COORDINATED WITHDRAWAL OF SURFACE AND
GROUND-WATER RESOURCES
SUMMARY
The Santa Clara Valley Water District, California, manages its surface and ground-water resources for
conjunctive use. Its activities include surface water storage, ground-water recharge, and water treatment and
wholesale delivery.
Ground-water users as well as surface water users pay for the District's activities. The District levies
a wound-water charge, which is a form of service fee, on all ground water pumped in the District. In the
Water Year 1987-88 (Juty through June), the District raised $175 million from these service fees, and
comparable amounts from property taxes and wholesale surface water deliveries. Revenues from these
sources are commingled in the District's water utility enterprise account and are used to support the
District's water supply activities, including wellhead protection.
ACTTVITY
Surface and
Ground-water
Supply
REVENUE SOURCE
Surface water
charges and
treated water sales
Property taxes
Ground-water
charges (pumping
service fee)
REVENUES
$20.0M/yr.
$15.7M/yr.
$17.5M/yr.
The ground-water charge has a number of advantages and disadvantages. The advantages include high
revenue yield and the facts that all beneficiaries are paying, that otherwise uncompensated costs (such as
for recharge) are recovered, and that opportunities to manage demand as well as supply may be realized
through pricing- strategies. Disadvantages lie largely in the expense and difficulty of measuring use and
enforcing payment by unmetered users.
BACKGROUND
The Santa Clara Valley Water District is one of many special districts created by the State to manage
California's water supplies. The District is coterminous with the County of Santa Clara. About 1.4 million
people live in the County's 15 incorporated areas, covering 1^16 square miles.
The District has two primary functions: to manage water supply and distribution; and to provide flood
control services. The revenues and expenditures for each function are managed through a separate account;
the water supply account is called the Water Utility Enterprise.
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Page 33
WATER SUPPLY AND DISTRIBUTION
The water users within the District's jurisdiction rely on a variety of water sources.
manages these sources in a coordinated fashion to assure reliable yield of quality water.
The District
The District wholesales treated surface water to water utilities, which supply most of the population.
Some utilities also buy water from the City of San Francisco (Hetch Hetchy reservoir) and pump ground
water from individual wellfields.
The ground-water table underlying most of the County in a confined aquifer fluctuates dramatically
depending on the amount of pumping and recharge from year to year. Allegedly a result of overpumping
in the 1560s, the land surface above the aquifer subsided as much as 13 feet in some areas, resulting in
encroachment of the San Francisco Bay on developed areas. Since that time, however, the District has
undertaken a number of measures to prevent ground-water mining and subsidence and provide more reliable
water supply. It brought more reservoirs on line (it now has eight) and began to take deliveries of water
from the Central Valley Project. In addition, the District instituted a ground-water recharge program and
began to levy a ground-water charge in 1964. The District now operates a network of stations for
monitoring ground-water quality and the elevation of the ground-water table.
The three principal sources of funds for the District are wholesale surface water sales, property taxes,
and the ground-water charge. Each wholesale surface water delivery contract is a take-or-pay contract (that
is, the buyer pays whether or not it uses the water), and each contract contains provisions for rationing in
the event of surface water shortage. The price of delivered water includes a basic user charge and, where
applicable, a pumping power charge, a capital recovery charge, and a water treatment surcharge (the
surcharge also applies to treated ground water).
Property tax rates vary among different zones within the District. The District was created through
the consolidation of a number of predecessor districts, and the zones reflect the boundaries of the
predecessor districts. In those zones in which a property tax preceded the adoption of Proposition 13 (the
property tax limitation initiative of 1978), the District has retained the tax as a hedge (the taxing right is
reallocated, if not exercised). In addition, the District has retained those property taxes that retire debt that
predated Proposition 13, since these taxes are exempt from the limitations of Proposition 13.
As early as 1950, the State of California authorized the District to levy ground-water charges. The
District has levied these charges, since 1964. The purpose of the charge is to recover from beneficiaries the
costs of ground-water protection and recharge. The revenue from the charge is collected by the County
twice a year and deposited into the District's water utility enterprise fund. These revenues, in conjunction
with the property tax and surface water sales revenues, are used to support the District's water supply and
protection activities.
Section 60-262 of the Santa Clara Valley Water District Act authorizes the District's board to establish
ground-water charge zones and:
"[T|n addition to the powers enumerated elsewhere in this act, to levy and collect a ground-
water charge for the production of water from the ground-water supplies within a zone or
zones of the district which will benefit from the recharge of underground water supplies or
the distribution of imported water in such zone or zones."
Section 60-26.7 of the Act established the collection procedure and rate-setting principles:
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Page 34
The board shall determine whether or not a ground-water charge should be levied in any
zone or zones. It the board determines that a ground-water charge should be levied, it shall
levy, assess, and affix such charge or charges against all persons operating ground-water
producing facilities within such zone or zones during the ensuing water year. The charge
shall be computed at a fixed and uniform rate per acre-foot for agricultural water, and at a
fixed and uniform rate per acre-foot for all water other than agricultural water. Different
rates may be established hi different zones; provided, however, that hi each zone the rate for
agricultural water shall be fixed and uniform and the rate for water other than agricultural
water shall be fixed and uniform. The rates shall be established each year in accordance with
a budget for such year submitted by the district to the Board of Supervisors of Santa Clara
County pursuant to this act and shall be fixed and uniform rates for agricultural water and
for all water other than agricultural water, respectively; provided, that each such rate for
agricultural water shall not exceed one-fourth of such rate for all water other than
agricultural water."
The ground-water pumping charge varies among zones based on the relative costs of the surface and
ground-water alternatives. Where revenues are generated from the property tax, resulting in a low surface
water charge, or where the cost of surface water service is less (for instance, a treatment plant is not
required), the charge is lower. For Water Year 1987-88, the ground-water charge was set equal to the
surface water charge in each zone. For instance, in the two largest zones, W-2 and W-5, the 1988-89 unit
charges for municipal ground-water withdrawal and basic surface water delivery are $100 and $26 per acre
foot, respectivety, and 1988-89 agricultural withdrawal or delivery charges are $25 and $6.50 per acre foot,
respectively.
Under Section 60-263 of the Act, the proceeds from the ground-water charge are to be used
exclusively for the following purposes:
"1. To pay the costs of constructing, maintaining and operating facilities which will
import water into the district which will benefit such zone or zones, including
payments made under any contract between the district and the State of California,
the United States of America, or any public, private or municipal utility.
"2. To pay the costs of purchasing water for importation into such zone or zones,
including payments made under contract to the State of California, the United
States of America, or any public, private or municipal utility.
"3. To pay the costs of constructing, maintaining and operating facilities which will
conserve or distribute water within such zone or zones, including facilities for
ground water re-charge, surface distribution, and the purification and treatment of
such water.
"4. To pay the principal or interest of any bonded indebtedness or other obligations
incurred by the district on behalf of such zone or zones for any of the purposes
set forth in paragraphs 1, 2 and 3 of this section.
The district may apply to any one or more of the purposes set forth in paragraphs 1, 2, 3
and 4 of this section any or all revenues received by the district from water sale contracts
executed by the district pursuant to this act."
In order to ensure that all ground-water users in the District bear then- fair share, the District has
developed methods to estimate unmetered use and has instituted a comprehensive enforcement program.
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Measuring use by water utilities and large industrial and commercial developments is relatively easy, since
their ground-water use is metered by the District However, the District does not meter ground water used
for household or agricultural purposes, and must rely on indirect estimation techniques. Examples of
measures for use include lot size, household size, and projected use for crops based on crop water-use
coefficients and acreage.
The District has encountered some difficulty enforcing payment by private well users, especially in areas
with weak hydrologic relationships to the principal aquifer.
As the water wholesaler, the entity responsible for recharge, and the entity that levies the pumping
service fee, the District exercises broad control over water supply and use. The District uses price as its
principal tool for avoiding excessive drawdown and subsidence. Not only does it vary the price of surface
water seasonally, but it can also vary service fees from year to year to reflect the relative availability of
surface and ground water. Because local utilities are sensitive to price and are required by public utility
commissions to use the least-cost source of water, the District can control the mix of surface water and
ground-water use by manipulating the relative price of the ground-water charge.
These supply and pricing measures have provided greater flexibility to the District to manage ground-
water and surface water supplies conjunctively, that is, as linked and interdependent resources. During
times of low rainfall and high demand, the District distributes only the surface water that is committed
under long-term contracts, and the utilities hi the region supplement these supplies with ground-water
withdrawals. During periods of high rainfall and low demand, the District uses surplus surface water for
ground-water recharge and also sells surplus water at a reduced price.
GROUND-WATER MONITORING AND ENVIRONMENTAL PROTECTION
The District includes large cities such as San Jose and Palo Alto ("Silicon Valley") as well as small
rural areas. The high concentration of industry hi Silicon Valley has posed a very strong threat to the
ground water. Thirty Superfund sites have already been identified in the District
The Act authorizes the board of the District to prevent contamination of surface and ground water,
to conduct studies related to water supply, and to perform or require abatement of contamination from
abandoned wells. Although the well-capping program has been active for years, this authority was otherwise
dormant until recently.
The District recently has entered into agreements with the San Francisco Regional Water Quality
Board. This Board, one of many such regional boards throughout the State, is the chief State agency
responsible for implementing and enforcing water quality in its region, which includes the District's
jurisdiction. Under the agreements, the District will perform monitoring and testing functions for the
Board's ground-water quality protection activities, including the underground storage tank program and
hazardous waste clean-up activities. These activities are supported from the Water Utility Enterprise fund.
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Page 36
ADDITIONAL INFORMATION
Mr. Leo Cournoyer
Water Supply Manager
Santa Clara Valley Water District
5750 Almaden Expressway
San Jose, California 95118
(408)265-2600
REFERENCES
Santa Clara Valley Water District Act Chapter 60, California Code, Sections 60-5, 60-6.1, 60-26, 60-262,
60-263, 60-26.7
Santa Clara Valley Water District, Santa Clara County, California, Resolution No. 88-41:
Ground-water Charges For Water Year 1988-1989. 1988.
Santa Clara Valley Water District, Santa Clara County, California, The Water Utility Enterprise, 1988.
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Page 37
CASE STUDY NO. 4
COUNTY OF SPOKANE, WASHINGTON:
A SPECIAL FINANCING DISTRICT PROVIDES THE
FINANCING WHEREWITHAL
SUMMARY
j " "—» o&& developed and implemented a comprehensive coordinated
ground-water protection plan that is financed almost entirely from dedicated revenue sources. The program
includes regufctmg potentially polluting activities overlying the County's source aJS^MTmoSS
public education, institutional coordination), building sewer facilities to replace faffing on-site septifS
ACnVITY
Sewer Facilities
Construction
Planning Well
Monitoring,
Public Education,
Regulatory Coord
Overlay Zone
Regulation
Wellhead Protection
Program
REVENUE SOURCE
Ground-water
withdrawal fees,
on-site sewage
disposal fees
Dedicated sales
taxes, real
properly transfer
tax
Access fees
Ground-water
withdrawal fees,
on-site sewage
disposal fees
General revenues
Federal grant
REVENUES
$Z25M/yr.
$L5M/yr.
$2700/connection
$250,000/yr.
$700,000
In Spokane County, taxpayers, polluters, and water users alike share in the costs of
nnplementahon. Furthermore, as a result of the close coordination of aquifer regulation aS
SS°rthTer fC°fT10n' ***?* C°Unty5S Pr0grams for !<"**•* drinking water adosety
to those that protect clean water through control of wastewater discharges.
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Page 38
BACKGROUND
The City and County of Spokane are home to roughly 300,000 residents. The
Prairie Aqrifcr is the sole source of potable water for the region. The gravel and sand geology of the
Sr gtes it a high recharge capability, but it also enables rapid percolaUon of surface contamination.
Protecting the aquifer's quality has become a top priority for area citizens and officials.
Water quality management planning studies were conducted in the 1570s under Section,2081 of the
Federal Clean Water Act and under the Ground-Water Management Area Program of the State of
WaSSgton^eS Code of Washington, Part 90.44.) The source of *e State's assistance funds * an
e*ds7tL oa tobacco products, the proceeds of which are placed in a Centennial dean Water Fund for
water quality protection.
These studies found that the aquifer was slowly being degraded by poorly maintained septic tanks and
the oercolation of contaminants from industrial and agricultural activities. In response, the County
ter quality management plan for the aquifer. The plan includes three major component
programrT^ewrSuity construction program, and a water quality pbnmng and technical^udy
. T& Water Quality Management Program (WQMP), an agency of the County's Public Works
Department, is primarily responsible for coordinating implementation.
REGULATORY PROGRAM
In 1983 at the recommendation of the County Planning Commission, die Board of County
Commissioner^ adopted an Aquifer Sensitive Overlay Zone that corresponds to the areal ejent of the
aquifer and adjacen? hillsides. New developments within the zone are subject to vanous restnctions Tte
annlicable rules vary depending on the type of use (residential use, commeroal/industnal users of critical
" ^th^comSeS/industrialTe) and on whether die use is located within the "Pnonty Sewer
or "General Sewer Service Area," as identified in the County's Comprehensive Wastewater
Plan. Users of critical materials are required to take measures to prevent spills and leaks in
the overlay zone and to dispose of wastes off-site and outside of the service area.
Generally, new developments in the overlay zone are required either tO; connect to existing sewers, to
provide non-septic disposal, or to install plumbing lines for future connection and agree to petition _ for
Cation of a Utility Local Improvement District (ULTO). ULIDS are a type of special district aufconzed
by State statute (Part 3634, Revised Code of Washington). Upon voter approval of a ULID petition, a
ULED has the authority to levy assessments to finance local sewer lines.
Administration of the overlay zone rules is funded through general revenues in the County budget to
the Planning Department and the Department of Building and Safety.
THE SEWER FACILITIES CONSTRUCTION PROGRAM
The rules for the overlay zone assure that new developments will be served by central sewer systems
or systems providing equal protection. In addition, the County wished to provide sewer extensions to
existing development to take existing septic tanks out of service. The sewer extension program coste
^pSnatery $6 million per year. Until 1985, the County had no satisfactory way to finance the sewer
extension program.
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Page 39
The County turned to the Washington State Legislature for the authority to create an aquifer
protection area. Sewer extensions within the aquifer protection area would be financed with fees paid by
those who withdraw ground water and those who dispose of sewage on-site with septic tanks.
In 1985, the Legislature passed Substitute House Bill 1116, "an Act relating to the protection of
subterranean water," that was codified as Part 3636, Revised Code of Washington. The Act authorizes
counties to create aquifer protection areas after public hearings and referenda within the proposed areas
A city or town must approve any inclusion of territory within its jurisdiction in the proposed area. Within'
each area, septic tank fees, or ground-water withdrawal fees, or both may be imposed.
Part 3636 sets forth policy for the fees and their use:
"Aquifer protection areas are authorized to impose fees on the withdrawal of subterranean
water and on on-site sewage disposal The fees shall be expressed as a dollar amount per
household unit Fees imposed for the withdrawal of water, or on-site sewage disposal, other
than by household units. If both types of fees are imposed, the rate imposed on on-site
sewage disposal not exceed the rate imposed for the withdrawal of water. No fees shall be
imposed in excess of the amount authorized by the voters of the aquifer protection area.
Fees shall only be used for the activity or activities authorized by the voters of the aquifer
protection area. Ballot propositions may be submitted to the voters of an aquifer protection
area to authorize a higher maximum level of such fees or to authorize additional activities
for which the fees may be used. Such a ballot proposition shall be substantially in the form
of that portion of the proposition to authorize the creation of an aquifer protection district
that relates to fees or activities, an provided in section 2 of this act. Approval of the ballot
proposition by simple majority vote shall authorize the higher maximum level of fees or
additional activities for which the fees may be used. A county may contract with existing
public utilities to collect the fees, or collect the fees itself.
"Aquifer protection areas may impose fees to fund:
"(1) The preparation of a comprehensive plan to protect, preserve, and rehabilitate
subterranean water. This plan may be prepared as a portion of a county sewage and/or water
general plan pursuant to RCW 36.94.030;
"(2) The construction of facilities for: (a) The removal of water-borne pollution; (b) water
quality improvement; (c)sanitary sewage collection, disposal, and treatment; and (d) storm
water or surface water drainage collection, disposal, and treatment; and
"(3) The proportionate reduction of special assessments imposed by a county, city, town or
special district in the aquifer protection area for any of the facilities described hi subsection
(2) of this section."
The County of Spokane used this authority to establish the "Spokane-Rathdrum Aquifer Protection
Area" and to levy both types of fee. The fees are each set at $125 per month for household units
Household units served by an approved sewer system or approved for service by such a system pay only the
water withdrawal fee; other units pay both fees. For non-household units, each fee is based on meter size.
For instance, the monthly fee for a 6-inch water meter is $80.
This simple fee structure enables the County to recover fees from all septic tank owners and water
users without the need to measure use. Administration of the fee program could begin quickly with
minimal startup and cost. o—i j
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Page 40
Ninety percent of the revenue from fees is used to support the sewer extension program. Uses of
funds include construction, debt service on new sewers, construction project administration, design and
engineering, rights of way, and related legal expenses.
The sewer construction program also obtains funds from State and Federal grants (such as the
Washington Ground-Water Management Area Program, RCW 90.44) and from three other local sources
of revenue. The first local source is a dedicated 0.125 percent county sales tax. Spokane County
Resolution 87-970 states as follows:
There is hereby imposed a sales and use tax, as the case may be, as authorized by RCW
82.14.030(2), upon every taxable event as defined by RCW 82.14.020, occurring within the
County of Spokane. The tax shall be imposed upon and collected from those persons from
whom the State sales tax or use tax is collected pursuant to Chapters 82.08. and 82.12 of the
Revised Code of Washington.
The rate of tax shall be one-eighth (1/8) of one percent (1%) of the selling price
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• Page 41
WATER QUALITY PLANNING AND TECHNICAL STUDIES
The water quality planning and technical studies in support of aquifer protection emphasize three
activities: monitoring of well water quality, public participation and education; and regulatory coordination
The regulatory coordination effort integrates the implementation of a number of regulatory activities- the
Aquifer Sensitive Area Overlay Zone; the County's stormwater management program; land-use planning-
underground storage tank programs; and the State's regulation of septic tank construction and septic tank
siting. r
The County attorney has determined that these activities are consistent with the purposes of RCW
36.36. As a consequence, these activities receive 10 percent of the proceeds from the septic tank and
ground-water withdrawal fees, amounting to approximately $250,000 annually. The funds are spent roughly
in the following proportions: $100,000 for the well monitoring program; $90,000 to cover overhead expenses;
and $60,000 for public information and regulatory coordination.
In addition to locally derived revenue sources to support water quality planning and technical studies,
Spokane County is part of a federally funded program for protecting the Spokane-Rathdrum Prairie Aquifer'
In fiscal years 1988 and 1989, the U.S. Environmental Protection Agency appropriated $700,000 and $1
million, respectively, to the county and the State of Idaho to protect the aquifer. The money will be used
to support the identification of sources of contamination, mapping, data base development and management
local land-use controls, and public education. '
ADDITIONAL INFORMATION
Mr. Stanley Miller
Water Quality Management Program
Spokane County Department of Public Works
North 811 Jefferson Street
Spokane, Washington 99260-0180
(509) 456-3600
REFERENCES
County of Spokane, Washington, Spokane Aquifer Water Quality Management Plan.
County of Spokane, Washington, Resolutions 84-1010, 85-0155, 85-0641, 85-0884, 86-0614, 87-0989.
County of Spokane, Washington, Aquifer Sensitive Area Overlay Zone. Section 7.06.000, Spokane County
Zoning Code.
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Page 42
CASE STUDY NO. 5
LOTT OPERATING AGENCY, WASHINGTON:
LOCAL COORDINATION FOR WASTEWATER TREATMENT AND
AQUIFER PROTECTION
SUMMARY
In 1976 four units of government in northern Thurston County, Washington, created an
intergovernmental action agency, known as LOTT, to provide regional sewerage services. Today, those units
are negotiating to significantly broaden the responsibilities of LOTT to include financing for ground-water
protection initiatives. LOTT would serve as the vehicle for funding interceptor sewers and land acquisition
in recharge areas, and would provide funding to the Environmental Health Division of Thurston County
for its ground-water management, planning and monitoring program. Sewerage service fees, general facilities
charges and septic tank service fees would form the backbone of LOTTs financing program.
ACTIVITY
Interceptor
Sewers
Planning, Models,
Monitoring, Public
Education
REVENUE SOURCE
Septic tank
service fees
General
facilities charges
Sewer use
service fees
Septic tank
service fees
Sewer use
service fees
REVENUES7
15 percent
70 percent
15 percent
50 percent
50 percent
LOTT and the Thurston County aquifer protection program illustrate how wastewater treatment
programs and aquifer protection programs can be coordinated. The proposed service fees are examples of
innovative fundhig sources that rely on the beneficiary and polluter to pay. LOTT is an example of an
authority created by intergovernmental agreement. Finally, LOTT illustrates how existing institutional
arrangements can be adapted to achieve ground-water management objectives.
1 Revenues are expressed in percentages because the new LOTT agreement had not been executed at
the time of this case study. Interceptor sewers are to be financed 15, 70, and 15 percent from each of three
revenue sources; planning, models, monitoring, and public education are to be financed 50 percent trom
each of two revenue sources.
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Page 43
BACKGROUND
In 1976 the City of Olympia, Washington, entered into an intergovernmental agreement with the cities
of Lacey and Tumwater, Washington, and surrounding Thurston County to service their wastewater
treatment needs. The parties to the agreement, who together are known as the LOTT agencies, created a
Wastewater Management Board with representatives from each of the four member jurisdictions and
deslgnated Olympia to serve as the LOTT Operating Agency. Under the authority granted by the
intergovernmental agreement, the LOTT Operating Agency functions as a sewerage utility, operating the
conveyance and treatment system and financing its operations with sewerage service fees.
Within the County's boundaries, 80,000 people dispose of their wastewater using on-site septic tanks,
while only 40,000 discharge to a community sewer system. By 2010 an additional 80,000 to 100,000 people
will reside in the County. The LOTT agencies have agreed that plant improvements and sewer extensions
are needed to service this growth and to protect the underlying aquifer from degradation caused by a
proliferation of septic tanks. LOTT is negotiating a successor agreement, the LOTT Agreement for
Wastewater Management, that provides the authority for these improvements and their financing.
The LOTT agencies have developed and incorporated in the new agreement a Wastewater Management
Plan. The Plan establishes a phased sewer construction program within a Twenty-Five Year Wastewater
Management Area. (The Wastewater Management Area corresponds to the County's Urban Growth
Management Area.) In conjunction with construction of the interceptors, septic tank construction standards
would be more stringent in areas not scheduled for service in the next five years, and connections of new
developments to sewers or community treatment systems, if available, would be required. The Plan also
calls for extensive capital improvements to Olympia's wastewater treatment plant and combined sewer
overflow corrections to reduce stormwater impacts on plant capacity. The capital improvement plan - $70.7
million for sewers and S25.1 million for plant improvements - extends from 1989 to 2010.
The treatment plant upgrade and combined sewer overflow corrections would be financed from existing
user charges (wastewater treatment service fees). However, to finance and implement the sewer extension
program, the LOTT agencies have chosen to broaden the charter of the Board and the LOTT Operating
Agency, including the authorization of three new revenue sources: septic tank charges (service fees); general
facilities charges; and a new sewerage charge. The sewerage charge would be a flat fee per household unit
and would be separate and distinct from the user charges that support the LOTT Operating Agency's
existing operations.
Furthermore, the LOTT agencies have agreed that a ground-water management and protection program
is needed. The Environmental Health Division of Thurston County is implementing such a program, called
the North Thurston County Ground-Water Management Program. The Program includes initiatives in water
quality monitoring, ground-water modeling and mapping, public education, and planning of ground-water
protection strategies. Under the pending LOTT agreement the LOTT Operating Agency would provide
funding for the program to the Environmental Health Division from the new sewerage service fees and
septic tank service fees. In addition, the LOTT partners are evaluating the purchase of sensitive recharge
areas and developing a funding formula. Up to $5 million will be committed to the acquisition of lands
or development rights.
CONSTRUCTION OF INTERCEPTOR SEWERS
The pending agreement provides a formula for financing the interceptor sewers:
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Page 44
• The County will issue at least $15 million in general obligation bonds. The bonds
will be additionally secured by a pledge of revenues from the LOTT system.
• General facilities charges will finance 70 percent of the cost of the interceptors,
including debt service, and will be set at such a level not to exceed that share over
a rolling ten-year period.
• Septic tank service fees and the new sewerage service fees will each finance 15
percent of the cost of the interceptors, including debt service, and will be set at
such a level not to exceed that share over a rolling ten-year period. The fees will
also fund the ground-water management and monitoring program, described below,
and fee revenues used for that purpose are not included in the 15 percent limit.
The General facilities charge (GFC):
"shall be paid by those property owners which will be connected to the public sewer collection
system or a community treatment system. Owners of lots who have constructed the
applicable buildings on said lots prior to the effective date of this agreement shall pay the
GFC prior to connecting to such facilities. The owners of all other lots shall pay the GFC
upon the issuance of a building permit.
"The initial amount of the GFC will be S900 per ERU. The WWMB shall adjust the amount
of the GFC to meet the revenue requirements necessary to carry out the interceptor
construction schedule of the WWMP as the same may be modified by the Board. Provided,
however, the portion of the cost of implementing the interceptor construction schedules which
is borne by the General Facilities charges shall not exceed an average of 70 percent of such
cost over a ten-year period. The 70 percent limitation may be exceeded from time to time
in order to meet bond covenants, however, any such excess will be offset in future years so
that the 70 percent allocation is not exceeded on the 10-year average. Provided, however,
that notwithstanding the limitations of this subsection, the 70 percent average over 10 years
may be exceeded by unanimous vote of the Wastewater Management Board." (LOTT
Agreement for Wastewater Management, Sec. VIII.B.(1))
The rest of the funding will come from the monthly sewerage service fees (initial amount: $14 per
month per household unit) and monthly septic tank service fees (initial amount: S2.50 per month per
permitted septic tank). Language in the pending agreement is similar to that for GFCs and describes the
method by which these fees are set.
The pending agreement also contemplates the adoption of an aquifer protection area for northern
Thurston County by referendum pursuant to RCW 36.36. (See case study no. 4 - Spokane County - for
a description of RCW 36.36.) The agreement provides that should such an aquifer protection area be
adopted the sources of funds for the sewer construction program would be modified. The portion (3U
percent) originally to be financed from LOTT: septic tank charges and sewerage charges would instead be
financed from the fees authorized by RCW 36:36 to be levied in the aquifer protection area namely water
withdrawal fees and/or septic tank fees. Either the new fees would replace the sewerage charge and the
septic tank charge, or credits in the amount of these charges would be applied against the fees. Such a
credit is authorized in RCW 36.36 (see case study no. 4 for statutory language.)
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Page 45
THE THURSTON COUNTY GROUND-WATER MANAGEMENT PROGRAM
p™-™ ^unguGround-Water Management Program Js administered by the County Division of
Environmental Health. The program includes the following initiatives:
• Developing and maintaining a comprehensive ground-water monitoring program
which will enable the creation of an area-wide ground-water data base;
• Developing a contaminant transport model to predict impacts of land uses on
ground-water quality;
• Developing and implementing a public information and education program
explaining the value of ground water and the steps being taken to protect it; and
• Conducting a Ground-Water Management Area planning process consistent with
State Department of Ecology rules.
as sho^n *
£rom three different
LOTT 31,032,000
United States Geological Survey $ 675,000
Washington State Department of Ecology .... S 65o!ooo
$2,357,000
LOTTs contributioni will be financed equally from sewerage service fees and septic tank service fees
levied over and above the amounts required for the interceptor construction program T
soScT61" states that should an aquifer protection area be adopted these fees will be replaced ;
ffnPanr^atS ^T "* ?e ^"^ Protection area' and thereafter a portion of the fee revenues would
finance the management and monitoring program.
Fr r C3Se StUdy Q°- 4 ~ ?ounty of SPokane) the Washington Department of
Ecology has designated the "North Thurston County Ground-Water Management Area" as eligible for State
0 ^-ntation, and will proviL continuing
ADDITIONAL INFORMATION
Mr. Mike Sharar
Program Administrator
LOTT Phase II Study
P.O. Box 1967
Olympia, Washington 98507
(206) 753-8343
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Page 46
REFERENCES
LOTT Operating Agency, T/YTT Urban Area Wastewater Management Plan for the Cities of Lacey,
Olvmpia. Tumwater & Thurston. Countv Washington, 1987.
LOTT Operating Agency, T rvrr Wastewater F*HHtv Tmnrovements. Olvmpia, Washington, Annual Financial
Report to The LOTT Advisory Committee. 1987.
LOTT, LOTT Agreement For Wastewater Management, 1988.
LOTT, Aor^ment For Kfrntifir.stinn And Pn-^hle Acquisition Of Aquifer-Sensitive ProBgities, 1988.
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PART III
APPENDICES
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Page 48
APPENDIX 1
SUMMARY OF EXAMPLES OF WELLHEAD PROTECTION FUNDING
Table 1-1 summarizes the protection activities of a number of exampleWellheac'Protection_ Programs
and the funding sources selected for each activity. Points of contact are also identified. Locations of the
examples are illustrated in Figure 1.
Taxes Demit fees and service fees are the predominant revenue generation measures among the
exampS S veSfty of revenue sources for each program also is notable. This diversity both spreads
trTcc.st burden among affected parties, and spreads the risk of funding interruption.
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Page 49
TABLE 1-1
EXAMPLES OF FUNDING FOR WELLHEAD PROTECTION
AND GROUND-WATER PROTECTION7
LOCATION/AGENCY
ACTIVITY
FUNDING SOURCE
1. State of Arizona,
Dept. Environmental Qual.
(602) 257-2300
2. Town of Easton, MA
Public Water Company
(508) 238-3641
3. Commonwealth of MA,
Dept. Env. Qual. Eng.
(617) 292-5526
4. Town of Harwich, MA
Water Department
(508) 432-0304
5. Cty. of San Bernardino,
CA, Health Department
(714) 387-4646
6. State of Vermont, Dept.
Devel. & Commun. Affairs
(802) 828-3231
7. State of Nebraska,
Natural Resource Commission
(402) 471,2081
8. State of New York, Dept. of
Environmental Conservation
(518) 457-8681
9. City ofTacoma, WA,
Planning Commission
(206) 591-5377
10. Cty. of Collier, FL,
Dept. Environmental Sci. &
Pollution Control
(813) 774-8904
Performance ctrls.
on discharges
Land-use controls,
performance controls
Aquifer land
acquisition
Land-use controls
Monitoring, new
well permits
Land acquisition,
planning, studies
Performance
controls
Land acquisition
Land-use & perf.
ctrls. (proposed)
Land-use controls,
perform, ctrls.
Permit fees (proposed)
Unit charges, access fees
General obligation bonds
General revenues, G.O.
bonds
Impact fees, permit fees
Real estate transfer excise
tax
Special assessments
General obligation bonds
Permit fees, service fees
(utility surchg.) (proposed)
General revenues
1 Table excludes grants.
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Page 50
TABLE 1-1
(Continued)
EXAMPLES OF FUNDING FOR WELLHEAD PROTECTION
AND GROUND-WATER PROTECTION*
LOCATION/AGENCY
ACTIVITY
FUNDING SOURCE
11. County of Ocean, NJ
Health Department
(201) 341-9700
12. Cty. of Suffolk, NY,
Dept. Health Services
(516) 348-2703
13. Edwards Undergrd. Wtr
Conserv. District, TX
(512) 222-2204
14. South Ctrl. Connecticut
Regional Water Auth., CT
(203) 624-6671
15, Town of Nantucket, MA>
Land Bank Commission
(508) 228-7240
16. South Florida Water
Management District, FL
(407) 686-8800
17. Bourne Water District, MA
(508) 563-2294
18. Town of Littleton, MA
Dept. Light & Water
(508) 486-3104
Land-use & perf.
ctrls., new well
Land acquisition
Performance
ctrls. (proposed)
Land acquisition,
management
Land acquisition
Use and well
permits, recharge,
Land acquisition
Well installation
Well monitoring
Performance ctrls.
Permit fees, penalties
permits, monitoring
Dedicated sales tax
General revenues
Unit charges
Real estate transfer excise
tax
Ad valorem property tax
rationing
Property tax, dedicated tax
bonds
Mandatory private, unit
charges
Permit (inspection) fees,
unit charges
Taxes
1 Table excludes grants.
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Page 51
TABLE 1-1
(Continued)
EXAMPLES OF FUNDING FOR WELLHEAD PROTECTION
AND GROUND-WATER PROTECTION2
LOCATION/AGENCY
ACTIVITY
FUNDING SOURCE
19. Metro. Dade Cty., FL,
Dept. Env. Resource Mgmt.
(305) 375-3303
20. Santa Clara Valley
Water District, CA
(408) 265-2600
21. LOTT Operating Agency
and Cty. of Thurston, WA,
Department of Health
(206) 786-5439
22. County of Spokane, WA,
Dept. Public Works
(509) 456-3600
Studies, enforcemt.,
monitoring, ping.
Operating permits
Plan approval
Surface and ground
water supply
Sewer interceptors
Models, monitoring
public ed., planning
Interceptor sewers
Monitoring, public
ed., regul. coord.
Service fee
(utility surcharge)
Permit fees
Permit fees
Surface water charges
treated water sales,
property taxes, ground-
water pumping service fees
Septic tank use fee,
access fee (GFC), sewer
use service fee
Grants, sewer use service
fee, septic tank fee
Pumping service fee, septic
tank use fee, access fee,
ded. sales tax, real estate
transfer excise tax
Pumping service fee, septic
tank service fee planning
1 Table excludes grants.
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FIGURE 1
LOCATION OF WELLHEAD PROTECTION EXAMPLES
Page 52
HAWAII
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Page 53
APPENDIX 2
GLOSSARY OF FINANCIAL TERMS
Ad Valorem Tax. A tax based on the assessed value of real property.
of use' such - •
Appropriation. The allotment of funds to a purpose for a particular fiscal period, as specified in a law or
ordinance. r
Assessed Valuation. The value placed on real property for purposes of taxation.
Authority. A unit of government, created by charter or by intergovernmental agreement, that has limited
powers as specified in the charter or agreement. "uuwu
Bond. A written promise to repay a debt at a specific date or maturity, with periodic payments of interest.
Bond Ordinance or Resolution. An ordinance or resolution authorizing a bond issue.
Capacity Credit. The purchase of future capacity in a public facility by private interests, customarily real
estate developers, prior to the construction of that facility.
Credit Risk. The risk of default.
Debt Limit. A limit, set by constitution or law, on the amount of debt a municipality can issue or have
outstanding. Also called a Debt Ceiling. Debt limits are frequently set at some proportion of the assessed
value of taxable real property within the municipality.
Debt Service. Periodic repayment of interest and/or principal on an outstanding loan or bond.
Dedicated Tax Bond. A bond secured by the pledge of the revenues from a particular fax source Also
called a special tax bond. '
Dedication. The assignment of a particular revenue stream to specific projects, purposes or programs
without need for an appropriation. r r r &
Default. Failure to pay in full, and on time.
Enterprise Fund. A fund or account established to manage the revenues and expenditures of a self-
sufficient activity. . ,
Excise tax. A tax levied against the exchange of a specific good or service.
Financial Advisor. A consultant to a unit of government who provides advice on the features and timing
of new bond issues, and on other financial management concerns such as utility rate setting and capital
budgeting. ° K
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Page 54
Financial Plan. An approach to financing capital improvements which optimizes the sponsor's funding
and uses of capital from the standpoints of cost, risk, and protection of future choices.
General Fund. The "pot" of commingled revenues from all sources.
General Obligation Bond. A bond secured by the pledge of the issuer's full faith, credit, and taxing power.
General Purpose Unit of Government. A unit of government, such as a state or municipality, authorized
to exercise all lawful powers to carry out the general functions of government.
General Tax. A tax, such as a property, sales, or income tax, that is paid by all persons, except those that
are specifically exempted, within a unit of government's jurisdiction.
Impact Fee. A fee assessed against private parties as compensation for the costs, such as for new capacity,
that their projects or activities impose upon public facilities.
Note. A written promise to repay a debt and interest thereon at a specific date or maturity, usually less
than three years.
Permit Fee. A fee assessed against a permittee to recover the costs of permit processing.
Public Enterprise. A publicly owned utility or utility-like operation that has sole claim on the revenues
from its opeTaUons, and for which revenues constitute its sole source of income, other from interest.
Revenue Bond. A bond secured solely by the pledge of project or system revenues, without recourse to any
tax support.
Service Fee. A mandatory payment by the recipient of a public service in accordance with individual benefit
received.
Special Assessment. A compulsory levy against certain properties to defray part or all of the cost of a
specific local improvement that primarily benefits those properties.
Special Assessment Bond. A bond secured by the pledge of revenues from a special assessment.
Special District. An independent unit of local government, created by referendum, that is organized to
perform a limited number of governmental functions for a specific geographic area.
Special Service Area. A limited geographic area that benefits from a particular localized service, the cost
Of^hich is recovered through service fees or taxes applied within the benefittmg area.
Special Service Area Bond. A bond secured by the pledge of the revenues from a service fee or tax applied
in a special service area.
Tax Base. The total of the sources of tax revenues.
Tax-exempt Bond. A bond, the interest payments of which are exempt from federal income taxation under
the federal revenue code.
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"""*
™ith
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Page 56
APPENDIX 3
GENERAL REFERENCES
in Development Finance, Council of State Planning
Alice, D.J., "Local Finance and Policy for Ground-Water Protection," The Fnvironmental Professional, Vol
8, No. 3, 1986.
Connecticut Aquifer Task Force, Report of the Aquifer Protection Task Force to the, Genera! Assembly,
1988.
Department of Natural Resources, State of Arizona, Draft Aquifer Protection Permit Statute, 1988.
Housatonic Valley Association, Annual Report, 1987.
lUinois Environmental Protection Agency, A Primer Reading Omin Aspects of the Illinois Ground-
Water Protection Act, 1988.
Jakubiak, Susan and Richard Mudge, Financing Infrastructure Innovations at the Local Level, National
League of Cities, December 1987.
League of Wisconsin Municipalities, Special Assessments in Wisconsin, A Manual of Procedures and Forms
for Cities and Villages. Revised, 1966.
Litvak, Lawrence and Belden Daniels,
Agencies, 1979.
Mushkin, Selma, Public Prices for Public Products. The Urban Institute, 1972.
Ohio Environmental Protection Agency, Ohio Gronnd-Water Protection and Management Strategy., October
1986.
Petersen John E. and Wesley C. Hough, Creative Capital Financing ft* State agTocal Governments,
G^vSnment Finance Research Center, Municipal Finance Officers Association, 1983.
Planning Department, City of Tacoma, Washington, General Guidance and Planer. Standards for the
South Tacorna Ground-Water Protection District, no date.
Poertner, H.G., «mrm«.mr Management in the United States. Department of Interior, Office of Water
Resources and Technology, 1980.
Stroman, Michael, "The Aquifer Land Acquisition Program: An Approach for Protecting Ground-Water
Resources in Masssachusetts," 1987.
U.S. Environmental Protection Agency, Office of Ground-Water Protection, Overview of State
Water Program Summaries: Volume 1. 1985.
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Page 57
U.S. Environmental Protection Agency, Office of Ground-Water Protection, Survey of State Ground-Water
Quality Protection Legislation. 1985. '
U.S. Environmental Protection Agency, Office of Water, Reference Guide on State Financial Assistance
Programs. 1988 " ~~ —
Virginia Ground-Water Protection Steering Committee, A Ground-Water Protection Strategy for Virginia,
1987.
Watson, Rick, How States Can Assist Local Governments with Debt Financing for Infrastructure. National
Conference of State Legislatures, 1982.
Williams, Paul C, "Creative Financing Techniques for Water Utilities," Journal of the American Water
Works Association. September 1982. '
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