MANAGING WET WEATHER WITH
GREEN INFRASTRUCTURE
MUNICIPAL HANDBOOK
FUNDING OPTIONS
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Managing Wet Weather with Green Infrastructure
Municipal Handbook
Funding Options
The Municipal Handbook is a series of documents
to help local officials implement green infrastructure in their communities.
September 2008
EPA-833-F-08-007
Front Cover Photos
Top: rain garden; permeable pavers; rain barrel;
planter; tree boxes.
Large photo: HighPointe Neighborhood,
Seattle WA
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Funding Options
Introduction
Securing adequate, sustainable sources of funding for managing wet weather presents a significant
challenge for towns and cities across the United States, and financial constraints frequently hinder the
implementation of effective programs and practices at the local level. This situation is often especially
true for green infrastructure approaches, not necessarily because they are more expensive than
traditional management approaches (in fact often they are less expensive), but because they do not
necessarily fit existing funding frameworks. In many cases, green infrastructure is simply another item
on the community "to-do" list that can not (and will not) be addressed without developing alternative
funding mechanisms.
Fortunately, a growing number of communities have overcome financial barriers with funding
strategies that are sustainable and effective. Many communities pay for green infrastructure projects by
drawing from general funds, while others set up new fees, taxes and other directed charges to help pay
for public infrastructure repairs and improvements. Often, these fees are applied to new development
and other land use alterations and may appear as plan review and permitting fees, or special assessment
fees that discourage building in particular locations - like green fields - by exacting an additional
charge for projects located in sensitive areas. Some communities are charging private properties a "fee-
in-lieu" of on-site water quality treatment, wherein developers no longer implement on-site water
quality treatment practices, but instead pay into a fund that the municipality can use to finance green
infrastructure projects in priority areas. Capital cost recovery fees, impact fees, and real estate taxes are
further examples of the many different ways that local governments are generating reliable funding for
green infrastructure practices that will result not only in better stormwater management, but in a wide
range of additional community benefits as well.
This chapter identifies and discusses the two most common funding options communities are using for
green stormwater infrastructure - stormwater fees and loan programs.
A third source of funding - grant programs - is also available in limited amounts to support green
infrastructure projects. The amount of grant money currently available on a national basis is only
sufficient enough to fund small, local projects, and is not enough to sustain large multi-year wet
weather programs. Grants, such as those provided under Clean Water Act Section 319 or through the
Department of Housing and Urban Development's Community Development Block Grant Program
(CDBG), can be useful in building demonstration projects or as seed money for building local political
and community support for green infrastructure practices. However, grant money is not considered a
reliable, long-term source of funding for establishing sustainable green infrastructure policies or
programs.
A number of national groups are currently working to increase the amount of grant money available for
green infrastructure projects, and if and when such funds become available this chapter will be
updated. However, some grant money may be currently available for communities interested in
funding small demonstration projects, and information on existing grant programs is available at
http://www.epa.gov/npdes/greeninfirastructure.
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Stormwater Fees
What is a stormwater fee?
Stormwater fees are used to generate a revenue stream to address the increasing investment most
communities will have to make to control both combined sewer overflows and stormwater runoff.
Some municipalities require additional funding for the new infrastructure required to meet the
demands of growth and development, while other, often older communities need extra revenue to
repair and maintain existing storm sewer systems. Smart growth planning and updated development
codes can help offset the financial impact of new infrastructure costs, but most municipalities have
extensive off-site stormwater systems that require ever increasing public investment.
Why have user fees as opposed to other collection methods?
Stormwater user fees are often considered a fair, equitable method for charging the people that benefit
from stormwater infrastructure. Traditionally, the cost of stormwater management was paid for through
general tax funds (such as a property tax) or was included as a line-item on monthly water bills.
However, stormwater user fees are increasingly
used to direct the costs for stormwater ,
management towards those properties that " - ,__
generate the most runoff. jr- '": ;
In addition to being more equitable, stormwater
fees are also easier for municipalities to set-up
and implement. In many communities, new
taxes require a vote of approval by the public,
while a fee is a charge that municipalities have
the authority to leverage for the services they
provide. Also, many properties can be exempt
from taxes. In Washington DC, for example, the
federal government contributes to 35% of the
District's overall impervious surfaces. These
properties are exempt from paying a stormwater
tax, but could be required to pay a fee for
stormwater management services, just as they
pay for electricity and water.
Fee Collection
As a community decides to create a stormwater
user fee, it is important to determine which
entity will be responsible for collecting and
managing the funds that are generated. Most
municipalities set up a new stormwater utility to
manage the billing process and incoming
revenue. The utility may be managed through an enterprise fund or special account separate from
general funds. If an independent entity is not created, existing departments, such as a department of
environment or department of public works, are often tasked with the responsibility of managing fee
collection and spending. For ease of collection, the stormwater fee can be added to water, sewer or
utility bills; however a few cities charge the user fee as a monthly or annual tax. In San Jose for
Minneapolis Central Library Green Roof. Image
courtesy The Kestrel Design Group, Inc.
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instance, the Santa Clara County Tax Collector's Office collects the Storm Sewer Service Charge
through the annual property tax roll.
It is equally important to consider how revenue from the fee will be spent. By creating new utilities,
municipalities are able to control and prioritize stormwater projects on city-owned property. User fee
revenue can be used for a wide variety of purposes, but most communities allocate these funds to
demonstration projects, capital improvements, and operations and maintenance of stormwater
facilities.
An increasingly common method for calculating a stormwater user fee is an impervious surface based
billing system. Because runoff from impervious areas is the primary contributor to the storm sewer
system, this is seen as a more equitable determination for fees than a meter-based fee, which charges
by water consumption. For example, a parking lot uses no potable water but creates significantly more
runoff than a small restaurant that consumes a large amount of potable water.
The calculation can differentiate by zoning or property use types. Currently, municipalities are setting
flat rates for residential units because limitations in technology make it administratively costly to
calculate actual imperviousness for each residential lot throughout the city. Instead of actual
impervious lot calculations, cities will set up equivalent residential unit (ERU) or equivalent
stormwater unit (ESU) charges. These approximate measures provide differential rates based on total
lot size, which gets closer to actual values of impervious surface calculations. In Minneapolis a three-
tiered system differentiates between overall parcel sizes of single family properties, with a standard
ESU at 1530 square feet of imperviousness which results in a charge of $8.72 per month.
Table 1: Minneapolis's Stormwater Charge for Single-Family Residential Properties
Tier
High
Medium
Low
ESU
1.25
1.00
0.75
Stormwater Charge
$10.90
$8.72
$6.54
Non-residential properties vary much more in gross size and total imperviousness than residential
parcels and are more frequently based on their actual contribution of stormwater runoff. Cities such as
Philadelphia, Pennsylvania, Lenexa, Kansas and Portland, Oregon calculate user fees for commercial,
multi-family residential and industrial properties by their total lot size and percentage of
imperviousness. These rates are measured through GIS and flyover image data that accurately accounts
for the stormwater runoff inputs of these large customer parcels.
Fee Discounts and Credits
When incentives are tied to stormwater fees, they encourage retrofits of existing properties and
implementation of green infrastructure in new developments. Fee discounts and credits provide an
opportunity for property owners to reduce the cost of their stormwater fees by using green
infrastructure techniques that limit impervious cover and reduce the amount of runoff generated. The
public system clearly benefits when property owners manage stormwater runoff on site. If less water
enters the sewer system, less money needs to be spent on treatment, maintenance, and operation
expenditures. Further, discounts and credits support the fee-for-service system because property
owners can reduce the amount they pay by reducing the service they receive.
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There are a number of options for reducing fees, but there must be a balance between the base charge
and the type of incentive that is used. The fee must be costly enough to encourage avoidance, while
credit standards must be reasonable enough that owners want to seek the credit in lieu of paying the fee
in full.
Before setting the credit standard, municipalities should first determine the types of stormwater
management goals they wish to achieve (e.g. reduce impervious cover, increase infiltration, increase
green roofs, etc.). Once these management goals are defined, officials must then decide how to credit
private property owners for the action(s) being incentivized. Table 2 outlines several common
stormwater management goals and identifies the mechanisms and processes that can be used to meet
these goals. Some cities give a percent discount for level of performance, primarily for stormwater
quantity reduction and in lesser cases for pollution reduction. Discounts are also offered for impervious
surface reductions, whether for total area or by the square foot. Finally, credits can be based on
particular practices, such as rain gardens, green roofs or even tree canopy. Portland, Oregon, for
instance, gives specific credits for sites with ecoroofs or trees over 15 feet tall. Credit amounts vary
based on the practice and the goals the municipality has for private stormwater management.
Depending on the billing cycle, these discounts can be incorporated into the next charge or
retroactively for past payment. In almost all cases, the fee reduction is permanent, especially for
impervious surface reductions, but may be contingent on proper maintenance for credits granted for
specific practices or tree planting/preservation.
Table 2: Framework for Stormwater Fee Discount Programs
Goal of Discount
Reduce Imperviousness
On-site Management
Volume Reduction
Use of Specific
Practices
Mechanism for Fee Reduction
• Percent fee reduction
• Per-square-foot credit
• Percent fee reduction
• Quantity/Quality credits (performance-
based)
• Percent fee reduction
• Performance-based quantity reduction
• Percent fee reduction
• One time credit
Process for Implementation
• Percent reduction in imperviousness
• Square feet of pervious surfaces
• List of practices with various credits
• Total area (square feet) managed
• Percent reduction in imperviousness
• Performance-based
• Total area (square feet) managed
• Practices based on pre-assigned
performance values
List of practices with various credits
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Drawbacks and Limitations
Stormwater fees can be a fair, efficient way for communities to recover the cost of maintaining and
improving stormwater infrastructure. However, to be an effective and sustainable source of funding,
stormwater fees must be thoroughly planned and thoughtfully implemented. When new fees are hastily
imposed, they can lead to unexpected consequences that often cause more harm than good.
When charging the people that use and benefit from stormwater infrastructure, it is critical that the
greatest costs are directed towards those who create the most runoff. Following this logic, most
stormwater fees should be structured so that properties with the large amounts of impervious area -
such as commercial and industrial facilities - pay higher fees than residential and other small-meter
properties which generally have less impervious cover.
When too much of the cost burden is placed on residential customers, stormwater fees can quickly lose
traction and support. In Detroit, for example, an increase in residential stormwater fees left many of the
city's low-income families unable to pay their monthly water bill. As a result, many of these residents
had their water turned off. This was clearly not the intent of the city's stormwater fee, but it serves as
an example of what can happen when the cost allocation of stormwater fees is not carefully thought
out. To address this problem, cities have developed a variety of assistance programs to help low-
income customers pay their stormwater bills. The City of Portland, Oregon, for example, offers bill
discounts, crisis vouchers (good for up to $150), and zero interest loans for qualified customers.
In addition to ensuring a fair cost allocation, stormwater fees must also provide enough capital to
maintain and enhance existing stormwater infrastructure. On the one hand, a stormwater fee that is too
high will likely meet
opposition from
overburdened customers. On
the other hand, a stormwater
fee that is too low is virtually
useless. The District of
Columbia, for example,
charges a $7 annual
stormwater fee to all single-
family homes - a charge that
covers only a fraction of the
District's actual infrastructure
costs. It is important to
remember that stormwater
fees are designed to offset the
costs of infrastructure ^ ******' , .\*~..- -*-*»
a%au?c „ * * tf
expenditures. To be truly
effective, these fees must
therefore generate enough
funds to pay for infrastructure
maintenance and upgrades.
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Tanner Springs Park in Portland, Oregon includes a constructed wetland for
managing runoff from nearby buildings
Case Study: Philadelphia, Pennsylvania
Like many large cities, Philadelphia has witnessed a significant increase in stormwater management
costs over the past several years. In an effort to comply with state and federal regulations, the city has
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incurred substantial capital expenditures and operating costs to maintain its aging stormwater
infrastructure. In addition, the city will need to invest hundreds of millions of dollars over the next
decade to reduce the frequency of combined sewer overflows.
To help offset these tremendous costs, the Philadelphia Water Department recently decided to revise
its stormwater fees. For years, the Water Department recovered the costs of operating and maintaining
stormwater infrastructure through a service charge collected from metered customers. Under this
system, properties with larger water meters - such as commercial and industrial facilities - paid a
higher service charge. While this fee structure may seem reasonable, it has one major drawback in that
non-metered properties such as parking lots and utility right-of-ways have not had to pay a stormwater
fee.
The Water Department convened a Citizens Advisory Council to make recommendations for
improving the city's stormwater fee. This group of stakeholders recognized that impervious cover is
the primary factor in determining the amount of runoff a property will generate. As a result, 80 percent
of the city's new stormwater fee is based upon a property's impervious area, with the remaining 20
percent based upon the property's gross area. In this way, stormwater fees will reach non-metered
customers such as rail lines, parking lots and utility right-of-ways that account for significant
impervious space (and stormwater runoff) within the city.
Philadelphia offers a stormwater fee discount for customers who reduce impervious cover using green
infrastructure practices, including rain gardens, infiltration trenches, porous pavements, vegetated
swales, and green roofs. If a property is retrofitted with any of these features, the Water-Department
will re-calculate that property's stormwater fee based on the 80/20 impervious/gross area formula.
The Water Department is planning to
implement this new fee among its
large-meter non-residential customer
base over a four year period beginning
in FY 2009. However, for residential
and other small-meter customers, the
City recognized that a detailed analysis
of each of the City's 450,000
residential properties would be
administratively complex and have
chosen not to implement this level of
detail for an impervious-based billing
program at this time. As a result, all
residential properties have been
combined and treated as a single land
parcel with the total costs of the 80/20
calculation divided equally among all
households. Under this new fee system,
stormwater costs will be spread out and
shared over a larger customer base, and
calculations show that the majority of
customers will see a reduction or otherwise minor impact on the stormwater component of their water
and sewer bills. For those customers that experience a noticeable increase in their fees, the Water
Philadelphia's new impervious-based fee encourages retrofits of large
impervious sites, such as the Wissahickon Charter School (above),
which now intercepts all parking lot runoff with rain gardens.
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Department will provide site-design recommendations that will decrease the amount of impervious
area on their properties and thus decrease their stormwater fees.
For more information about Philadelphia's new stormwater fee, contact:
Christopher S. Crockett, Ph.D., P.E.
Director - Planning & Research
Philadelphia Water Dept.
(215)685-6368
Chris.Crockett@phila.gov
Case Study: Portland, Oregon
The City of Portland has one of the most well-developed stormwater fee and discount programs in the
nation. The City Council first established a stormwater utility charge based on impervious surfaces in
1977 and has continued to update the program as local regulations and state funding sources change.
The most drastic change came in 2000 when the City Council adopted a new split charge on the utility
bill, with 35% for on-site and 65% for off-site stormwater management. The on-site portion is based on
the pollutant loads and volumes created by a given property's impervious surfaces, while the off-site
portion of the fee covers costs for street drainage, combined sewers and other conveyance and disposal
infrastructure. Portland currently has the highest average monthly fee for stormwater in the U.S., at
$16.82 per month based on a rate of $7.22 per 1,000 square feet of imperviousness.
At the same time that the new split stormwater charge appeared on utility bills in 2000, the City
adopted a discount program for the on-site portion of the fee. Itemization of the bill was motivated by a
desire to improve public awareness about stormwater and the role of individual property owners and
runoff created by impervious surfaces like roofs and parking areas. It also set a convenient cap for the
stormwater discount so that the program creates the revenue necessary to cover costs for large
infrastructure maintenance and updates, such as several ongoing combined sewer overflow (CSO), or
"Big Pipe" projects.
Clean River Rewards is the most recently updated version of the stormwater discount program.
Launched in 2006, it provides discounts to property owners based on the extent and effectiveness of
on-site stormwater management practices that control flow rate, pollution and disposal. Because the on
site portion of the stormwater bill is only 35%, this is the maximum discount received for full on site
management. Different forms and requirements apply to two ratepayer categories, either single-family
homes or commercial, industrial, and multi-family homes. The process for registering is very simple
and straightforward, can be done entirely online and requires only the property owner's signature for
certification.
Single-family homes are given a stormwater discount based on roof runoff management. Property
owners are given a checklist to choose what type of on-site management qualifies them for the
discount. For example, different percentage discounts are given for disconnecting downspouts and
depending on the type of practice collecting runoff, such as a dry well, swale or rain barrel. Partial
credit is also given for ecoroofs, four or more trees over 15 feet tall and for properties with less than
1,000 square feet of imperviousness. To date, over 35,000 residential participants have registered for
Clean River Rewards.
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Commercial, industrial, and multi-family home discounts are based on runoff managed not only for
roof areas, but for paved areas as well. Property owners are asked to calculate the square footage of
impervious area that drains to an acceptable stormwater management practice listed on the form. Over
2,000 commercial, industrial and multi-family home properties have registered for the discount
program.
Bureau of Environmental Services staff are granted access to inspect properties and verify that
stormwater facilities are properly maintained and operated. The City imposes civil penalties and
recovers stormwater discounts in situations where management practices are not in proper working
order. Staff members also provide technical assistance to a range of property types, with special
attention to schools,
hospitals, nonprofits and
government properties to
help them become eligible for
the discount. Overall
participation is expected to
reach 110,000 of the 176,000
ratepayers in Portland.
For more information on
Portland's stormwater charge
and Clean River Rewards,
contact:
Dan Vizzini
Portland Bureau of
Environmental Services
Environmental
Intergovernmental Relations
(503)823-4038
danv@bes.ci.portland.or.us
The Oregon Convention Center saves $15,600 annually on its stormwater bill by
managing roof runoff in rain gardens along the side of the building.
Case Study: Toledo, Ohio
The City of Toledo implemented their stormwater utility as a way to pay for the increasing costs of
managing and maintaining their sewer system. In 1999, the City created a utility that charged fees
based upon the amount of impervious surface area of all the landowners within their jurisdiction. To
establish a framework for the utility, city officials worked with the University of Toledo and private
consultants to measure the amounts of impervious surface within the city.
In 2001, the city also instituted a stormwater fee discount program as a way for non-residential
property owners to reduce their stormwater service fee. The credit program was developed based on
research and evaluation of 15 other communities with existing Stormwater Utilities. The program
identifies several different practices that property owners can install to reduce stormwater runoff and
pollution and establishes different discount percentages for each practice. For example, a property
owner can receive a 10% discount for brownfield reuse, and a 30% discount for installing a forested
buffer or swale. The current guidelines of the program are as follows:
Credits are available only for non-residential property owners who pay a stormwater fee.
The maximum credit receivable is 50%.
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• Credit is awarded only for fully constructed and functional practices.
• The credit is applicable only to the impervious area that is controlled by the practice.
Currently, the credit program is evolving and being refined. The city wants to add rain gardens and
bioretention units as credit worthy practices, and public schools are working with the city and other
partners to install bioretention on school facilities as a means of receiving stormwater credits.
For more information on Toledo's utility, contact:
Patekka Bannister
City of Toledo
Department of Public Utilities
Division of Environmental Services
(419) 936-3774
Patekka.Bannister@toledo.oh.gov
Case Study: Lenexa, Kansas
Lenexa, Kansas is a growing suburb in metropolitan Kansas City that faces increasing pressure from
the impacts of new development, including more homes, roads and other impervious surfaces that
create more runoff volume. In an effort to protect local water quality, as well as prevent flooding and
improve the quality of life for local residents, Lenexa's 20 year comprehensive plan, Vision 2020,
outlines a number of policies and programs to protect land from future development and introduce new
green infrastructure practices that limit imperviousness and manage runoff on site. Part of the 2020
process involved establishing sustainable funding at the local level to purchase lands for open space
preservation and to pay for new and expanded stormwater management programs.
Lenexa is leveraging funds to incorporate green infrastructure into major capital projects, ranging from
updates to existing wet weather infrastructure to development and redevelopment of roads, parks and
other facilities. Funding for these major projects and for the day-to-day staffing and management of a
watershed protection program, Rain to Recreation, comes from four primary sources:
1. Sales Tax
Lenexa taxpayers voted for a ballot in 2000 to add a 1/8 of a cent sales tax levy to support building
stormwater facilities that repair existing infrastructure problems and protect against future flooding
events. The sales tax passed by a 78% margin. It generated $7.2 million between 2000 and 2005 and
sunsets in 2010. The sales tax levy supports a frontloaded capital improvement program.
2. Utility Charge
Lenexa established a stormwater utility and charge to provide comprehensive sustainable funding for
its new programs. The stormwater utility charge is based on the amount of runoff surface on each
parcel of land. Each property is charged $5.50 (in 2008) per equivalent dwelling unit (EDU), which is
measured at 2750 square feet, or about the average runoff surface area of a house with a driveway. The
minimum charge for stormwater management for all residential properties is one EDU. Commercial
and non-residential properties are charged based upon amount of storm water runoff generated and
rates are calculated by dividing total runoff surface area by the number of square feet in an EDU
(2750) to more closely charge these larger properties by runoff contributions to the public system. The
stormwater utility charges are collected through annual property tax roles administered by the County.
The City offered a 25% credit for the first three years of the utility to those rate payers that converted
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their dry bottom detention to wet bottom detention to encourage greater water quality improvement
from existing basins. There was no demonstrated interest at the time and thus the credit was
discontinued to date.
3. New Development Charge
In 2004, the Lenexa City Council
adopted the Systems Development
Charge to require new development
to pay a one-time fee at the time of
building permit as a means for
recovering costs for capital
improvement activities within the
Rain to Recreation program so that
growth pays for growth. Although all
public projects incorporate water
quality treatment and protection into
all new city facilities, the focus of
this fee is to systemically address
water quantity needs through
construction of regional retention
facilities and necessary capital
improvements to streamways, many
of which are protected by the City's
stream setback ordinance. Some
other cities refer to this as a "fee in
lieu" of requiring developers to
construction detention areas on new
development sites (and in this case detention of the 100 year (1% storm) event), and instead directs the
money towards projects that have wider public benefit beyond just water quality treatment. Because
new developments are contributing to the problems of water quantity, Lenexa has required that they
pay into the pool of funds used to build new projects, including the construction of regional watershed
management, multi-use lakes, wetlands and stream restorations.
4. Existing Sources
Continued grants from state and federal sources, such as Clean Water Act Section 319 Nonpoint
Source monies for park construction and Surface Transportation Project (STP) funding for roadway
projects, have assisted with capital and demonstration projects that helped establish Lenexa's Rain to
Recreation program. Other sources of funding also support Lenexa's stormwater program, including
Johnson County Stormwater Management Advisory Council (SMAC) funding supported by a 1/10th
cent sales tax and basic permitting fees charged to developers.
For more information on Lenexa's programs, contact:
Michael Beezhold
Watershed Manager
Public Works Department
City of Lenexa
(913)477-7680
mbeezhold@ci.lenexa.ks.us
www. raintorecreati on. org
Lenexa, Kansas uses revenue from their stormwater utility fee to purchase
land that protects natural resources and serves as public park and
educational areas.
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Loan Programs
In situations where the creation of a stormwater utility is impractical, loan programs provide another
funding option for communities looking to finance green infrastructure projects. There are currently a
variety of federal and state loan programs that can be used to help pay for stormwater infrastructure.
One of the largest, most readily available sources of funding for green infrastructure implementation is
the US Environmental Protection Agency (EPA) Clean Water State Revolving Fund (CWSRF).
Background
The CWSRF is a powerful financing program that provides funding for wastewater treatment,
stormwater management, nonpoint source abatement and estuary protection projects. Today, all 50
states and Puerto Rico operate successful CWSRF programs that have provided over $63 billion in
financial assistance since 1988, with funding generally provided in the form of low interest loans. In
2007 alone, $5.3 billion was provided to fund a wide variety of projects that protect or improve
national water quality. At present, only a small percentage of the CWSRF has been used for green
infrastructure projects; however a growing number of states are beginning to implement green
stormwater technologies with CWSRF loans.
The working framework of the CWSRF is relatively simple. Each year, funds to establish or capitalize
the CWSRF program are provided to states through EPA grants. In addition, states add matching
funds which are then loaned to a wide variety of water quality improvement projects. Although there is
no federal requirement to do so, these loans are usually paid off over 20 years or the useful life of the
project - which ever is less - with repayment commencing within one year of project completion. To
complete the cycle, loan payments, interest and new capitalization grants are reincorporated into the
fund and used for new projects. This is the basis of the revolving funding program.
Stales Match
Federal Capitalization
Granls (20 percent of
federal capitalization)
Federal
Capitalization Provide*
Initial Funding
Estuary
Protection
Bond Haiders
Provide Additional Funding
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Benefits
The CWSRF is an attractive financing option for a number of reasons. For one, CWSRF money is
readily available and can be used for a wide variety of projects, both large and small. State managers of
the CWSRF program are very innovative and can often leverage available resources to meet the
fluctuating demand for funding. In addition, the CWSRF is also an affordable way to finance projects
that improve water quality. Though the money provided is not free, CWSRF loans can have interest
rates as low as 0%, and repayment can begin up to one year after a project is complete. Even better,
CWSRF loans can cover 100% of a project's costs with no matching requirement on behalf of the
borrower. Finally, the CWSRF is a very flexible program. There are countless ways to structure
funding agreements, and states have wide latitude to set interest rates and repayment terms. In many
cases, funds to repay CWSRF loans are generated by the project itself. For instance, wastewater user
fees can be used to repay loans to publicly owned treatment works (POTWs). That said, funds do not
necessarily have to come directly from the project, and it is perfectly acceptable for loan repayment to
come from unrelated funding sources, such as:
• Stormwater Fees
• Homeowner Fees
• Recreational or License Fees
• Dedicated Portion of State, County, Town, or Special District Fees or Taxes
• Donations or Membership Dues made to Nonprofit Organizations
• Individual or Business Revenues
Eligibility
The CWSRF has broad authority to fund watershed projects directly related to (1) POTWs, (2)
implementation of a state's Nonpoint Source Management Plan, and (3) development and
implementation of a National Estuary's Comprehensive Conservation Management Plan (CCMP). The
key to eligibility is determining which of these three authorities apply to a project, if any. Of prime
concern for green infrastructure projects is whether the project is located in a community that is
regulated under the National Pollutant Discharge Elimination System (NPDES) Stormwater program
and, if so, identifying what the NPDES permit specifically requires of the community.
Permitted Communities: If a community is permitted for Stormwater, it is considered a point source,
and therefore projects may be funded as POTWs. These types of projects must be publicly owned. If a
community is permitted and the project is not specifically required by a draft or final NPDES permit, it
may be funded as a nonpoint source project if it is consistent with a state's Nonpoint Source
Management Plan. Nonpoint source projects may be publicly or privately owned.
Non-Permitted Communities: If a community does not have a draft or final NPDES Stormwater permit
or is exempt from permitting, the project may be funded as a nonpoint source project under a state's
Nonpoint Source Management Plan and can include publicly or privately owned projects. Additionally,
any public or private project may be funded as an estuary project if the project is located in a National
Estuary's watershed and is sanctioned by the Estuary's CCMP.
Green Infrastructure Funding
Under current regulations, the CWSRF can fund only the "capital costs" of a water quality
improvement project. However, the CWSRF's definition of capital costs is very broad. In addition to
traditional infrastructure expenditures on pipes, pumps and treatment plants, capital costs also include
things like land conservation, tree plantings, equipment purchases, environmental cleanups and even
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the development and initial delivery of environmental education programs. One of the few things the
CWSRF cannot fund is the operation and maintenance costs of a project, such as periodic cleaning of
pervious pavement.
Some examples of green infrastructure projects that are eligible for CWSRF assistance include:
Land Conservation Wetland Restoration
Reforestation Parks & Greenways
Tree Boxes Rain Gardens & Bioinfiltration Practices
Cisterns & Rain Barrels Permeable Pavements
Downspout Disconnections Green Roofs
In addition to providing funding for green infrastructure projects, the CWSRF can also help reduce the
risk associated with the performance of green infrastructure practices. Some communities may be
reluctant to try these relatively new stormwater management technologies because of concerns that
they may fail to perform as expected. Fortunately, there is a simple way to ease these concerns. Many
states currently charge additional fees on their CWSRF loans, known as non-program income, which
can be used for a wide range of purposes. Using this additional source of income, states may pay for
insurance that can cover the risk associated with the performance of newer green technologies. If there
is sufficient non-program income, states can also use these funds to replace a particular technology that
fails to perform adequately.
Helpful Hint: By incorporating green infrastructure into traditional stormwater infrastructure
projects, POTWs can use CWSRF funds to pay for land acquisitions in public right-of-ways that
would not otherwise be authorized. Here is how:
Under current regulations, POTWs cannot receive CWSRF funding for land, including right-of-
ways, unless that land is integral to the wastewater treatment process. However, percolation of
stormwater through the soil matrix is often essential to the operation of green infrastructure
practices, many of which can be conveniently located in public right-of-ways. Thus, because green
infrastructure practices can utilize the soils and plants in a right-of-way to clean and infiltrate
stormwater, the land in that right-of-way becomes integral to the treatment process and is therefore
eligible for CWSRF funding.
Case Study: Ohio CWSRF Program
The Ohio CWSRF program recently provided over $1.1 million in low interest loans to Hidden Creek,
Ltd., a residential development company, to fund the installation of a variety of green infrastructure
practices that protect the Big Darby Creek watershed - one of the highest-quality aquatic ecosystems
in the United States. Home to 25 rare or endangered species, this watershed encompasses 557 square
miles in central Ohio and has been recognized as one of The Nature Conservancy's "Last Great
Places" in the western hemisphere.
When a large tract of highly sensitive agricultural land within this watershed was put up for sale,
Hidden Creek Ltd. bought the property and designed a housing project to demonstrate that
development can be both environmentally sensitive and financially profitable.
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With the help of CWSRF funds, a
comprehensive set of actions were
taken to limit the amount of runoff
generated from the development
project, including the construction of
vegetated swales for stormwater
treatment, restoration of wooded
stream buffers, and the establishment
of emergent wetland habitat. In
addition, 230 acres of the riparian
stream corridor within the
development have been protected via a
conservation easement held by the
Natural Resources Conservation
Service. A program has also been
developed to educate homeowners and
housing contractors about watershed
protection and related deed restrictions
attached to each property. Hidden
Creek, Ltd. received a national wetland award for land stewardship and development from the
Environmental Law Institute for their watershed protection efforts, and has repaid the CWSRF loans
with revenues from the sale of the housing lots.
The Big Darby Creek watershed provides habitat for 86 species of
fish, 35 species of reptiles, and 170 species of birds.
Resources
University of Maryland, Environmental Finance Center.
http://www.efc.umd.edu/
Florida Stormwater Association, Establishing a Stormwater Utility.
http://www.florida-stormwater.org/manual.html
National Association of Flood and Stormwater Management Agencies, Guidance for Municipal
Stormwater Funding.
http://www.nafsma.org/Guidance%20Manual%20Version%202X.pdf
Black and Veatch Stormwater Utility Survey 2007
http://www.bv.com/Downloads/Resources/ems brochures/rsrc 2007StormwaterUtilitvSurvey.pdf
EPA's Financial Assistance Comparison Tool (FACT)
www. epa. gov/owm/cwfmance/cwsrf/fact.htm
EPA's Guidebook of Financial Tools
www.epa.gov/efmpage/guidebook.htm
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