ENVIRONMENTAL  FINANCIAL ADVISORY
    M embers


 Karen Massey, Chair

  Helen Akparanta

    Aural Arndt

    William Cobb

    Edwin Crooks

     Hope Cupit

     Lisa Daniel

  Marie Do La Parra

  Donna Ducharme

    Rick Giardina

 Ann Grodnik-Nagle

Heather Himmelberger

   Jeffrey Hughes

   Philip Johnson

     Mark Kim

    Suzanne Kim

  Courtney Knight

    Thomas Liu

  James MacAdam

  Mathilde McLean

 G. Tracy Mehan, III

   Wayne Seaton

   Blanca Surgeon

   Joanne Throwe

   Leanne Tobias

   Jeffrey Walker

 Jennifer Wasinger

   Richard Weiss


  Michael Shapiro
    Designated
   Federal Official
February 26, 2016

Dr. Andrew Sawyers, Director
Office of Wastewaler Maiagement
United States Environmental Protection Agency
1200 Pennsylvania Avenue, NW
Washington, DC 20460

Dear Dr. Sawyers:

The Environmental Financial Advisory Board (EFAB) is pleased to present you with recommenda-
tions on how the Water in frastructure Resiliency and Finance Center (WIRFCf can best support com-
munities across the country in developing dedicated sources of revenue for stonnwater and green in-
frastructure.

Under your leadership, EFAB was issued a charge from the U.S. EPA's Office of Water in May 2015
to identify innovative ways WIRFC could help local governments develop dedicated stonnwater reve-
nue mechanisms. A work group was soon fanned and charged with (1) identifying the common chal-
lenges to developing a dedicated stonnwater revenue stream, {2} outlining the steps municipalities
should take to develop a dedicated source of revenue, and (3) noting how WIRFC could use its re-
sources effectively to help with each step.

The EFAB believes  that the question of funding for stomivvatcr and green infrastructure should jp
beyond advancing only the adoption of slormwater utility fees and should include a variety ofoptions
that best fit a community's social and geographic profile as well as its economic and political struc-
ture,

The EFAB identified several key barriers to implementation that included political, legal, geograph-
ical, equitable, administrative, financial, and educational challenges,  EFAB identified several oppor-
tunities for the U.S.  HPA to play a significant role in helping local governments overcome these ban>
ers. Specifically, EFAB recommends utilizing WIRFC to help local governments dctcnninc specific
costs relating to stonnwatcr management, evaluate a variety of revenue options in more detail, exam-
ine equitability and affordability concerns more closely, create an implementation framework for the
collection and segregation of revenues, utilize technology more often in determining costs, and com-
municate effectively with stakeholders. For WIRFC to focus its attention on providing support to
local communities in these areas would go a long way in expanding siomivvater financing mecha-
nisms nationwide. EFAB feels that providing local  governments with access to targeted training, rev-
enue options, case study examples, technology resources, and reliable cost data will empower com-
munities across the country to expand their funding of stonnwater and green infrastructure.

We are pleased to provide you with the detailed results of our recommendations in a document enti-
tled "Developing Dedicated Stonnwater Revenocs." We hope that you find our analysis and specific
recommendations valuable and thank you for the opportunity to assist you with this charge.

Sincerely,                    /
Karen Massey, Chair
Environmental Financial Advisory Board

Enclosure
                              Innovative and Cost Effective Environmental Protection

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Environmental financial Advisory Board Report: Developing Dedicated Starmwater Revenues
Agency Charge;
HOW CAN WIRFC BEST SUPPORT COMMUNITIES TO DEVELOP DEDICATED SOURCES OF REVENUE FOR
STORMWATER AND GREEN INFRASTRUCTURE PROGRAMS?
WIRFC will focus on supporting the development of dedicated sources of revenue for community
storm water and green  infrastructure  programs. Managing stormwater is a key challenge for many
communities across the country whether the motivation Is flooding, water quality, and water quantity or
community revitalization. There are approximately  8,000 local governments that are required by NPDES
permit to implement  stormwater programs.   Financing  these  programs and  encouraging  green
infrastructure approaches is a priority and a challenge for the U.S. EPA and many communities.

WIRFC requests that EFAB identify barriers to communities to develop dedicated sources of revenue for
stormwater and green infrastructure programs and  ways to address those barriers. Identify actions that
WIRFC, together with its partners, could take to propagate more communities with dedicated revenue
sources.
introduction of Agency Charge and Statement Regarding framework of Paper
The Environmental Finance Advisory Board (EFAB) has been charged with recommending innovative ways
in which the new Water Infrastructure Resiliency and Finance Center (hereafter known as WIRFC) can best
support communities across the country in developing dedicated sources of revenue for stormwater and
green infrastructure,  EFAB will  address this charge by (I) identifying the common  challenges to
developing a dedicated storm watt r revenue stream,  (2) outlining the steps municipalities should take to
develop a dedicated source of revenue, and (3) noting how WIRFC could use its resources effectively to
help with each step.

Decisions about stormwater financing involve economic as well as political considerations.  Local
governments must decide what stormwater services to provide, assess what the costs and benefits will
be for those services, and determine how to spread those costs among their various constituents. They
must take into consideration what they are mandated to do, how climate change may be impacting their
stormwater investments, what projects to prioritize, and how best to utilize limited resources to create
and deliver the most cost-effective program that will ultimately achieve the desired stormwater goals,
Controlling stormwater has always been important for water quality, but as the climate changes, it is also
important for storm resiliency and protecting neighborhoods.

As EFAB  sees  it, there  are key barriers to  overcome that  go beyond the current capacity of many
communities and would be appropriate focus areas for WIRFC to help communities overcome and build
capacity. The challenges include but are not limited to the following:
    «   Political support.  Gaining buy-in and support for stormwater financing programs from elected
       officials and key citizen groups can be challenging.  Raising and maintaining political will requires

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Environmental Financial Advisory Board Report; Developing Dedicated Stormwater Revenues
       focusing on the Idea that Stormwater financing is necessary, important, fair, and not just another
       new tax. Developing Stormwater champions takes time and resources.
       Legal constraints. Legal barriers to establishing Stormwater funding mechanism are varied. There
       are several states in the U.S. that explicitly prohibit Stormwater utility fees. There are other states
       that have enabling legislation to authorize utility fees, but, despite this, some local governments
       are concerned that implementation could result in lawsuits and future legal challenges related to
       setting up and administering a dedicated Stormwater funding mechanism. In some states, the
       wording and structure of enabling legislation that authorizes a dedicated fee structure for
       multiple partner municipalities is confusing for localities that are too small to pursue a stand-
       alone structures. Such is the case in Pennsylvania where regional approaches are being pursued
       in the counties of  Blair,  York, Lancaster, and Montgomery, but, even there, one of the major
       barriers to implementation is concern about the confusing details of the enabling legislation and
       fear that irn pie mentation won't conform and will be mired in legal challenges.  The  lack of
       enabling legislation authorizing Stormwater utilities  in most  states,  vague and ambiguous
       statutes, and the lack of financial resources to pay for  legal disputes are major barriers and
       deterrents for many communities.
       Geographical jurisdiction and wfaes. Communities that consist of both urban and rural areas
       within  a single jurisdiction find it difficult to implement Stormwater  or green infrastructure
       projects  given  the potential different  perspectives of  control  and  responsibility.    Local
       governments that share the burden of making water quality improvements to a waterbody may
       not agree on responsibility and therefore do little, if anything, assuming it is the responsibility of
       the other party.  Being  the first community to  enact Stormwater financing  mechanisms is a
       daunting, and often more costly endeavor, because more resources will be needed to navigate
       the process for the first community that attempts it.
       Equity and affordBbiHty concerns. Communities have families with a wide range of income levels.
       The affordability factor ofttn plays into the "who pays" distribution to families or small businesses
       that often  bear  the brunt of Stormwater costs based on their geographic  footprint   Local
       governments seeking to reduce the financial burden on low income families are challenged by the
       fact that many of these families live in areas where flooding is most prevalent, as often these
       floodplain areas are the location of affordable housing and the more Impervious surfaces add to
       the problem.  To be effective in the long-term, Stormwater financing must be fair and transparent,
       but the concerns over equity have proven  to be  a difficult barrier for many urban areas to
       overcome.
       Administrative demands. Implementing and managing a Stormwater financing mechanism can
       be a significant administrative burden for most local governments.  Local governments may lack
       adequate billing  systems, lack scientific  data, have limited GIS capabilities, or have little to no
       internal systems  of administrative support. Stormwater responsibilities are often shared across
       various departments, so coord in at! rt| the needs and available resources can be a barrier that also
       needs to be addressed.

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Environmental Financial Advisory Board Report: Developing Dedicated Stormwater Revenues


    •   Financial resources. With limited existing budgets and available resources, and the fact that other
       local  priorities such as transportation, public safety, and schools  take  priority  in budget
       allocations, stormwater often falls to the end of the funding list. Without additional revenue
       sources, many communities are unlikely to make a dent in their stormwater needs.
    *   Lack of information and awareness. A general lack of understanding within local governments
       and the community regarding the need for financing stormwater activities is another common
       barrier for communities.  Even with the heavy emphasis by EPA on the many benefits of green
       infrastructure, there Is limited awareness of the benefits of incorporating green infrastructure
       projects instead of solely focusing on funding large-scale grey infrastructure projects. There is
       also a common misperception among communities that stormwater management doesn't require
       the same  infrastructure improvements, oversight, overall management, or funding level that is
       needed for drinking water or wastewater1 management. By way of example, a 2015 survey in
       York County, Pennsylvania2 showed that residents believed the average stormwater expenditures
       were approximately $25,000 per municipality,  when  in fact, the average expenditures were
       $250,000, and the actual amount needed to cover stormwater management for most of the
       municipalities was several times higher than what was being spent. This misconception is one of
       the main reasons  behind the limited dedicated funding  spent on stormwater compared to other
       water services provided by a local government.  Financial limitations for stormwater and green
       infrastructure programs are also often compounded by  the lack of information of a community's
       assets, what condition these assets are in, what costs are involved, insufficient scientific data, and
       limited awareness of how to properly manage stormwater and implement green infrastructure
       projects.

In this report, we will discuss many of these barriers and highlight opportunities to provide assistance to
help overcome them  and  enhance and expand stormwater and green Infrastructure financing across the
United States. We will do this by outlining the steps a community should undertake when dive I oping
dedicated storm water funding, which include:
    1.  Develop a stormwater management framework and determine costs associated with managing
       stormwater
    2.  Examine revenue  options and analyze alternatives
    3,  Determine details of revenue structure to fund stormwater costs equitably
    4.  Create implementation framework for collection and segregation of stormwater revenues
    5,  Utilize technology to determine stormwater costs and revenue options
1 To note, in this document, "wastewater* is used to refer to sanitary flows; it does not include stormwater flows.
2 At the time of this report being issued, York County Planning Commission was in the process of making the results
from a stormwater feasibility study available to the general public.  For more information as it becomes available,
please reference http://www,ycpc.org/divisions/long-range-p!anning/stormwater.html#Doc_Reports
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Environmental Financial Advisory Board Report: Developing Dedicated Stormwater Revenues


    6.  Communicate with stakeholders about the need for and structure of the storrnwater revenue
       source

Activities Local Governments Should Consider When Developing o Dedicated Source of Revenue and the
Possibilities for WIRFC to Provide Assistance In The$e Areas
1.  Develop a stormwater management framework and determine and determine costs associated with
managing stormwater
Local governments often struggle with understanding exactly what stormwater revenues are needed to
address their stormwater needs and deliver a level of service that will meet their stormwater goals.  As
municipal  rates and charges are usually established based on a cash-needs approach, the first step
towards developing dedicated sources of revenue for stormwater and green infrastructure programs is
often  determining the expenses that need to be covered.  If the local government currently pays for
managing stormwater as part of its overall wastewater treatment, what portion of the total wastewater
costs are due to managing stormwater?  For instance, how much of the capital investment is specifically
related to stormwater management? Or, in a combined system, how much of the wastewater treatment
capacity was constructed in order to handle stormwater flows? Many small to medium sized communities
often  struggle with understanding what stormwater assets are within their jurisdiction and determining
the condition of the assets. Many stormwater infrastructure systems around the country are very old and
in need of significant replacement  or repair, but without a complete mapping of these systems, which
many communities do not have, replacement is not occurring until an emergency  occurs that costs much
more than a repair would have cost if a proper asset management program had been in place. In light of
the impacts that changing climate conditions has on aging assets, understanding location, age, and overall
condition of existing assets is more critical than ever as communities begin to assess true costs associated
with managing storrnwater.

In addition to improving the way assets are managed, there needs to be more attention paid to municipal
services that are not always attributed to stormwater. For example, if street sweeping services or cleaning
catch  basins provides substantial stormwater benefit as well as solid waste benefits, what  percentage
should be attributed to stormwater? What soft costs related to general program management, education,
and research  should be included?  Also, if the municipality needs to invest in  additional stormwater
management, what will the related costs be? Identifying existing and future costs is complex, and some
municipalities may not know where to begin or what gaps currently exist in their program that need
funding.  Feasibility studies that evaluate costs are not always affordable; therefore, communities'
inability to fund such studies limits the ability to develop dedicated funding.

WIRFC could identify and promote a better understanding of stormwater management costs by providing
the following;

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Environmental Financial Advisory Board Report: Developing Dedicated Starmwater Revenues
       Fact sheets, financial worksheets, templates, and guidebooks. These useful documents about
       the types of storm water casts that are frequently incurred would help municipalities identify their
       own system's comparable costs.
       Asset management training. There are significant gaps in asset management training programs
       for stormwater. This type of technical assistance is available for drinking water and wastewater
       but often overlooked and lacking for stormwater. It is difficult for local governments to develop
       a dedicated funding mechanism for stormwater when they are unaware of their entire system's
       condition, location, and age, WIRFC should also note thit a gap exists in asset management not
       just for urban communities but also for more rural  communities that often overlook soft
       infrastructure such as ditches and culverts that need to be better managed and maintained in
       order to work properly.  Any successful stormwater funding mechanism  should focus on a
       complete understanding and assessment of all assets that need to be managed.
       Workshops and training. Trainings should be led by stormwater financing experts who can assist
       with financial cost analysis and revenue calculations to help prompt better understanding of costs.
       This training could also include what is often unavailable cost Information related to engineering
       estimates,  equipment replacement,  long-term maintenance costs, GIS  and mapping needs,
       monitoring and modeling data, and other budget Items that are often missing or greatly under-
       calculated in stormwater financing programs. Assistance with financial cost analysis coupled with
       asset  management training for stormwater will go a  long way in justifying a dedicated funding
       mechanism to elected officials and citizens.
       Examples of how costs can be allocated between different programs. Showing examples of costs
       for items such as wastewater and stormwater management, street maintenance,  and  the
       additional wastewater capacity that is needed to handle stormwater and  showing allocation
       methodologies for utility administrative overhead would provide helpful background information
       to communities and show how these costs can be allocated.
       Examples of  project management  and operations  and maintenance cost overlap  between
       stormwater, wastewater and drinking water. Providing more information so that each utility
       could think about its system holistically and identify and achieve efficiencies in water-related
       programs would be helpful in informing communities' analysis of costs.
       Cost benchmarks for both green and gray stormwater management options. This would include
       capital and operations and maintenance costs for both options, as well as advice on how a utility
       might evaluate its own needs and establish a cost basis using the benchmarks.
       Examples of  how communities have successfully evaluated their stormwater management
       costs.  There are so many examples of how this is done around the  country in ways that would
       make sense for many local governments.  These need to be collected and made available in an
       easily accessible format and location.

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Environmental Financial Advisory Board Report: Developing Dedicated Starmwater Revenues


    *   A list of funding sources that can be tapped to pay for the initial analysis, If such funding sources
       exist. This information should be updated often and preferably available on a state by state or
       regional basis, if possible.

Develop a Framework/Design Requirements, One important facet of stormwater management and the
estimate and public-private  allocation of stormwater costs is the community's stormwater design
requirements.  Therefore, when developing a stormwater charge, each community must develop (or
review existing) guidelines for the design and construction of stormwater management systems, including
performance requirements for stormwater  release/detention.   The community must  also develop a
framework for ongoing review of such instaltations and could provide mechanisms for granting credits or
fee allowances based on a property owner's installation of stormwater management infrastructure on
his/her private property.

WIRfC could assist local communities on better design requirements by;
    *   Reviewing local  and state manuals  of existing  stormwater  best management  practices,
       summarizing them for communities, and identifying barriers to implementing such guidelines,
       for example, many of the manuals do not give credit to certain types of green infrastructure that
       provide ancillary benefits.

2.  Examine revenue options and analyze alternatives
Stormwater utility fees based on property attributes such as lot size and impervious area have been the
most discussed and fastest growing dedicated source of stormwater revenue in recent years; however,
these fees are not  the only option available to communities.  The legal authority for establishing
stormwater revenue financing mechanisms vary considerably across the country. In some regions/states,
communities have the authority to enact stormwater impact fees on new development to cover the cost
of developing stormwater Infrastructure, and many local governments rely on plan review and permitting
fees to supplement their stormwater management budgets.  In some areas of the country, units of local
government  are  authorized to charge special stormwater or watershed  property taxes.   Property
assessment programs,  similar but distinct from taxes, are used by some units of government to fund
stormwater and green infrastructure installations that benefit a subset of property owners in a particular
jurisdiction.  However, dedicated  revenue does not always  require a new dedicated fee or tax.  Local
governments that are reluctant to create a new fee or tax may be willing to earmark a steady stream of
their existing tax revenue for stormwater purposes.  Finally, in  some parts of the country that rely on
combined sewer systems, a portion of wastewater utility fees may remain an important stormwater
management revenue source.

Local governments often struggle with evaluating which stormwater revenue source would be best suited
for their particular community based on the local economy, culture, geographic makeup, and government
structure.  Deciding how to design and  implement an appropriate revenue structure is often  very
burdensome, so the result is inaction or a system that is perhaps easiest but may not be the most effective.
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Environmental Financial Advisory Board Report: Developing Dedicated Starmwater Revenues


The rate or tax design should be a process of developing an ideal system that can actually be implemented.
There are particular challenging  considerations that need to be considered when developing a financing
mechanism, and the lack of resources  even for things like a feasibility study, outreach activities, or
educational materials are often a hindrance.

WIRFC could help communities overcome these challenges by:
    •  Identifying common revenue sources. WIRFC could collect and disseminate information or data
       to show how different municipalities fund their stormwater needs (e.g., allocation from genera!
       funds, line item on property tax bills, separate stormwater tax districts, component charge on
       wastewater bills, separate stormwater fees, and environmental fees),
    «  Evaluating benefits and appropriateness of different  revenue options.  WIRFC could better
       outline the pros and cons of each funding option and provide references and case study examples
       for each option.  For instance, separate stormwater tax districts, such as in Washington, D.C.,
       could provide communities with the opportunity to leverage identified revenue sources by issuing
       bonds backed by a pledge  of dedicated stormwater fees.  These revenue sources could also
       provide communities with the opportunity to leverage private capital in P-3 or public-private-
       partnerships.
    •  Providing technical assistance to evaluate best options. All communities differ in terms of
       financing needs and their ability to implement a financing program. Deciding what may work best
       under specific local constraints (e.g.,, political, administrative, economic, etc.) can  be hard for a
       community to self-evaluate.  The outside perspective of a technical assistance provider can offer
       an expert, politically-independent opinion regarding best options for a community. WIRFC could
       provide this by leveraging the Environmental Finance Centers (EFC) across the country, working
       with other EPA grant programs to provide assistance, and leveraging partnerships with non-profits
       and foundations that have similar priorities but are yet to provide this type of technical assistance.
    •  Hosting webinars.  WIRFC could help promote and emphasize  stormwater financing options
       through webinars given  by its existing partners and grant recipients such as the  EFC's, the Water
       Environment Federation (WEF),  the International City/County Management Association (ICMA),
       TetraTech, and others.
    «  Developing decision support systems for evaluating most suitable financing option. Dashboards
       and other decision support system software and tools are very useful for identifying, evaluating,
       and educating local governments about the need to enhance and improve their water  programs.
       They can also be developed for helping communities undertake the process of evaluating suitable
       funding options by asking the  right questions and showing  an analysis of options  based on
       community information  such as  local capacity, size of the community, regulatory drivers, etc.
    •  Promoting demonstration projects.  WIRFC could promote existing grant programs or develop
       new grant programs to provide planning resources; WIRFC could also provide technical assistance,
       as noted above, to communities that have or are pursuing dedicated revenue sources and then

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Environmental Financial Advisory Board Report; Developing Dedicated Stormwater Revenues
       highlight these success stories and document the process used. This would be especially useful
       in areas around the country that have few funding mechanisms in place,
    •   Developing and promoting resource guides. There are few resource guides on how to develop
       appropriate  programs that are right for various sized communities; WIRFC could develop a
       resource guide. There are some guides at the regional level (e.g.,, Florida's guidebook) that could
       serve as a starting point for WIRFC,
    «   Developing and promoting case studies. WIRFC could review, collect, and make more readily
       available the many examples of stormwater tax districts and fees and provide information on their
       credit structures, ensuring that successful examples are being shared.

3.  Determine details of revenue structure to fund stormwater costs equitably
It is important to note that many local governments have difficulty in fairly  identifying the impacted
parties or potential beneficiaries of stormwater projects.  Most  stormwater projects are implemented
because of the need to improve  water quality or control water quantity, but there  is a need at the local
level to create a  more equitable  process for any financing mechanism that is imposed on various users.
Assistance at the local level to  identify who benefits from  stormwater improvements and how the
improvements will impact them needs to be spelled out clearly to the citizens. This analysis helps to gain
buy-in, but it is usually not well  articulated by local governments to their citizens and  businesses.
Additionally, universities and large subdivisions may also have their own stormwater permits to meet and
often do not coordinate with the county or municipality in which they are located. A lack of coordination
between permit holders can result in costlier implementation of best management practices, duplication
of outreach efforts, and inefficiencies in overall operations and maintenance programs. Collaboration and
coordination are often lacking locally because of the lack of understanding of how costs can be lowered
and water quality improved by working together.

Opportunities to overcome these challenges that could be facilitated by WIRFC include:
    »   Developing new resource material highlighting the benefits of collaboration.  WIRFC could work
       with other EPA offices, the EFC's, and non-profit organizations to promote the many benefits of
       collaboration across permit holders to lower costs and create efficiencies.
    •   Assisting In cost recovery evaluations. WIRFC could help localities examine what impact different
       structures will have on recovering costs fairly from the beneficiaries. Developing a process for
       clearly defining the  impacts on potential users and benefits.  There is a need to identify
       disconnection and barriers where people/organizations would have a clear  benefit but wouldn't
       pay a fee (e.g., DOT}. WIRFC could help develop a process by which  communities could identify
       such parties.
    •   Considering affordabllity of stormwater revenue sources. WIRFC can help  provide mechanisms
       for local governments to evaluate the affordability impact on various classes of customers either
       through the EFC's or through other grant programs.

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Environmental financial Advisory Board Report; Developing Dedicated Stormwater Revenues


    »  Developing basic tools to assess financial impacts. WIRFC can provide different financing options
       for different customers either through a dashboard spreadsheet tool or through other decision
       support systems.
    •  Providing afford ability data.  There has not been much written specifically about storm water fee
       affordability or segmentation, and this is an area where WIRFC could add value by collaborating
       with EPA to  refine the financial capacity framework and collaborate with municipalities in their
       individual fee analysis,  Seattle  and Portland could provide |ood examples of stormwater
       afford ability considerations,

4.  Create implementation framework for collection and segregation of stormwater revenues
Segregated stormwater utilities can provide a dedicated source of revenue for stormwater in the long
term, but such separate utilities will not be adopted by all local governments.  Many local governments
will pursue combined utilities for stormwater, drinking water, and wastewater  to share costs across the
three systems and create economies of scale. Other I oca I govern merits may seek stopgap funding sources
such as tapping into general reserves or one time federal and state grants. As EPA is aware, most of these
stopgap-funding sources  may pay for capital improvements, but  they  won't  cover operations and
maintenance costs.  Most communities don't realize this fact and are consistently seeking capital funding
alternatives to pay for stormwater and green infrastructure capital projects without consideration of
ongoing  O&M needs.  WIRFC should promote stormwater financing in  ways that would prompt a
discussion and understanding of what the best options are for a community.

if the creation of a distinct legal entity, fee, or tax is being considered by a community, WSRFC coutd assist
by doing the following:
    *  Sharing information  about communities  that  have  successfully established a dedicated
       stormwater utility fee or watershed tax. These communities could serve as models, and ideally,
       be willing to act as mentors to the new utilities,
    •  Acting as a  facilitator to make connections  between communities within regions whenever
       possible to help foster and guide those considering forming a separate stormwater utility or tax
       district. Peer-to-peer learning has been found to be one of the most effective ways of initiating
       change at the local level. Hearing firsthand from communities that have implemented a financing
       program and learning how to overcome potential challenges can be compelling to communities
       that are unsure of how best to move forward.
    «  Supporting more training activities or information guides on outlining the step-by-step process
       used to create a stormwater utility, and provide specific guidance on how to overcome potential
       barriers based on local case study examples. Guidance on setting up an equitable program,
       setting up the most appropriate  rate  system, getting buy-in from elected officials, and gaining
       community  support is difficult to find but  often requested.  "Empowering communities" is a
       phrase often used by the EFC's across the country, and a step-by-step guidebook on these topics
       is needed to educate communities on what needs to be done to overcome barriers. An important

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Environmental Financial Advisory Board Report: Developing Dedicated Stormwater Revenues


       part of the guidance and information that WIRFC could provide would be how to combine the
       message about the importance of managing stormwater based on a permit obligation or a water
       quality issue with a focus on local assets and improving public health so that the resulting message
       would  resonate with the community. The EFC's that have worked on implementing stormwater
       utilities have found that finding a local issue such as a river, a recreational activity (fishing, hiking,
       trails,  and kayaking),  a public  health or safety concern,  home  value, or a  beautification
       improvement is one of the most effective ways of getting a stormwater financing mechanism in
       place.

If the community is not interested in creating a separate stormwater utility but would like to establish a
dedicated source of funding for stormwater purposes, WIRFC could assist by;
    *  Providing examples of systems that have established funding sources without establishing a
       separate stormwater utility.  These examples could include a list of references with first-hand
       experience with  issues such as establishing reliable means of  budgeting or appropriation or
       segregating revenues at the time of collection (e.g., from tax or other water revenues}.
    •  Promoting more activities where successful examples can be shared and providing mentoring
       opportunities. As mentioned above, peer-to-peer learning has been found to be one of the most
       effective ways of initiating change at the local level,

5.   Utilize technology to determine stormwater costs and revenue options
Many communities across the United States lag far behind in using technology to assess program costs
and  to  implement financing mechanisms  such  as fees based  on impervious areas.   This lack of
technological  capacity can impede  the  adoption of successful stormwater and green infrastructure
financing mechanisms implemented at the  local  level.   Billing systems  for stormwater financing
mechanisms are also confusing and can be an administrative problem if not implemented properly.  Lastly,
the design and construction of some stormwater  best management practices may not be based on the
most up to date technology or the latest guidelines. Sf stormwater financing mechanisms are to become
more widely adopted, the latest and best information needs to be made accessible to local governments.

Geographical Information System (GIS) Survey, As stormwater runoff is a function of rainwater hitting
the earth, and the effectiveness of stormwater management is frequently measured in inches per acre,
one of the important metrics to consider when developing a stormwater fee is land area, specifically the
impervious land area. Therefore, an important step for most municipalities is to undertake a GIS survey
of impervious land area and incorporate the results into the stormwater charge analysis.

To overcome the gap in GIS survey information, WIRFC could assist by:
    *  Providing case studies  to communities considering a GIS  survey.   These case studies  would
       describe how other utilities have undertaken GIS surveys and incorporated the results into their
       stormwater rates.

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Environmental Financial Advisory Board Report: Developing Dedicated Storm water Revenues
    •   Developing a list of universities with GI5 labs and other capabilities that could partner with loca!
       jurisdictions to support or enhance their GIS needs.  Many GIS labs exist but are underutilized by
       local governments.  Providing an opportunity to identify and connect these important resources
       to local governments would be very beneficial.
    •   Using its influence to reinforce the need to have GIS resources at the local level. Promoting the
       importance of utilizing GIS resources as part of a storm water program would have a big impact
       on local governments trying to assess stormwater financing programs.

Billing Logistics.  Often, there is an ideal and theoretical way to structure a stormwater charge; however,
its actual  billing might  not be technically feasible.  Therefore,  when a  municipality is  considering
implementing a stormwater charge, it must evaluate its billing system and determine if the charge can be
billed by its existing system, how it can be done, or what additional billing  system capacity it needs to
develop to bill such charges.

WtRFC could assist communities in this evaluation by:
    •   Providing case studies and specific information that would describe how other utilities have
       billed stormwater charges or applied billing credits.  These  case studies and additional resources
       could include detailed information about the billing system  each community used.

6.  Communicate  with  stakeholders about the need for and structure of the stormwater  revenue
    source
Developing dedicated stormwater revenue sources generally requires, at a minimum, the support of local
elected officials, and it often requires the approval of voters. Given that stormwater management is not
usually considered a high  priority  among community  needs,  developing effective  communications
strategies  and tools  is essential.  Proponents  must communicate skillfully to  build  political  will and
effectively link stormwater  management with community priorities such as water conservation, flood
control, and  natural resource-based tourism  and  economic development.   The significance of
communications as both an  obstacle and an opportunity is often underappreciated by municipal officials.

The majority of  existing resources on  stormwater outreach and communications do not  address the
politically fraught process of "selling" a new government fee.  A few good resources do exist regarding
messaging and communications  around the development of stormwater  revenue sources (such as:
American   Rivers   httjg://www.americanriver5.orE/initiative/stormwater-sewage/proiects/developing-
messages-for-change-stormwater-communications-research-and-tutorial/ and  Choose  Clean  Water
http://choosecleanwater.orfi/toolkit/l;  however, these are tailored more  toward advocates than to
government agencies and officials who are usually responsible for developing and communicating about
new revenue structures.

In terms of communication, WIRFC could assist by doing the following:

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Environmental Financial Advisory Board Report: Developing Dedicated Stormwater Revenues
    »   Supporting communities In their communications efforts by documenting and analyzing case
       studies of both successful and failed campaigns to develop revenue sources. As a result of this
       analysis,  WIRFC  may be  able to develop useful  resources around effective communication
       principles, key pitfalls to avoid, and methods for developing partnerships needed for successful
       communications campaigns.
    »   Providing more training opportunities (webinars, workshops, etc.) for municipal officials. This
       could be  done in partnership with nonprofits like American Rivers, ICMA, and others that would
       focus on  effective communications campaigns for developing stormwater revenue sources.
    *   Linking local leaders with supportive and potential partner organizations in their region.  There
       are many local partners that can be found to help move the process along faster and more
       effectively. Often, however, these partners are not identified as a resource or otherwise engaged
       in the effort.  Overlooked partners include  city  departments like Parks  and Recreation, Public
       Works, Planning or local  watershed  groups.  Highlighting the importance of engaging these
       partners  early and often wiil make a difference in the outcome.
    *   Acting as a sounding board regarding the community's concerns and provide the community
       with similar state/municipal/utility references of whom to ask questions/advice. Since there is
       no central place for a local government to go for advice, providing a forum or location for getting
       answers  to  overcome  obstacles or  connect  communities' concerns is vital  to a  successful
       outcome.

Additional Resources
For the sake of this report, we have simplified these six steps that a community must take to develop an
effective source of dedicated storrnwater revenues.  However, connected with all of them, WIRFC could
help local communities by providing a bibliography of valuable resource documents, such as:
    *   Reports from:
           o  The National Association of Clean Water Agencies (NACWA) hittp://www.na cwa. o rg/
           o  The National  Resource Defense Council (NRDC) http://www.nrdc.org/
    »   National  Research Council. Urban Stormwater Management in the United States. Washington,
       D.C. The  National Academy Press, 2009,
    *   Western  Kentucky  University. Stormwoter Utility Survey 2014.  Western  Kentucky  University.
       2014.
       httD://wku.edu/enQineering/civil/fpm/swusuryey/wku  swu survey 2014 incorporating rd co
       mments.Ddf
    *   Local Government Stormwater Financing Manual. University of Maryland. January 2014,
       http://efc.umd.edu/jocalgovernmentstorrnwaterfinancingmanyal.html
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Environmental Financial Advisory Board Report: Developing Dedicated Stormwater Revenues


    •   Methods      and      Strategies      for      Financing      Green       Infrastructure:
       http://wmy.efc.sog.unc.e^^
    »   Running Meetings: Lead with Confidence; Move Your Project Forward; Manage Conflicts. The 20-
       Minute Manager Series. Boston, Massachusetts: Harvard Business Review Press, 2014.
    *   Stormwater Utility Fees: Considerations and Options for Inter-local Stormwater Working Group.
       New England Environmental Finance Center.
    •   Auditing  your  Town's Development Code Issue Brief - 9/2013 Environmental Finance Center
       Network
    •   Green Infrastructure Finance Map. University of Maryland Environmental Finance Center. 2014.
       http://efc. umd.edu/gimap, html
    •   Managing Wet Weather with Green Infrastructure Municipal  Handbook, US  EPA 2008
    •   How-to guides currently being compiled into "clearing house" and organized by state and region
    «   Case studies on recent implementations across the country
    •   List of EFCs,  not-for-profits, and  consultants  providing assistance regarding  Stormwater fee
       process

Conclusion
Helping communities develop dedicated Stormwater revenues is a big task for W1RFC to assume. In this
report, we have  attempted to outline some  ideas about how WIRFC might address  this responsibility.
Additionally, we  hope  that WIRFC will have the broader support of  EPA in fulfilling this mission.  If so,
other options for developing mechanisms for Stormwater funding could include the EPA collaborating
with DOT to evaluate highway funding options and the cost/benefit tradeoffs of investing in Stormwater
control. EPA could  aiso promote better collaboration and communication of materials and resources on
the issue of Stormwater financing through state agencies and non-profits that are closely tied to local
governments. Many partners and existing resources are available but are not well known or easily found.
EPA and  WIRFC  could be the catalyst that supports  and better aligns these sectors,  partners, and
resources.
                                                                        Publication S830R16005

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