ENVIRONMENTAL FINANCIAL ADVISORY BOARD
Members
Joanne Throw®, Chair
Brent Anderson
Lori Beary
Janice Beecher
Theodore Chapman
Rudolph Chow
Edwin Crooks
Lisa Daniel
Marie Roberts De La Parra
Yvette Downs
Ted Henifin
Craig Holland
Daniel Kaplan
Suzanne Kim
Pamela Lemoine
James McGoff
Christopher Meister
James "Tony" Parrott
Eric Rothstein
William Stannard
Carl Thompson
Angie Sanchez Virnoche
Richard Weiss
David Zimmer
Designated Federal
Officer
Edward H. Chu
March 30, 2020
The Honorable Andrew R. Wheeler
Administrator
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, NW
Washington, D.C. 20460
Dear Administrator Wheeler:
The Environmental Financial Advisory Board (EFAB) is pleased to submit our report, Evaluating
Stormwater Infrastructure Funding and Financing, which was developed by an EFAB Task Force
in response to Section 4101 of the 2018 America's Water Infrastructure Act (AWIA). Through
extensive assessment and discussion, the EFAB has concluded that current stormwater
funding mechanisms and public education initiatives are not sufficient to confront the
significant needs across the nation. Federal investment is required to address the lack of state
and local funding and to improve multi-jurisdictional stormwater management. Programs and
investments similar to those that support the drinking water and wastewater sectors are
needed for the stormwater sector to close the estimated $7-10 billion annual funding gap.
Local stormwater management costs have been increasing steadily and many communities,
particularly small or disadvantaged communities that are often subjected to the greatest
impact from stormwater runoff, lack a sustainable source of funding for their stormwater
programs. The inability of some communities to establish and maintain sustainable revenue
sources (such as user fees) limits their access to low-cost debt financing to help them meet
the challenge of paying for stormwater infrastructure and management. Further,
communication programs are needed to inform local officials and the general public about the
benefits of investment in stormwater infrastructure and the cost of inaction. Securing funding
for stormwater management is a national problem that requires action now.
With this in mind, we offer the following recommendations:
• Increase federal investment in stormwater infrastructure, including additional grants
and loans to local governments;
• Provide a new construction grant program specifically geared to stormwater and
increase annual funding and make program modifications to the Clean Water Act
section 319(h) grant program;
• Provide additional funds (with no offsets to other programs) for the State Revolving
Loan Fund (SRF) and the Water Infrastructure Finance Innovation Act (WIFIA)
programs;
• Create a federal funding program that will help address household water affordability
issues, similar to the Low Income Home Energy Assistance Program (LIHEAP) for home
energy costs;
• Prioritize the education of elected officials, professional administrative leaders and the
public on the benefit of and need for sustainable local stormwater funding and the
value of stormwater utilities as a way to lessen the stormwater funding gap;
Creative Approaches to Funding Environmental Programs, Projects, and Activities
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• Provide technical assistance and funding to help communities create and maintain sustainable funding
sources and increase operational efficiency;
• Develop a common application for stormwater grants across all federal agencies;
• Provide funding to build and maintain a compendium of stormwater case studies; and
• Promote innovative financing, such as pay-for-performance or nutrient trading, to help reduce costs and
create efficiencies.
These action-oriented recommendations are meant to make better use of existing funding, increase accessibility to
those funds, identify additional funding opportunities, and build awareness for communities and their leaders of
the wide-ranging benefits associated with proactive and effective management of stormwater runoff. Several of the
recommendations include direct engagement of the EPA with state and local agencies. This two-way exchange will
help bridge the gap between the source of clean water regulations (federal) and the most important source of
funding (primarily local). This, in turn, will serve the overall goals of the Clean Water Act and the interests of agencies
and stakeholders. An in-depth discussion of the recommendations is provided in Section 3 of the enclosed report.
Under AWIA section 4101, the EPA was directed to establish a stormwater infrastructure funding task force "to
conduct a study on, and develop recommendations to improve, the availability of public and private sources of
funding for the construction, rehabilitation, and operation and maintenance of stormwater infrastructure" to meet
the requirements of the Clean Water Act. To meet this charge, the Stormwater Infrastructure Finance Task Force
was convened as a workgroup under the EFAB and the EFAB discussed and approved this report and accompanying
recommendations at our public meeting on February 11-13, 2020.
The EPA is required to submit a report to Congress no later than 18 months after enactment of the 2018 AWIA (by
April 2020) describing the results of the Task Force's study and resulting recommendations. We hope this report is
helpful to the EPA and we look forward to your report to Congress on this important matter.
Sincerely,
Joanne M. Throwe, Chair
Environmental Financial Advisory Board
Rudolph S. Chow, Co-Chair
EFAB Stormwater Infrastructure
Finance Task Force
Enclosure
cc: Edward H. Chu, Designated Federal Officer, Environmental Financial Advisory Board
David P. Ross, Assistant Administrator for Water
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Environmental Financial Advisory Board
Members
Joanne Throwe, Chair
Brent Anderson
Lori Beary
Janice Beecher
Theodore Chapman
Rudolph Chow
Edwin Crooks
Lisa Daniel
Marie Roberts De La
Parra Yvette Downs
Ted Henifin
Craig Holland
Daniel Kaplan
Suzanne Kim
Pamela Lemoine
James McGoff
Christopher Meister
James 'Tony" Parrott
Eric Rothstein
William Stannard
Carl Thompson
Angie Sanchez Virnoche
Richard Weiss
David Zimmer
Designated
Federal Officer
Evaluating Stormwater Infrastructure
Funding and Financing
March 2020
This report has not been reviewed for approval by the U.S. Environmental
Protection Agency; and hence, the views and opinions expressed in the
report do not necessarily represent those of the Agency or any other
agencies in the Federal Government.
Edward H. Chu
Printed on Recycled Paper
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Evaluating
Stormwater
Infrastructure
Funding and
Financing
A Report from the Stormwater Infrastructure
Finance Task Force Workgroup of the
Environmental Financial Advisory Board
r
March 2020
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Environmental Financial Advisory Board
Stormwater Infrastructure Finance Task Force
Co-Chairs
Joanne Throwe, President, Throwe Environmental LLC, Bristol, Rl
Rudolph Chow, Director, Municipal Utilities and Engineering Department, City of Redlands, CA
EFAB Members
Lori Beary, Community Development Director, Iowa Finance Authority, Des Moines, IA
Theodore Chapman/ Senior Director, U.S. Public Finance Department, S&P Global Ratings, Dallas, TX
Lisa Daniel, Managing Director, Public Financial Management, Memphis, TN
Yvette Downs, Chief Financial Officer, Sewerage & Water Board of New Orleans, New Orleans, LA
Edward (Ted) Henifin,* General Manager, Hampton Roads Sanitation District, Virginia Beach, VA
Craig Holland, Senior Director of Urban Water, Global Cities, The Nature Conservancy, Arlington, VA
Pamela Lemoine,* Principal Consultant, Black & Veatch Management Consulting, LLC, Chesterfield, MO
Christopher Meister, Executive Director, Illinois Finance Authority, Chicago, IL
Eric Rothstein, Principal, Galardi Rothstein Group, Chicago, IL
William Stannard, Chairman of the Board, RAFTELIS, Kansas City, MO
Angie Sanchez Virnoche, Vice President and Principal, FCS GROUP, Redmond, WA
Invited Consultants
Bethany Bezak, Director, Stormwater Implementation Strategy, Tetra Tech, Inc., San Diego, CA
Jerry Bradshaw, Senior Engineer, SCI Consulting Group, Fairfield, CA
David Bulova, Member, Virginia House of Delegates, 37th District
Janet Clements, Senior Economist, Corona Environmental Consulting, Louisville, CO
Carrie Evenson, Stormwater Program Manager, Stormwater Division, City of Norman Public Works,
Norman, OK
Matthew Fabry, Manager, San Mateo Countywide Water Pollution Prevention Program, City/County
Association of Governments of San Mateo County, Redwood City, CA
Carol Haddock, Director, Houston Public Works, City of Houston, Houston, TX
Laurie Hawks, Project Manager, Brown and Caldwell, Atlanta, GA
Lisa Kay, President, Alta Environmental, San Diego, CA
Drew Kleis, Deputy Director, Storm Water Division, Transportation & Storm Water Department, City of
San Diego, San Diego, CA
Prabha Kumar, Director, Water Advisory and Planning, Management Consulting, Black and Veatch, LLC,
New York, NY
Rebecca Losli, Program Manager, Program Planning Division, Metropolitan St. Louis Sewer District, St.
Louis, MO
John Lundell, Mayor, City of Coralville, Coralville, IA
Ewelina Mutkowska, County Stormwater Program Manager, Watershed Protection District, Ventura
County Public Works, Ventura, CA
Fernando Pasquel, Senior Vice President and National Director, Stormwater & Watershed Management,
Arcadis, Arlington, VA
* Task Force Workgroup Section Leads
* « $
/
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Mike Personett, Assistant Director, Watershed Protection Department, City of Austin, Austin, TX
Andrew Reese, Vice President, AMEC Earth and Environmental, Nashville, TN
Elizabeth Treadway, Principal Program Manager, Wood Environment & Infrastructure Solutions,
Johnson City, TN
Chuck Walter, Director, Stormwater Environmental Utility/Public Works Planning Manager, Sarasota
County, Sarasota County, FL
EPA Supporting Staff
Sonia Brubaker, Director, Water Infrastructure and Resiliency Finance Center
Tara Johnson, Water Infrastructure and Resiliency Finance Center
Ellen Tarquinio, Water Infrastructure and Resiliency Finance Center
Britney Vazquez, Water Infrastructure and Resiliency Finance Center
* « $
//
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U.S. Environmental Protection Agency
Environmental Financial Advisory Board - 2020
Chair
Joanne Throwe, President, Throwe Environmental LLC, Bristol, Rl
Members
Brent Anderson, Chief Executive Officer, RESIGHT, Littleton, CO
Lori Beary, Community Development Director, Iowa Finance Authority, Des Moines, IA
Janice Beecher, Director, Institute of Public Utilities, Michigan State University, East Lansing, Ml
Theodore Chapman, Senior Director, U.S. Public Finance Department, S&P Global Ratings, Dallas, TX
Rudolph Chow, Director, Municipal Utilities and Engineering Department, City of Redlands, CA
Edwin Crooks, Founder and Principal, Greystone Infrastructure Advisors, Great Falls, VA
Lisa Daniel, Managing Director, Public Financial Management, Memphis, TN
Marie Roberts De La Parra,* Chief Executive Officer, BMB Construction Properties, Alameda, CA
Yvette Downs, Chief Financial Officer, Sewerage & Water Board of New Orleans, New Orleans, LA
Edward (Ted) Henifin, General Manager, Hampton Roads Sanitation District, Virginia Beach, VA
Craig Holland, Senior Director of Urban Water, Global Cities Program, The Nature Conservancy,
Arlington, VA
Daniel Kaplan, Financial Services Administrator, King County Department of Natural Resources and
Parks, Seattle, WA
Suzanne Kim, Founder and Managing Partner, Motivate Capital, Tiburon, CA
Pamela Lemoine, Principal Consultant, Black & Veatch Management Consulting, LLC, Chesterfield, MO
James McGoff,* Chief Operating Officer & Director of Environmental Programs, Indiana Finance
Authority, Indianapolis, IN
Christopher Meister, Executive Director, Illinois Finance Authority, Chicago, IL
James (Tony) Parrott,* Executive Director, Metropolitan Sewer District of Louisville, Louisville, KY
Eric Rothstein, Principal, Galardi Rothstein Group, Chicago, IL
William Stannard, Chairman of the Board, RAFTELIS, Kansas City, MO
Carl Thompson,* Vice President, Sales and Marketing, Infiltrator Water Technologies, Old Saybrook, CT
Angie Sanchez Virnoche, Vice President and Principal, FCS GROUP, Redmond, WA
Richard Weiss, Executive Director, Morgan Stanley, New York, NY
David Zimmer, Executive Director, New Jersey Infrastructure Bank, Lawrenceville, NJ
EPA Designated Federal Officer
Edward Chu, Deputy Regional Administrator, EPA Region 7
* Did not participate in finalization of this report
* « $
///
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Table of Contents
1.0 EXECUTIVE SUMMARY 1
1.1 Stormwater Infrastructure Finance Task Force Report and Charge 2
1.2 Recommendations 2
2.0 INTRODUCTION AND BACKGROUND 5
2.1 America's Water Infrastructure Act of 2018, Section 4101 6
2.2 Stormwater Infrastructure Drivers—A New Paradigm 7
2.3 Challenges and Opportunities 7
2.4 Report Overview 8
2.5 Funding Needs Not Included in This Report 10
2.6 KeyTerms 10
3.0 TASK FORCE RECOMMENDATIONS 13
3.1 Allocate new federal stormwater funding 13
3.2 Provide stormwater funding education and technical assistance 18
4.0 SUFFICIENCY OF FUNDING 21
4.1 American Support for Investments in Water Infrastructure (2019) 23
4.2 Black & Veatch Stormwater Utility Surveys (2016 and 2018) 23
4.3 Clean Watersheds Needs Survey 2012 Report to Congress (2016) 24
4.4 Florida Stormwater Association Stormwater Utility Report (2016 and 2018) 25
4.5 Georgia Stormwater Utilities Report (2017) 26
4.6 Southeast Stormwater Association Utility Report (2019) 26
4.7 The Chesapeake Stormwater Network Select Results of the MS4 Needs Survey (2016) 26
4.8 Water Environment Federation MS4 Needs Assessment Survey Results (May 2019) 27
4.9 Western Kentucky University Stormwater Utility Surveys (2013,2016,2018 and 2019) 27
5.0 EXISTING SOURCES OF FUNDING 28
5.1 The Role of the Federal Government in Funding Stormwater Programs 28
5.2 Stormwater Funding and Financing—Types and Uses of Funds 29
5.3 Availability of Funding 45
5.4 Barriers to Obtaining Funding 47
5.5 Summary Conclusions 52
6.0 INFRASTRUCTURE AFFORDABILITY 53
6.1 Infrastructure Efficiency 53
6.2 Financial Capability 55
6.3 Customer Household Affordability 59
APPENDIX I: TABLES AND FIGURES 61
APPENDIX II: MUNICIPAL FINANCIAL REPORTING AND ASSET MANAGEMENT 72
APPENDIX III: CASE STUDIES 74
APPENDIX IV: STORMWATER FUNDING DATABASE 113
* « $
iv
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Acronym List
Acronym
Definition
AWIA
America's Water Infrastructure Act
BMP
Best Management Practice
CBP3
Community-Based Public-Private Partnerships
CSO
Combined Sewer Overflow
CSS
Combined Sewer System
CWA
Clean Water Act
CWNS
Clean Watersheds Needs Survey
CWSRF
Clean Water State Revolving Fund
DWSRF
Drinking Water State Revolving Fund
EFAB
Environmental Financial Advisory Board
ERU
Equivalent Residential Unit
FCA
Financial Capability Assessment
FCI
Financial Capability Index
FEMA
Federal Emergency Management Agency
FSA
Florida Stormwater Association
LIHEAP
Low Income Home Energy Assistance Program
LTCP
Long Term Control Plan
MHI
Median Household Income
MS4
Municipal Separate Storm Sewer System
NFIP
National Flood Insurance Program
NPDES
National Pollutant Discharge Elimination System
O&M
Operation and Maintenance
P3
Public-Private Partnerships
PRI
Program-Related Investment
Rl
Residential Indicator
SRF
State Revolving Fund
USACE
United States Army Corps of Engineers
USDA
United States Department of Agriculture
USEPA or EPA
United States Environmental Protection Agency
WEF
Water Environment Federation
WKU
Western Kentucky University
• • •
v
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1.0 Executive Summary
Stormwater Funding: A National Problem That Requires Action
Effective stormwater management is as integral to American quality of life as effective wastewater
management and delivery of safe drinking water. Polluted rainwater and snowmelt run off U.S.
roadways, streets, sidewalks and roofs into the nation's rivers, lakes and beaches. This polluted water is
typically collected in municipal storm sewer systems consisting of drains, pipes, catch basins, outfalls,
ditches and other facilities. Flood control and flood mitigation are also important aspects of stormwater
management that challenge local towns and communities. Stormwater management needs to be
recognized as a true utility service on par with drinking water and wastewater utility services—and it
needs equitable and reliable funding, just like drinking water and wastewater utilities.
Stormwater management is a critical policy issue because failure to properly manage stormwater runoff
creates significant impacts, including flooding and related property damage, degradation or destruction
of fisheries and habitat, degradation of hydropower facilities, increased costs to downstream users for
water treatment and potential adverse health impacts. Increasing rainfall and flooding events are
exacerbating these challenges to effectively manage stormwater in communities around the country.
Unmanaged or poorly managed stormwater has significant external costs that are borne by citizens,
taxpayers and businesses.
Stormwater knows no jurisdictional boundaries and crosses state, county and municipal borders. And
while stormwater pollution is a principal cause of water quality issues nationwide, adequate funding to
manage its effects lags the investments made in wastewater management and delivery of safe drinking
water by decades. Review of the available information indicates a significant funding gap (approximately
$7-10 billion annually based on the limited surveys that are described in Section 4.0.) for the operation
and maintenance and capital expenditures needed to support stormwater management programs and
infrastructure. However, a comprehensive assessment is needed to fully understand the total cost to
construct and adequately maintain and operate stormwater infrastructure nationally. What is clear is
that current stormwater funding sources are insufficient for currently known stormwater needs.
Federal investment will be required to address both the lack of state and local funding, and to address
multi-jurisdictional stormwater management needs. Drinking water and wastewater management
services in the United States, generally provided through the utility structure, have matured to become
reliable and effective services to communities—with dedicated sources of funding that facilitate access
to capital. Cumulatively, Clean Water State Revolving Fund (CWSRF) programs have provided $138
billion in assistance for wastewater projects since 1985, mainly in the form of low-cost financing to a
wide range of eligible borrowers. Unfortunately, only 1,600 of the 7,550 permitted stormwater entities
in the United States have dedicated stormwater management revenue, including stormwater fees and
taxes.
Current estimates point to a shortfall between identified needs and available state and local funding. As
set forth in the recommendations below, and discussed more fully in the report, the nature of new
federal investment could take a number of different forms that involve education, expansion of existing
• • •
1
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programs and potentially new programs. The federal government can also help by allocating funding for
stormwater programs from existing related programs to ensure that infrastructure is properly
maintained, and that future infrastructure planning, design and capital expenditures are conducted
using industry best practices. Finding funding sources is also a necessary activity for local governments
and utilities that are charged with managing stormwater programs. This report outlines
recommendations for potential sources of funding to deliver effective stormwater management.
1.1 Stormwater Infrastructure Finance Task Force Report and Charge
This report was developed in response to Section 4101 of the 2018 America's Water Infrastructure Act
(AWIA), which directed the Environmental Protection Agency (EPA) to establish a stormwater
infrastructure funding task force "to conduct a study on, and develop recommendations to improve, the
availability of public and private sources of funding for the construction, rehabilitation, and operation
and maintenance of stormwater infrastructure" to meet the requirements of the Clean Water Act.
Specifically, the Task Force was charged with the following tasks:
~ Identify existing federal, state and local public and private sources of funding and financing for
stormwater infrastructure (addressed in Section 5.0).
A Assess how the source of funding and financing affects affordability, including costs associated with
infrastructure finance (addressed in Section 6.0).
# Assess whether these sources of funding and financing are sufficient to support capital expenditures
and long-term operational and maintenance costs required to meet the stormwater infrastructure
needs of municipalities (addressed in Section 4.0).
1.2 Recommendations
Task Force recommendations are presented as items that are practical to implement, actionable at the
federal level and understandable to the public. The recommendations present suggestions to use
existing funding mechanisms, increase accessibility to those funding mechanisms, identify additional
funding opportunities and enhance public education. Recommendations are summarized below;
detailed descriptions of the recommendations can be found in Section 3 of the report. The Task Force's
recommendations are grouped into the following categories:
• Allocate new federal stormwater funding. Given the magnitude of the stormwater needs described
in this report, there is a need for increased federal investment in stormwater infrastructure, with no
off-sets to other programs. Federal grants, loans and new stormwater programs are needed to fund
critical stormwater infrastructure in communities of all sizes across the country and support local
funding sources.
Recommendation: Develop a new and enhanced construction grant program specifically for
stormwater projects, similar to the federal Municipal Construction Grants Program that funded
the construction of wastewater treatment plants.
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Recommendation: Increase annual funding allocation for and modify the Clean Water Act
section 319(h) grant program to allow and encourage local capacity building, utility fee study
and implementation and asset management, and remove restrictions on use of grant funds for
MS4 permit compliance.
Recommendation: Provide additional funds for the CWSRF and Water Infrastructure Finance and
Innovation Act (WIFIA) programs specifically for stormwater. The CWSRF and WIFIA programs
are integral tools among the many infrastructure financing options available to communities.
Whether stormwater receives consideration of its own through a new SRF program or receives
less restrictive eligibility considerations and larger appropriations within the existing CWSRF, it is
the view of the Task Force that stormwater would benefit from a separate, additive, recurring
financial commitment from EPA. This would provide communities an incentive to create
dedicated funding sources to demonstrate financial capacity and capabilities, while still retaining
the flexibility and local control as to the actual method for repayment. This could be achieved by
the implementation of one or more of the following, each of which has associated risks and
opportunities:
I. Create a specific stormwater set-aside in the existing CWSRF framework and increase
awareness/guidance on the CWSRF for stormwater projects, including the Green Project
Reserve program.
II. Create a "One Water" SRF with amounts allocated to drinking water, clean water and
stormwater.
III. Create a new SRF program exclusive to stormwater programs and projects.
IV. Expand the existing WIFIA program (e.g., explicit references to stormwater project
eligibility, priority points for stormwater projects, lower project minimums for bundled
stormwater projects) to allow funding for more stormwater projects or fund the Army
Corps of Engineers (USACE) Corps Water Infrastructure Financing Program (CWIFP), also
established in 2014.
Recommendation: Create a federal funding program (similar to the Low Income Home Energy
Assistance Program [LIHEAP]) to help address household affordability issues for customers who
are economically challenged in paying their water related charges, including stormwater.
Provide stormwater funding education and technical assistance. Educating the public and elected
officials on the need for stormwater funding is critical to the successful implementation of and
community support for funding solutions. In addition, many communities need technical assistance
related to evaluating and securing funding and financing mechanisms.
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Recommendation: Provide funding to educate elected officials, professional administrative
leaders and the public on the benefit and need for sustainable local stormwater funding and
organizational capacity through, for example, the creation of stormwater utilities or the
expansion of existing utilities into the stormwater sector. Sustainable funding for stormwater
infrastructure builds long-term financial capacity, improves operational performance and over
time produces results for citizens and residents. For over two hundred years, this has been the
experience with drinking water and wastewater utilities in this country. The educational goals for
these three audiences are to demonstrate that stormwater management investment directly
benefits the health, safety and economic opportunity for citizens and residents through the
overall improvement of water quality and resiliency of communities.
Recommendation: Provide technical assistance and funding to help communities create and
maintain sustainable and legally defensible funding sources and increase operational efficiency.
This could include assistance with funding need assessments, organization analysis, grant
applications, affordability assessments, integrated planning and/or establishing revenue
instruments.
Recommendation: Provide for a common application for differ en t federal grants applicable to
stormwater across all federal agencies.
Recommendation: Provide funding to build and maintain a compendium of case studies and
other resources to assist users to identify successful stormwater funding and financing
approaches.
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2.0 Introduction and Background
Stormwater management involves diverse activities that span both operation and maintenance (O&M)
and capital programs. The O&M activities, to name a few, typically include the maintenance of
stormwater conveyance infrastructure; good housekeeping practices; land use development and
redevelopment permitting, monitoring, and inspections; public education and outreach; and
management of various other stormwater programs. Capital program management typically includes
asset management, capital projects planning and execution. Needless to say, holistic management of
stormwater O&M and capital program services requires sustainable and dedicated funding.
Stormwater management is widely viewed as a key part of the solution to improving water quality in the
nation's waterways, reducing local flooding/drainage problems and enhancing community resiliency.
However, the challenges related to funding stormwater infrastructure are daunting. The stormwater
sector is still maturing and has traditionally not been funded as a true "utility" operation like wastewater
and drinking water utilities. Meanwhile, EPA has identified urban stormwater runoff as the only major
growing source of water pollution across much of the country. Starting in the 1990s, EPA sought to
reduce pollution in U.S. waterways through regulations and a permit program under the Federal Water
Pollution Control Act, commonly known as the Clean Water Act (CWA). Communities with stormwater
permits include more than 80 percent of the
U.S. population—therefore, stormwater
funding is a national problem that requires
action.
There are no comprehensive assessments of
the funding needed to construct, maintain and
operate stormwater infrastructure nationally.
Recent regional or limited surveys estimate
stormwater management and infrastructure funding needs in the billions of dollars, ranging from $3.3
billion over the next 10 years in Florida alone1 to $7.5 billion per year for only municipal separate storm
sewer system (MS4) permittee activities in the United States.2
EPA estimates that $67.2 billion is needed for stormwater infrastructure and program investments
(MS4s and combined sewer overflows) over the next 20 years.3 The needed investment in stormwater
infrastructure is similar to the level of investment that federal funding programs have covered in the
past to initiate construction of our interstate highway system or to upgrade wastewater treatment
plants.
1 Florida Stormwater Association. 2018. Stormwater Utility Report. https://www.florida-
stormwater.org/stormwater-utilitv-reportl
2 WEF Stormwater Institute. 2019. National Municipal Separate Storm Sewer System (MS4) Needs Assessment
Survey Results. https://wefstormwaterinstitute.org/wp-content/uploads/2019/08/MS4-Survey-Report-2019.pdf
3 U.S. EPA. 2016. Clean Watersheds Needs Survey 2012 Report to Congress EPA-830-R-15005.
https://www.epa.gov/sites/production/files/2015-12/documents/cwns_2012_report_to_congress-508-opt.pdf
While there are no comprehensive
assessments of the funding needs for
stormwater, recent regional or limited
surveys estimate stormwater
management and infrastructure funding
needs in the billions of dollars.
• • •
5
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Funding needs continue to expand as the stormwater sector faces increasing challenges related to
regulatory requirements, water quality degradation, increased flood risk, community resilience, aging
infrastructure and more. The cost of inaction in these areas can often exceed the costs of the
infrastructure. Many communities have no sustainable source of funding for stormwater programs. In
addition, increasing stormwater
management costs at the local level
exacerbate the affordability challenges that
many communities face. While a more
detailed analysis is needed to fully assess
the funding need, it is widely
acknowledged that the stormwater
infrastructure sector cannot fully address
these challenges at current funding levels.
Perhaps the biggest obstacle to closing the
stormwater funding gap is the lack of
political will to increase revenues dedicated
to stormwater investment at the local, state and federal levels. Without leadership, stormwater
infrastructure investment will continue to fall short of annual needs and future generations will be
burdened with failing stormwater systems.
2.1 America's Water Infrastructure Act of 2018, Section 4101
This report was developed in response to Section 4101 of the 2018 AWIA, which directed EPA to
establish a stormwater infrastructure funding task force "to conduct a study on, and develop
recommendations to improve, the availability of public and private sources of funding for the
construction, rehabilitation, and operation and maintenance of stormwater infrastructure" to meet the
requirements of the CWA. AWIA stipulates that the task force comprise representatives of federal, state
and local government and private entities (including nonprofit entities). Furthermore, EPA is required to
submit a report to Congress no later than 18 months after AWIA enactment describing the results of the
task force's study and resulting recommendations.
The Stormwater Infrastructure Finance Task Force was convened under an existing Federal Advisory
Committee, the Environmental Financial Advisory Board (EFAB). Thirteen members of the EFAB with
experience and expertise in stormwater funding and financing were on the Task Force. EPA also initiated
an open nomination process to identify additional experts to advise and support the Task Force. EPA
invited 19 consultants to address gaps in the Task Force's expertise and ensure the Task Force could
complete the required study and recommendations within the stipulated timeframe. EFAB members,
invited consultants and key EPA staff who supported the preparation of this report are presented at the
beginning of this report.
Task Force members and consultants participated in two in-person meetings and in regular telephone
conference meetings to conduct research, develop the study and identify associated recommendations
for consideration by EPA. EPA also solicited public input on stormwater funding through seven public
meetings held across the country in Florida, Massachusetts, Illinois, the District of Columbia, Virginia,
Georgia and Washington; a summary of this public input was provided to the Task Force to assist in the
development of the report. The Task Force report was considered and approved, with revisions, by the
EFAB at a public meeting on February 11-13, 2020.
Stormwater runoff is generated from rain
and snowmeit events that flow over land
or impervious surfaces, such as paved
streets, parking lots, and building rooftops,
and does not soak into the ground. For the
purposes of this Report, the Task Force
looked at stormwater management
activities that impacted communities,
water quality and flooding/ flood control.
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2.2 Stormwater Infrastructure Drivers—A New Paradigm
Before the 1990s, municipal stormwater management was driven mainly by one consideration: convey
stormwater away from our built environment. While federal regulations have added a new focus on
water quality, the Task Force recognizes the need to consider both water quality and water quantity
when evaluating stormwater funding sources and needs. In fact, stormwater management is undergoing
a significant paradigm shift (Figure 1): local programs often have multiple responsibilities, including
water quality, water quantity, floodplain management, resilience planning and response, regulation of
new and re-development, multi-objective planning, ecosystem health, increasing community
expectations for environmental quality. These responsibilities are relevant to stormwater management
in recognition of the broader public concern for infrastructure management and environmental
stewardship.
Figure 1. Graphic representing the growing number of environmental and societal factors that are shifting the
focus of stormwater management.
2.3 Challenges and Opportunities
This report identifies potential sources of funding available to most municipalities (see Section 5.0).
While the length of the list may imply that it is easy to fund stormwater management activities, the
opposite is true; the number of options shows that there is no universal solution, and many types of
• • •
7
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funding must be supplemented by a baseline revenue stream like that found in other municipal-level
utilities. Establishing such a baseline revenue stream for stormwater management programs—programs
that themselves are undergoing such a significant paradigm shift—is extremely challenging and faces
legal obstacles in many places. Garnering community support for an expanding program is difficult
enough. Asking a community to pay for it in the form of user fees or taxes is an even greater challenge.
A municipal stormwater program cannot be funded in a bureaucratic vacuum and in an environment in
which the decision makers and the community are not fully aware of the benefits and challenges of
stormwater management. It can only succeed with the support of the local community and its elected
officials. One of the many barriers to gaining that support is the lack of public understanding about what
a stormwater program is and how it affects quality of life for the average citizen. Municipal stormwater
programs have focused on infrastructure and environmental stewardship but have not always done an
effective job of explaining to the community and elected officials the goals of the programs and why
they are important.
At the same time, the Task Force has observed that municipalities differ significantly with respect to the
distribution of stormwater management and regulatory compliance responsibilities due to variations in
local and state institutional frameworks. Under a new and evolving paradigm, institutional frameworks
often lag behind the functional changes brought about by the new drivers. The distribution of
responsibilities can affect cost-effectiveness, funding and affordability, creating situations with
overlapping responsibilities and a shortage of accountability or leadership for program implementation.
In addition, providing technical assistance and public outreach/education to such a dispersed
community of stormwater managers and programs is a challenge.
While these challenges are daunting, they also represent opportunities to interact with and leverage
other public investments such as transportation, flood protection, public safety, recreation and other
cultural endeavors that fit within the new stormwater paradigm. Municipalities have made great strides
to integrate stormwater projects and programs into these other areas through multi-benefit projects.
But much more must be done to move the needle on the adequacy of stormwater funding.
In summary, the local government stormwater manager is faced with multiple, costly, sometimes
conflicting responsibilities across a wide spectrum of stormwater-related demands—often with little
dedicated funding to accomplish necessary tasks. About 60 percent of the stormwater permittees
indicate that their major challenge is the lack of funding or availability of capital for implementation of
stormwater programs and design, construction and maintenance of stormwater infrastructure.4
2.4 Report Overview
The Task Force was charged with the following tasks:
* Identify existing federal, state and local public and private sources of funding and financing for
stormwater infrastructure (Section 5.0).
* Assess how the source of funding and financing affects affordability, including costs associated with
infrastructure finance (Section 6.0).
4 WEF Stormwater Institute. 2019. National Municipal Separate Storm Sewer System (MS4) Needs Assessment
Survey Results. https://wefstormwaterinstitute.org/wp-content/uploads/2019/08/MS4-Survey-Report-2019.pdf
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* Assess whether these sources of funding and financing are sufficient to support the capital
expenditures and long-term O&M costs required to meet municipalities' stormwater infrastructure
needs (Section 4.0).
The report is organized based on the findings associated with these tasks, as described below.
Section 3.0: Task Force Recommendations
Section 3.0 presents the Task Force's overall recommendations. The recommendations present
suggestions to enhance the use of existing funding mechanisms, increase accessibility to those funding
mechanisms, identify additional funding opportunities and measures to enhance public education. The
Task Force's recommendations are grouped into two categories:
# Allocate new federal stormwater funding assistance.
~ Provide stormwater funding education and technical assistance.
Section 4.0: Sufficiency of Funding
Section 4.0 discusses the difficulty of assessing the capital and long-term O&M funding needed for
municipal stormwater infrastructure in the United States. This section also presents information from
several regional and national surveys that attempt to make these estimates and includes case studies of
stormwater funding challenges in more than a dozen communities across the country. Finally, Section
4.0 describes the reasons why the funding gap exists and continues to grow, as well challenges
associated with finding effective solutions to meeting stormwater funding needs.
Section 5.0: Existing Sources of Funding
Section 5.0 describes the various types of plausible funding sources such as recurring and sustainable
sources, intermittent revenue sources, capital financing sources and one-time sources of funding for
stormwater programs. Even though there are multiple types of funding sources, only a few can provide
reliable, sustainable and dedicated revenue for holistic stormwater management. Perhaps more
importantly, without support from elected officials to develop such dedicated sources of funding where
they currently do not exist, the availability of funding will continue to be limited, leaving most programs
without enough funds to meet all the stormwater community's needs.
Section 6.0: Infrastructure Affordability
Section 6.0 describes how available funding sources and financing options affect affordability of a
municipality's stormwater management program in three key areas:
i Effective management of infrastructure. Defined as industry best practices, such as adopting
proactive asset management, leveraging resources and economies of scale, building resilience and
engaging in risk mitigation, all of which can also improve affordability.
• Financial capability. Defined as the adequacy of a municipality's funding to meet its annual
stormwater O&M obligations and to manage its capital stormwater infrastructure needs,
determined based on delivering adequate levels of service. This sub-section discusses the impact of
different funding sources on building financial capacity and provides criteria for evaluating the
affordability impacts of different recurring, intermittent and one-time funding sources to address
capital and O&M requirements.
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* Customer household affordability. Defined as the impact that the various types of financial
resources have on the users of the system. This sub-section describes traditional and emerging
concepts that are used to evaluate household affordability.
Affordability and willingness to pay can also be impacted by the public and elected officials' lack of
understanding of the need for stormwater services and the benefits of stormwater programs. Therefore,
the Task Force concludes that educating these stakeholders can facilitate the implementation and
acceptance of reliable and sustainable funding sources.
2.5 Funding Needs Not Included in This Report
This report does not address funding needs related to the following programs or activities (which can
complement the goals of local stormwater management programs, but are typically funded by other
federal or local sources):
* Addressing stormwater runoff that causes agricultural water pollution. Most local stormwater
programs focus on urban areas and the associated drainage, flooding, resilience and stormwater
quality needs. These local programs typically do not have legislation that allows them to regulate
agricultural activities. Soil and Water Conservation Districts and other U.S. Department of
Agriculture programs under the Farm Bill, as well as CWA non-point source regulations, address this
growing source of pollution.
* Flood risk identification and mapping. Costs associated with the Federal Emergency Management
Agency (FEMA) flood risk identification and mapping program under the National Flood Insurance
Program (NFIP) are not included in this report, since these federal activities are funded by the NFIP
and flood insurance policy fees.
i Large flood risk management and ecosystem restoration programs. Large programs to address
riverine flooding, navigation, and ecosystem restoration programs conducted by the U.S. Army
Corps of Engineers (USACE) and funded through the Water Resources Development Act are not
included in this report. In some instances, local stormwater revenue is used as the local match for
these large projects, but the bulk of the costs are paid by federal sources.
2.6 Key Terms
To frame and further refine the scope of the required study, the Task Force first agreed on a definition
for stormwater, as well as definitions of associated environmental, technical and other considerations
and drivers for stormwater services.
The Task Force used the following key definitions related to stormwater, stormwater services and
regulatory requirements for municipal stormwater services:
i Municipal stormwater: Surface water runoff, snow melt runoff and drainage from public and
private lands in urban areas, typically collected in MS4s consisting of drains, pipes, catch basins,
outfalls and ditches and conveyed to nearby streams, rivers, lakes, estuaries, basins, wetlands and
oceans, carrying with it a variety of urban pollutants.5 Stormwater control measures (e.g.,
5 Adapted from National Association of Flood and Stormwater Management Agencies. 2006. Guidance for
Municipal Stormwater Funding, https://www.epa.gOv/sites/production/files/2 iocuments/guidance-
manual-version-2x-2 O.pdf
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basins/ponds and green infrastructure—bioswales, filters, infiltrators, pollutant traps, etc.), also
known as best management practices (BMPs), are used to "treat" municipal stormwater by
capturing pollutants to improve water quality and reducing runoff to prevent flooding.
A Municipal Separate Storm Sewer System (MS4): A conveyance or system of conveyances (including
roads with drainage systems, municipal streets, catch basins, curbs, gutters, ditches, artificial
channels or storm drains) that is owned or operated by a state, city, town, borough, county, parish,
district, association or other public body and is designed or used to collect or convey stormwater,
but is not a combined sewer and is not part of a publicly owned treatment works (POTW).6 There
are 7,550 MS4 stormwater permittees in the United States, including more than 6,500 cities.
Communities with MS4 stormwater permits serve more than 80 percent of the U.S. population or
approximately 263 million people.7
A Stormwater Operation and Maintenance (O&M): The O&M activities, to name a few, typically
include the maintenance of stormwater conveyance infrastructure; good housekeeping practices;
land use development and redevelopment permitting, monitoring, and inspections; public education
and outreach; and management of various other stormwater programs.
* Stormwater Capital Expenditures: Capital program management typically includes asset
management, capital projects planning and execution.
i Phase I Municipal Stormwater Regulation (hereafter Phase I): A 1990 regulation that requires
medium-sized and large cities, or certain counties with populations of 100,000 or more, to obtain
National Pollutant Discharge Elimination System (NPDES) permit coverage for their stormwater
discharges. There are about 855 Phase I MS4s covered by 250 individual permits.7
* Phase II Municipal Stormwater Regulation (Phase II): A 1999 regulation that requires small MS4s in
U.S. Census Bureau-defined urbanized areas, as well as MS4s designated by the permitting
authority, to obtain NPDES permit coverage for their stormwater discharges. Phase II also includes
non-traditional MS4s such as public universities, departments of transportation, hospitals and
prisons. There are about 7,000 Phase II MS4s covered by statewide General Permits; some states
instead use individual permits.8
A Combined Sewer System (CSS): A system of conveyance that carries and conveys both sanitary
sewage and stormwater flows, in the same pipe, to a POTW. CSS's serve about 43 million people in
about 1,100 communities nationwide.9
* Infrastructure efficiency: The ability to effectively manage the stormwater system infrastructure
and improve affordability through best management practices, including adopting proactive asset
management, leveraging resources and economies of scale, building resilience and engaging in risk
mitigation.
* Integrated planning: A voluntary approach to meeting multiple CWA requirements by identifying
efficiencies from formerly distinct drinking water, wastewater and stormwater programs and
6 Definition from 40 CFR § 122.26.
7 U.S. EPA. 2019. Stormwater Discharges from Municipal Sources. httpsi//www,epa,gov/npdes/storm water-
discharges-municipal-sources
8 Ibid.
9 U.S. EPA. 1997. Combined Sewer Overflows—Guidance for Financial Capability Assessment and Schedule
Development. EPA 832-B-97-004. February 1997. https://www3.epa.gov/npdes/pubs/csofc.pdf
» «
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sequencing investments to address the highest priority projects first. Integrated planning also
encourages multi-benefit, cross-sector sustainable and comprehensive solutions to water resource
challenges.
A Median Household Income (MHI): The middle-income level earned by households in a given area,
intended to represent the economic status of households in that area. Fifty percent of households in
the specified area will earn above MHI, and 50 percent will earn below.
» « <
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3.0 Task Force Recommendations
The Task Force offers recommendations on how existing funding can be used and made more accessible,
as well as on identifying additional funding opportunities. They are intended to be actionable and
understandable to the public. The recommendations are summarized in the Executive Summary and
presented in detail below.
The Task Force's recommendations fall into the following categories:
* Allocate new federal stormwater funding assistance. Given the magnitude of the stormwater
needs described in this report, there is a need for new federal investment similar to the investments
that were made in the National Interstate Highway system and wastewater treatment plant
upgrades. New and increased funding levels of federal grants, loans (e.g., from State Revolving
Funds) and programmatic and technical assistance support to enhance affordability are needed to
maintain sustainable local funding sources. These actions would provide communities an incentive
to create dedicated funding sources to demonstrate financial capacity and capabilities, while still
retaining the flexibility and local control as to the actual method for repayment.
* Provide stormwater funding education and technical assistance. Educating the public and elected
officials on the benefit of and the need for stormwater funding is critical to the successful
implementation of and community support for funding sources. In addition, many communities
need technical assistance related to evaluating and securing funding and financing mechanisms.
Several of the recommendations include direct involvement and interaction by EPA with state and local
agencies. The main goal is for federal actors to provide support to state and local agencies, while also
learning about issues and barriers that confront local agencies. This two-way flow of information and
experiences will help bridge the gap between the source of clean water regulations (federal) and the
most important source of funding (primarily local). This, in turn, will also greatly benefit the overall goals
of the CWA, the involved agencies and the public at large.
3.1 Allocate new federal stormwater funding
Given the magnitude of the stormwater needs described in this report, the Task Force recommends
increased federal investment in stormwater infrastructure, with no off-sets to other programs. Federal
grants, loans and new programs, similar to the Municipal Construction Grant Program, are needed to
fund critical stormwater infrastructure in communities of all sizes across the country and support local
funding sources.
Recommendation: Develop a new and enhanced construction grant program specifically for
stormwater projects, similar to the federal Municipal Construction Grants Program that funded
the construction of wastewater treatment plants.
A Stormwater Construction Grants Program, similar to the Municipal Construction Grants program that
funded the construction of wastewater treatment plants in the 1970s and 1980s, could be developed to
serve as a much-needed jump start to investment in stormwater infrastructure/capital investment. Such
a program could likely be managed through existing SRF programs if new funding sources are identified.
However, funding stormwater management is less straightforward than funding construction of
• • •
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wastewater treatment plants. The program components outlined below could help to avoid some of the
challenges of the original Municipal Construction Grants Program and better tailor a program to
stormwater management.
A The program could require participants to demonstrate capacity or secure financial assurances to
show that they can fund ongoing O&M for grant-funded projects. The technical assistance model
recommended by this Task Force could be used to help evaluate and provide these assurances.
A In many communities, the greatest capital investment need is related to the renewal and/or
replacement of existing stormwater infrastructure. However, communities have indicated a need for
help in prioritizing stormwater asset maintenance and replacement and estimating associated
costs.10 To help meet this need, the construction grant program could fund development of an asset
management plan (or require communities to have one in place that meets certain requirements) as
a first tier of funding for renewal/replacement projects.
i The grant program could require, prioritize or set aside a separate "bucket" of funds for
regional/watershed projects that result in cost savings and greater environmental benefits and help
avoid conflicts associated with implementing different methods for stormwater management across
communities. Similarly, the program could prioritize cross-sector opportunities, such as partnerships
with transportation departments, that result in significant cost savings and/or bring additional
matching funds.
~ The program should not require "shovel-ready projects" and should fund design, feasibility studies
and other upfront costs, particularly for small and medium-size communities.
~ To further encourage participation of small and medium-size communities, particularly those that
are economically disadvantaged, the program could waive or reduce matching fund requirements. It
should also carefully evaluate the needs of these communities and set aside appropriate funds or
tailor the program to better meet their needs.
A The program should fund a wide range of projects and prioritize projects that result in the greatest
financial, environmental and social benefits. Water quantity projects (flood control and mitigation)
should be eligible and be prioritized in consideration of all benefits—not subordinated to water
quality projects.
~ Many stormwater projects, particularly green infrastructure projects, result in multiple benefits. The
grant program could be linked to other federal programs that provide funds for investment in
projects or programs related to these co-benefits (e.g., public health, air quality, energy savings,
economic development). For example, for projects that result in specific co-benefits, related federal
grant programs could provide the required matching funds. This would incentivize these projects
and stretch public dollars toward meeting multiple goals. It would require research and coordination
across relevant programs. This could also be achieved, in part, through the common application for
relevant federal grant programs/agencies, as recommended by this Task Force.
10 WEF Stormwater Institute. 2019. National Municipal Separate Storm Sewer System (MS4) Needs Assessment
Survey Results. https://wefstormwaterinstitute.org/wp-content/uploads/2019/08/MS4-Survey-Report-2019.pdf
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Recommendation: Increase annual funding allocation for and modify the Clean Water Act
section 319(h) grant program to allow and encourage local capacity building, utility fee study
and implementation and asset management, and remove restrictions on use of grant funds for
MS4 permit compliance.
The 319(h) grant program is an important resource to many small and medium-sized local governments,
but the overall limitations, for both funding and implementation, of the program affect the ability of
local communities to effectively use these funds for sustainable stormwater infrastructure. There are
several challenges that communities face using these funds, summarized as funding and implementation
challenges below.
Funding Challenges:
• The overall funding levels of the program are not adequate to meet the large demand of
local communities to meet their critical non-point source needs.
• The allocation, distributed to state non-point source pollution programs, varies from
year to year based on budget authorizations. Therefore, there is no stable platform for
grant awards at the local level.
• There is a need to provide more funding support in an entire watershed, prioritized on
financial capacity.
Implementation Challenges:
• The use of funds for general operational program costs is limited to 10 percent.
Effectively planning and implementing stormwater infrastructure projects often take
significant funds that communities do not have without greater grant assistance. The
limitation on the use of funds for regulatory purposes, and its limitation for operational
costs, should be reconsidered.
• Investment in capacity building through technical, financial and managerial support,
directly by consultation or through use of grant funds, is of critical importance.
Expanding the programmatic criteria for use of Section 319 Grants to address technical,
managerial and financial deficiencies, along with technical and funding support for
comprehensive asset management, will advance local communities' ability to effectively
carry out their role in partnership with federal permitting, state program guidance and
local surface water system operation.
• The current program structure does not allow the use of these grant funds for MS4
permit compliance and consideration should be given to allow for such use, specifically
targeted to allow an exception for communities with limited capacity to address water
quality protection.
* « #
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Recommendation: Provide additional funds for the CWSRF and WIFIA programs specifically for
stormwater. The CWSRF and WIFIA programs are integral tools among the many infrastructure
financing options available to communities. Whether stormwater receives consideration of its
own through a new SRF program or receives less restrictive eligibility considerations and larger
appropriations within the existing CWSRF, it is the view of the Task Force that stormwater would
benefit from a separate, additive, recurring financial commitment from EPA. This would provide
communities an incentive to create dedicated funding sources to demonstrate financial capacity
and capabilities, while still retaining the flexibility and local control as to the actual method for
repayment. Additional funding for stormwater projects could be achieved by the implementation
of one or more of the following, each of which is outlined below with the associated risks and
opportunities:
Create a specific stormwater set-aside in the existing CWSRF framework and increase
awareness and guidance on the CWSRF for stormwater projects, including the Green
Project Reserve program (requires all CWSRF programs to use a portion of their federal
grant for projects that address green infrastructure, water and energy efficiency, or
other environmentally innovative activities)11.
a. Advantages
1. Would not require new federal legislation.
2. Preserves each state's ability to administer the program to maximize
efficiencies and effectiveness specific to its needs.
b. Disadvantages
1. Might not improve best management practices or capability of
communities if the set-aside is viewed by them as an implicit high
likelihood or guarantee of funding.
II. Create a "One Water" SRF with amounts allocated to drinking water, clean water and
stormwater.
a. Advantages
1. Would encourage community creativity and holistic, multi-year
master planning - including resilience and integrated planning - by
way of multi-purpose projects that achieve goals aligned with the
One Water principles.
2. Might be more likely to attract private sector participation,
especially if flood control and stormwater facilities are added as a
private activity bond category as proposed by the Administration in
the February 2018 infrastructure stimulus package.
3. Would provide communities an incentive to create dedicated
funding sources to demonstrate financial capacity and capabilities,
11 EPA. 2012. https://www.epa.gov/sites/production/files/2019-05/documents/gpr guidance change memo 2-
21-17.pdf
* « <
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while still retaining the flexibility and local control as to the actual
method for repayment
b. Disadvantages
1. Would require amending existing enabling SRF legislation.
2. The CWSRF has been in place since 1987 and the DWSRF since 1997;
therefore¦, decades of policy and administrative inertia could pose an
implementation barrier.
III. Create a new SRF program exclusive to stormwater programs and projects.
a. Advantages
1. Replicates programs that have been proven successful for decades.
2. Would eliminate 'competition' with wastewater projects inherent
within the current CWSRF program.
b. Disadvantages
1. Would require the creation and passage of new enabling legislation
to establish a new SRF program.
2. Would create a new layer of bureaucracy with cross over and
potential duplication with the CWSRF program, both of which are
legislated through the same CWA.
IV. Expand the existing WIFIA program (e.g., explicit references to stormwater project
eligibility, priority points for stormwater projects, lower project minimums for bundled
stormwater projects) to allow funding for more stormwater projects or fund the USACE
Corps Water Infrastructure Financing Program (CWIFP), also established in 2014.
a. Advantages
1. Would not require new enabling legislation.
2. WIFIA has already demonstrated the ability to leverage federal
dollars many times over the initial appropriation.
3. The CWIFP has a stated mission to "enable local investments in
projects that enhance community resilience to flooding, promote
economic prosperity and improving environmental quality" which is
consistent with the general aim of stormwater infrastructure.
b. Disadvantages
1. Bundling enough projects together to meet the scope of the WIFIA
program.
2. Administrative difficulty in successfully applying to the program.
Recommendation: Create a federal funding program (similar to the Low Income Home Energy
Assistance Program, or LIHEAP) to help address household affordability issues for customers who
are economically challenged in paying their water-related charges, including stormwater.
m m #
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One of the strengths of using utility fees to fund stormwater management is that the cost of services is
distributed to properties in proportion to the stormwater that properties contribute to a public
stormwater system. This type of industry-accepted fee for service approach is perceived to enable
equitable cost recovery by establishing a reasonable nexus between the demand placed on the system
and the charges that are assessed. However, the addition of a stormwater user fee, however small the
fee maybe, could create an additional burden on low-income households, including the elderly on fixed
incomes, that already struggle to pay the drinking water and sewer utility charges.
To address household affordability challenges, some local governments have established customer
assistance programs to help with drinking water, sewer and stormwater utility fees, using general funds
or other non-utility resources. However, at the local level, particularly in financially stressed
communities, establishing fee assistance programs becomes burdensome, even if statutes allow such
programs. Further, subject to varying state and local statutes, many utilities are unable to establish any
low-income customer assistance programs because establishing utility fee assistance programs using
utility enterprise funds is deemed to violate the fee for service concept. Due to these types of
challenges, elected officials in many communities in the U.S. are reluctant to adopt a stormwater utility
fee funding mechanism.
The federal Low Income Home Energy Assistance Program (LIHEAP),12 in place since the 1980s, helps
qualifying households offset a portion of their energy costs. Expanding LIHEAP — with additional funding
to help offset drinking water, sewer and stormwater utility charges and/or establishing a similar distinct
federal assistance program for drinking water and sewer utilities, including stormwater — could remove
a major barrier to the creation of dedicated user fee-based stormwater funding, at the local level.
3.2 Provide stormwater funding education and technical assistance
Educating the public and elected officials on the need for stormwater funding is critical to the successful
implementation of and community support for funding solutions. In addition, many communities need
technical assistance related to evaluating and securing funding and financing mechanisms.
Recommendation: Provide funding to educate elected officials, professional administrative
leaders and the public on the benefit and need for sustainable local stormwater funding and
organizational capacity through, for example, the creation of stormwater utilities or the
expansion of existing utilities into the stormwater sector. Sustainable funding for stormwater
infrastructure builds long-term financial capacity, improves operational performance—and over
time produces results for citizens and residents. For over two hundred years, this has been the
experience with drinking water and wastewater utilities in this country. The educational goals for
these three audiences will demonstrate that stormwater management investment directly
benefits the health, safety and economic opportunity for citizens and residents through the
overall improvement of water quality and resiliency of communities.
Stormwater, along with drinking water and wastewater, must be approached as part of a
comprehensive "One Water" solution. When stormwater management, sustainable drinking water
12 Low Income Home Energy Assistance Program (LIHEAP). U.S. Department of Health and Human Services. More
information available at: https://www.acf.hhs.gov/ocs/programs/liheap
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supplies and wastewater treatment resources and goals are aligned, communities avoid costs, are
financially sustainable, are safer, are better environmental stewards, and provide better economic
opportunities and quality of life for their residents. FEMA's own hazard mitigation program generally
notes that investments in key stormwater infrastructure alone improve a community's resilience; the
return on investment is four times or even better, through cost avoidance and quicker return to
normalcy after a flooding event than a do-nothing scenario.
Communities with successful water resource management strategies have generally identified financial
needs over multi-year planning horizons. Implementation of "One Water" strategies supported by
appropriate financial resources provide better management of public health, safety, economic and
financial risks. Successful education will help reduce barriers, such as those that may exist under state
law, and will build support to establish forward-looking and sustainable operational capability in
stormwater management and responsible and long-term finance and capital planning. The Task Force
recommends that EPA's Water Infrastructure and Resiliency Finance Center (also referred to as EPA's
Water Finance Center) work with other EPA programs and federal agencies to address this
recommendation.
Recommendation: Provide technical assistance and funding to help communities create and
maintain sustainable and legally defensible funding sources and increase operational efficiency.
This could include assistance with funding need assessments, organization analysis, grant
applications, affordability assessments, integrated planning and/or establishing revenue
instruments.
Many communities would be willing to work toward greater funding self-sufficiency but lack the
support, expertise and initial resources to get started. Federal assistance can help overcome these
hurdles through technical assistance and funding to support the initial activities necessary to create
sustainable funding sources.
Technical assistance may include guidance documents, webinars, hands-on training and support. While
technology should be leveraged to make this assistance accessible to all communities with stormwater
issues, the technical assistance also needs to be proactive. Proactive programs should include reaching
out to smaller communities through circuit-rider type programs with onsite assistance. This technical
assistance program could be established under the EPA Office of the Municipal Ombudsman established
by AWIA Section 5006.
EPA should provide funding in the form of grants or matching funds to support the utility capacity
building, feasibility and needs assessment, grant applications and other activities needed to create
sustainable funding sources. EPA also should provide a database of federal funding opportunities that
can be easily accessed and used by local communities and stakeholders. This online database should be
maintained and updated by EPA to stay current on funding options.
Recommendation: Provide for a common application for differ en t federal grants across all
federal agencies.
Most of the U.S. population lives in large urban or suburban areas, generally associated with
governmental units that have relatively more financial, technological and human resources. However,
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even larger municipalities do not always have sufficient resources to dedicate to securing necessary
stormwater funding. In addition, most individual local governments are associated with small or very
small populations (10,000 or fewer people). These communities are also often rural and often exhibit
below-average income indicators. As such, they may face particular difficulty in accessing the requisite
technical expertise and financial resources needed to prepare applications for federal grants.
The Task Force believes all communities, especially small, rural and otherwise disadvantaged ones,
would greatly benefit from more uniformity to the federal grant application process—perhaps some
baseline commonality to all applications across the federal government irrespective of the agency or
department ultimately administering the grant program. A common application could lessen barriers for
communities if as much of the actual application as possible were exactly the same and not specific to
any particular federal agency or department. The Task Force notes that the federal Paperwork
Reduction Act (44 U.S.C. §§ 3501-3521) was established in 1980 but has not been amended since 1995,
during the infancy of the Information Age. For a comparable example, The Common App13, implemented
almost a generation ago, is now used by nearly 900 colleges and universities across all 50 states,
benefitting more than a million prospective college students. This streamlining and simplification saves
both the applicant and the associated higher education institutions significant time while breaking down
barriers of access and relieving burdens of redundancy.
Recommendation: Provide funding to build and maintain a compendium of case studies and
other resources to assist users to identify successful stormwater funding and financing
approaches.
As part of the 2020 Clean Watersheds Needs Survey, EPA should create a state-level funding evaluation
framework and request that states use that framework to identify barriers and gaps in state enabling
legislation to create new stormwater user fees or restrictions on fee increases. Once information is
received from states, EPA should post a compendium of findings from the evaluation in a publicly
available forum and provide educational materials for local government officials and the public. Further,
Congress should develop an incentive framework (e.g., matching 319 funds or other federal grant or
funding mechanisms) to encourage removal of state-level funding barriers, where applicable.
13 The Common App is a college admissions application that applicants may use to apply to various universities.
More information available at: https://www.commonapp.org/.
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4.0 Sufficiency of Funding
Evaluate whether sources of funding are sufficient to support capital
expenditures and long-term operation and maintenance costs necessary to
meet the stormwater infrastructure needs of municipalities.
Determining the extent of capital and long-term O&M costs necessary to meet the stormwater
infrastructure needs of municipalities in the United States is a challenging task. Many surveys and
studies have been conducted over the past 30 years, each with its own limitations. The surveys and
studies presented below were largely developed within the last four years and represent only a few
resources from the pool. However, these resources collectively indicate the following:
* There are no large-scale, comprehensive, nationally representative numbers on total stormwater
capital and O&M needs.
* While there is no comprehensive survey, it is widely accepted that the needs are great, and the
funding gap is very wide — ranging between $7-10 billion based on the limited surveys that have
been conducted (described briefly below and in detail further in the Section, along with their
limitations).
* The most recent attempt to estimate the need on a national scale was conducted by the Water
Environment Federation (WEF) Stormwater Institute in 2018, with a survey of MS4 permittees that
determined the total annual funding gap for stormwater programs (MS4 compliance activities only)
to be $7.5 billion nationally.
* Other existing surveys evaluated and summarized below have estimated needs ranging from:
o A combined $1.7 billion for the next five years and $3.3 billion for the next 10 years for 137
stormwater utilities in Florida alone.14
o An EPA-estimated total of $67.2 billion for the nation over 20 years.15
o $9.7 billion for capital improvement over 20 years for 67 stormwater utilities in just the
southeastern United States.16
The limitations of these and other surveys are discussed below and point to a potentially significant
underrepresentation of total national need. Many communities have not been able to quantify their
long-term needs or quantify existing spending/annual revenues, which limits the ability to fully capture
funding needs.
* Needs specific to O&M are even less well captured and defined because O&M responsibilities in
many communities are passed to property owners or homeowners associations where the
14 Florida Stormwater Association. 2018. Stormwater Utility Report. https://www.florida-
stormwater.org/stormwater-utilitv-reportl
15 U.S. EPA. 2016. Clean Watersheds Needs Survey 2012 Report to Congress EPA-830-R-15005.
https://www.epa.gov/sites/production/files/2015-12/documents/cwns_2012_report_to_congress-508-opt.pdf
16 WEF Stormwater Institute. 2019. National Municipal Separate Storm Sewer System (MS4) Needs Assessment
Survey Results. https://wefstormwaterinstitute.org/wp-content/uploads/2019/08/MS4-Survey-Report-2019.pdf
• • •
21
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stormwater systems or treatment facilities (best management practices or stormwater control
measures) are located.
4 Revenue for established stormwater programs may be largely generated from taxes or user fees,
which can vary significantly across the country, and capital improvements may be more commonly
cash-financed than debt-financed.
# In some communities, there is a moderate to significant gap between annual revenue and capital
and O&M needs, and lack of funding and financing is a significant concern and priority for
stormwater programs/utilities.
4 Public perception of water infrastructure, including stormwater infrastructure, varies widely across
the country and in each community. In some communities there is widespread support for investing
in the water infrastructure, even if this requires moderate increases in customer charges; other
communities oppose any increase in charges.
The Task Force has clearly identified the need for a
national survey of stormwater needs that includes all
costs related to managing stormwater, from water
quality to flood control. The American Society of Civil
Engineers, in coordination with the WEF Stormwater
Institute, has prepared report cards on the nation's
infrastructure since 1998. The next report card will
include stormwater infrastructure as a specific
category.
The Task Force believes—based on
the many existing surveys on
stormwater funding needs—that the
stormwater infrastructure funding
gap is well into the billions of dollars
per year and will continue to grow if
things are left on the current course.
The Task Force believes—based on the many existing surveys on stormwater funding needs—that the
funding gap is well into the billions of dollars per year and will continue to grow if things are left on the
current course. Lack of action to build and maintain adequate stormwater infrastructure could lead to
costs that far exceed initial costs.
In addition to a review of available surveys and estimates on a broad scale, Task Force members
developed illustrative case studies of stormwater programs in 20 communities across the country
(Appendix III). While not meant to be statistically representative of stormwater programs across the
nation, these case studies highlight the funding challenges faced by large metropolitan communities like
Atlanta, Chicago and San Diego, as well as smaller communities like Coralville, Iowa; Griffin, Georgia; and
Washtenaw County, Michigan. In nearly all of these communities, significant gaps exist between current
funding levels and the annual needs of O&M programs as well as capital investment needs. Stormwater
programs align their level of service with available funding, not typically on the basis of an asset-
management generated, data-supported program. This means programs may not be ensuring that
adequate maintenance levels are achieved and adequate investment is being made in renewal and
replacement of stormwater infrastructure. Some communities acknowledge that their current programs
do not address the impact of more intense, more frequent storms and floods.
There are many reasons the funding gap for stormwater infrastructure exists. While there are many
federal funding programs—including the revolving loan programs, WIFIA, the various USDA programs,
and others—the total available funding falls well short of the need and access can be challenging,
especially for small and disadvantaged communities. Attracting private capital continues to be
* « #
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challenging, as the expected return for third-party capital is mismatched with the risk profile of most
stormwater projects. Without low-cost concessionary debt, there is no compelling desire for outside,
private capital to invest.
Communities across the nation have implemented local stormwater fees that, in isolation, do not create
undue financial burdens on the majority of their customers. Affordability is, however, an issue for lower-
income segments of the population across the nation. While the funding gap is not exclusively related to
affordability, the impact to lower-income segments of the population for all water costs can limit rate
increases and restrict a community's ability to cover costs with fees alone.
Perhaps the biggest obstacle to closing the stormwater funding gap is the lack of political will to increase
revenues dedicated to stormwater investment at the local, state and federal levels. Without leadership,
stormwater infrastructure investment will continue to fall short of annual needs and future generations
will be burdened with failing stormwater systems.
A detailed summary of the resources and surveys evaluated to assess the funding gap is provided below.
4.1 American Support for Investments in Water Infrastructure (2019)
In February 2019, as part of the U.S. Water Alliance "Value of Water" campaign, public opinion
researchers conducted a phone-based survey of 1,000 voters in 47 states (all but Hawaii, Oklahoma and
West Virginia). The goal of the campaign was to raise awareness of the importance of water and water
challenges facing the nation. This survey focused broadly on water infrastructure through the lens of
drinking water and wastewater infrastructure and did not include an explicit stormwater component.
Of the 1,000 respondents, 79 percent ranked rebuilding America's infrastructure as "extremely to very
important," which is consistent with information gathered during similar 2017 and 2018 surveys. In
2019, 83 percent of respondents rated the water infrastructure in their local communities as "very
good" or "somewhat good" (on par with 2016 responses, accounting for reported margin of sampling
error). However, only 49 percent of respondents rated the condition of the nation's water infrastructure
as "very good" or "somewhat good," while 36 percent believe it is "somewhat bad" or "very bad."
While public opinion of the condition of water infrastructure in their own communities remains positive,
nearly four in five respondents indicated that they support developing plans to rebuild America's water
infrastructure and support an increase in federal investment to do so. Of note, 80 percent of
respondents indicated that their drinking water and wastewater rates were affordable and would be
willing to pay a modest amount more to improve local water infrastructure. Additionally, two-thirds of
surveyed voters believe that investments in comprehensive upgrades, replacements and improvement
should be made today, rather than addressed over time as the need arises. The survey did not
distinguish between investments in capital improvements and O&M.
4.2 Black & Veatch Stormwater Utility Surveys (2016 and 2018)
National consulting firm Black & Veatch has been conducting biennial stormwater utility surveys for over
25 years. The 2016 online survey included 74 participants from 24 states. The 2018 online survey
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included 75 participants from 21 states.17 Combined, the surveys included local utilities that served
populations from 86 to 1.5 million people. Respondents to the 2018 survey have a median population
served of 110,500 people and 33,000 accounts. In 2018, 28 percent of respondents indicated that their
stormwater operations were governed as a stand-alone stormwater utility, while 23 percent were
combined with a department of public works and 20 percent each with a drinking water and/or
wastewater utility or other entities.
In the 2016 and 2018 surveys, as well as many previous surveys, respondents cited funding or
availability of capital as the most important challenge to enhancing their utilities' stormwater
management. In 2018, 94 percent of respondents reported that more than 75 percent of their revenue
is derived from user fees. Additionally, survey results showed that the majority (87 percent, on par with
2016 and 2014 responses) of capital improvement projects are cash-financed, as opposed to debt-
financed.
Respondents' 2018 annual stormwater capital improvement program budget ranged from $1,800 to
$143.9 million, with an average of about $7.6 million. According to the 2016 survey, 88 percent of
respondents indicated that they do not have adequate funding to meet all their stormwater programs'
needs, while 85 percent of 2018 respondents indicated that funding was not adequate. This aligns with
survey responses to the same question from the 2010, 2012 and 2014 reports. Neither the 2016 nor the
2018 survey explicitly discussed funding and needs for O&M activities, although 2018 survey
respondents indicated that stormwater utility budgets generally do capture costs for inlet and outfall
maintenance and best management practice inspection and maintenance.
4.3 Clean Watersheds Needs Survey 2012 Report to Congress (2016)
The EPA conducted its most recent Clean Watersheds Needs Survey (CWNS) in 2012 and published the
survey in 2016. The CWNS estimates the capital investment necessary to meet the nation's stormwater
and wastewater treatment and collection needs, based on CWA requirements. Water quality
improvement investments considered in the CWNS included stormwater management. This category
captured costs associated with the planning and implementation of structural and non-structural
measures to control runoff in Phase I, Phase II and non-traditional MS4s.
This voluntary survey captures needs across most states, Puerto Rico, the District of Columbia and U.S.
Territories ("states"). The goal of the survey is to capture a 20-year need nationwide; however, many
states had limited documentation to demonstrate needs over this timespan (most projects are
completed within a 5-year period), so most of the needs captured in the 2016 report only reflect 2012 to
2017 needs.
Information provided by the states captured needs for over 27,000 wastewater facilities and water
quality projects. Of the estimated $271 billion required to meet documented needs, an estimated $19.2
billion was for stormwater-related needs ($67.2 billion for both CSO and stormwater management
needs) over 20 years. This represents a 60 percent decrease from the 2008 CWNS, but this decrease is
17 The following states did not participate in the 2016 and 2018 surveys: AK, AL, AR, AZ, CT, HI, ID, IN, LA, MA, ME,
Ml, MS, ND, NH, NJ, NM, NV, NY, Rl, SD, UT, VT, Wl, WV, and WY. The following additional states did not
participate in the 2018 survey: NE, OK, and MD. In 2018, 33 respondents represented three states, Florida (16),
Texas (10) and Colorado (seven).
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due in part to lower participation in the 2012 CWNS. Three fewer states participated in 2012, and seven
states reported no needs in 2012, which accounted for $7.2 billion of the 2008 survey's needs.
Additionally, EPA's estimate only included projects that had a "storm water quality benefit" and thus did
not include needs associated with flood control projects in the estimates. As a result, states reported
that this modification made it difficult to meet EPA's documentation criteria for stormwater in 2012. Of
the $19.2 billion for stormwater management needs, 45 percent is attributed to conveyance systems, 32
percent for the treatment of stormwater runoff (e.g., ponds, manufactured devices), and the remaining
15 percent for low-impact development and green infrastructure projects (an additional $45 billion in
funding needs is associated with CSO projects).
Additionally, the CWNS only includes projects with site-specific solutions to known water quality
problems and detailed cost information. Needs associated with water quality problems without known
solutions and cost estimates were not captured.
4.4 Florida Stormwater Association Stormwater Utility Report (2016 and 2018)
In 1995, the Florida Stormwater Association (FSA) began performing biennial Stormwater Utilities
Surveys to provide stormwater program information to state and local government managers and policy
makers. The FSA provides questionnaires to the 67 counties and 410 cities in Florida. Of those 477
entities, FSA estimates, 165 local governments have established stormwater utilities. In 2016, 124
utilities responded to the questionnaire; in 2018 FSA received 137 responses. In 2016, 88 respondents
(71 percent) cited user fees as their primary approach to revenue generation. In 2018, 91 respondents
(66 percent) reported the same. In both surveys, about 70 percent of respondents indicated that fees
were primarily based on impervious area.
Eighty-two entities in 2016 and 89 entities in 2018 reported that their stormwater operating budgets are
funded solely by their stormwater fees. The rest (42 in 2016 and 47 in 2018) indicated their budgets
were covered by fees and other "non-fees" including, but not limited to, ad valorem taxes, sales taxes
and gas taxes. The 2016 survey indicated that 44 percent of stormwater capital construction programs
were funded only by fees, while the remainder were funded by fees and non-fees. Responses were very
similar in 2018.
In 2016, 66 percent of respondents reported that their operating budgets are funded only through fees.
Of the 34 percent for which fees and other non-fee funds fund their operating budgets, 45 percent
reported ad valorem taxes as the source of non-fee revenues. Responses to these questions were nearly
identical in 2018.
The 2016 report identifies the annual average revenue generated by each entity's utility fee as $3.6
million, whereas the 2018 report lists the annual average as $3.9 million. Respondents reported a
combined projected capital improvement need of $1.7 billion for the next five years and $3.3 billion for
the next 10 years (per-utility average of $14 million and $35.1 million, respectively). This represents an
increase from 2016 reported total respondent needs of $1.4 billion (five-year need) and $3.1 billion (10-
year need). Respondents were also asked whether stormwater fee revenue was sufficient to meet
administration, O&M and capital improvement needs. In 2018, 33 percent of respondents indicated that
fees were sufficient to meet all or most needs, while 26 percent reported that fees were not adequate
to meet urgent needs. In 2016, responses to the same questions were 39 percent and 37 percent,
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respectively. Respondents were not given the option to indicate whether fees were not adequate to
meet non-urgent needs.
4.5 Georgia Stormwater Utilities Report (2017)
From August 2016 to February 2017, the University of North Carolina Environmental Finance Center and
the Georgia Environmental Finance Authority surveyed 48 stormwater utilities in 27 Georgia counties
regarding stormwater fees. Of the 48 respondents, 23 reported collecting fees through utility bills, while
20 reported collecting fees through property tax bills and five through stand-alone bills. Of the
participants, 31.2 percent indicated they apply unique multi-family residential fee structures. In Georgia,
flat fee structures are commonly used to apply fees for multi-family and single-family residential
properties. Lastly, 93.8 percent of respondents indicated that they charge an equivalent residential unit
(ERU)-based fee for non-residential properties, which is based on the amount of impervious surfaces on
a property.
4.6 Southeast Stormwater Association Utility Report (2019)
The Southeast Stormwater Association conducted its seventh biennial survey of stormwater utilities in
2019, capturing information from 103 respondents representing stormwater utilities from 136
jurisdictions in Georgia, South Carolina, North Carolina, Alabama, Tennessee, Florida and Kentucky.
Ninety-four percent of respondents reported generating revenue from a user fee, largely based on the
amount of impervious area on a property. Annual reported revenue generated by the stormwater utility
fee ranged from $32,000 to $71.1 million, with an average of $4 million. Average monthly utility rates
ranged from $0.62 in Alabama to $5.36 in South Carolina.
Across 67 respondents, the estimated total 20-year capital improvement need is $9.7 billion, with an
average of $144.8 million in need per respondent.
4.7 The Chesapeake Stormwater Network Select Results of the MS4 Needs
Survey (2016)
In 2016 the Chesapeake Stormwater Network surveyed Phase I and Phase II MS4 permittees within the
Chesapeake Bay watershed (Virginia, Maryland, Delaware, West Virginia, Pennsylvania, New York and
Washington, D.C.) to identify funding needs. A total of 137 respondents provided input for the survey.
Seventy-three percent of respondents indicated that their stormwater program is somewhat (45
percent) or very (28 percent) underfunded. Respondents also cited resource limitations and scale of
permit requirements as the most significant challenges to permit implementation.
The majority (65 percent) of Phase I permittees responded that they have an approximate annual
budget of over $1 million. The remaining Phase I permittees indicated the following: 8 percent operating
on a budget of less than $25,000; another 8 percent operating on a budget between $25,001 and
$100,000; 5.4 percent operating on a budget between $500,000 and $1 million; and 13 percent unsure
of their operating budget.
The majority of Phase II permittees (36 percent) indicated that they have less than $25,000 to
implement their programs. The remaining Phase II permittees indicated the following: 21 percent
operating on a budget between $25,000 and $100,000, 8 percent operating on a budget between $500
and $1 million, 7 percent operating on a budget between $100,001 and $500,000, and another 7
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percent operating on a budget of more than $1 million, and 18 percent not sure of their budget
allotment.
4.8 Water Environment Federation MS4 Needs Assessment Survey Results
(May 2019)
WEF's Stormwater Institute conducted a national survey of MS4 permittees in 2018 to identify
permittees' information and technical resource needs and better understand the challenges facing MS4
permittees. A total of 622 respondents represented 48 states and Washington, D.C. The sample size was
statistically significant and generally representative of the distribution of MS4 programs across the
United States, including municipal, non-traditional and state department of transportation permittees.
The survey determined the total annual funding gap for stormwater programs in the MS4 sector to be
$7.5 billion nationally.
Phase I and Phase II MS4 respondents cited lack of funding or availability of capital, aging infrastructure
and increasing or expanding regulations as the most significant challenges to their stormwater
programs. Close to 50 percent of Phase I and II municipal permittees indicated that they do not have
enough money to meet program goals, and that a respective 52 percent and 136 percent annual budget
increase is needed. Respondents also indicated a need for more information on methods for securing
funding and financing. Specifically, respondents indicated needing additional information on "leveraging
additional sources of funding based on co-benefits."
WEF indicates that the number of MS4s with inadequate annual budgets may be underrepresented due
to unwillingness to answer questions that might only raise further questions about their budgeting
process or regulatory compliance.
4.9 Western Kentucky University Stormwater Utility Surveys (2013, 2016, 2018
and 2019)
Western Kentucky University (WKU) has conducted a regular survey of stormwater utilities since 2007.
The WKU team mines publicly available online data on stormwater utilities, in addition to conducting
phone surveys. The survey aims to identify as many stormwater utilities as possible within the United
States and Canada.
The number of identified stormwater utilities has been increasing in each survey. The 2013 survey
identified 1,417 stormwater utilities in the United States, compared to 1,583 in 2016, 1,681 in 2018, and
1,716 in 2019. The 2019 survey reported that 800 of these utilities fund their programs with ERU-based
user fees. These reported monthly fees have generally increased through the years from $4.57 in 2013
to $5.85 in 2019 (median of $4.75), even though the average impervious area based on the ERU has
varied. This is largely attributed to the application of tiered fees and the fee structure that is applied to
residential and non-residential properties.
The Task Force believes, based on the many existing surveys on stormwater funding needs, that a
significant gap exists that is well into the billions of dollars per year. If left on the current course, this gap
will continue to grow.
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5.0 Existing Sources of Funding
Identify existing federal, state and local public and private sources of funding for
stormwater infrastructure and how funding for stormwater infrastructure from
such sources has been made available, and utilized, in each state to address
stormwater infrastructure needs.
Stormwater management at the local municipal level has changed significantly within the last 20 years.
The following are some of the factors that have raised the average cost of stormwater programs
(adjusted for inflation) over what it was 20 years ago:
* The need for more green stormwater infrastructure projects to balance impervious surface within a
watershed for stormwater management.
* The maturation of many water quality programs and the increase in infrastructure maintenance
needs.
* The impacts of more intense rainfall.
* The necessity for resilience planning and implementation of initiatives.
* The realization that underground stormwater systems were reaching the end of their functional
lives, requiring massive rehabilitation and replacement programs.
This cost increase necessitates an evaluation of existing sources of stormwater funding, as well as ways
to either further leverage existing funding sources or identify potential new sources of funding.
5.1 The Role of the Federal Government in Funding Stormwater Programs
To date, the role of the federal government has been to provide minimal funding for selected
stormwater capital projects that are geared toward targeted and limited programs, often with a
significant match required. Availability is further limited by annual appropriations. For example, for flood
resiliency support, federal programs include U.S. Housing and Urban Development Hazard Mitigation
Grants, Community Development Block Grants, FEMA Pre-Disaster Mitigation Programs and Flood
Mitigation Assistance, USACE flood risk management studies and projects, EPA loan programs, etc. Even
though these programs provide small contributions to the construction of capital projects, they do not
provide funding for the bulk of the stormwater needs, i.e., compliance requirements, infrastructure
operations and maintenance, and additional capital expenditures. In addition, most USACE flood risk
management funding is for large projects that typically do not address the stormwater needs of small
communities.
Existing funding has proven inadequate for current and anticipated future costs associated with proper
stormwater management. Certainly, it is not expected that the federal government should meet all
funding needs—but it has opportunities to provide leadership and increased funding to allow local
communities to better address stormwater management needs. The needed federal investment in
stormwater infrastructure is similar to federal funding programs used in the past to begin construction
of our interstate highway system and to upgrade wastewater treatment plants.
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Some local communities may be able to address stormwater management costs by implementing
realistic stormwater user fees or other dedicated funding sources, in concert with the ability to
repurpose existing federal programs. However, communities still will need to confront very real funding
challenges associated with the following:
# Extreme events and large system flooding issues.
i Lack of resources to meet compliance requirements, environmental standards or consent decrees
that go beyond typical water quality issues.
~ O&M needs for stormwater infrastructure (treatment and collection).
i Vast sections of very old and inadequate stormwater piped drainage systems. In many of these
cases sources of the problem exist outside the boundaries of the community.
5.2 Stormwater Funding and Financing—Types and Uses of Funds
In the face of increasing costs, communities across the United States have implemented a wide range of
approaches to fund stormwater programs and related capital projects—but few have the revenue
capacity or one-time influx of funds to support anything beyond small capital projects or ancillary
programs. Stormwater funding tends to fall into three categories:
~ Revenue—an ongoing stable and meaningful flow of funds, including taxes of various types,
franchise fees and stormwater user fees, as well as intermittent revenue from various special fees
and charges.
* Capital financing—targeted capital financing for a specific project, such as state and federal grants,
state and federal loan programs, general obligation or revenue bonds and other short or long-term
loans.
i Other resources/approaches for funding stormwater management, including development by
others—new development and redevelopment creating stormwater infrastructure or partnership
approaches, other in-kind services or volunteer programs, approaches that can shift risk or delay
payment such as public-private partnerships, market-based solutions and other innovative
approaches.
Table 1-1 (Appendix I) provides a stormwater funding matrix that further outlines examples of
stormwater funding currently used by communities, along with advantages and disadvantages of each.
Most communities use more than one source of funding. The following sections further explain the
sources and uses of each type of funding.
* « <
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5.2.1 Revenue-Based Funding Sources Used to Pay Ongoing Operation and
Maintenance and Debt Service of the Stormwater System
The majority of ongoing stormwater program costs must be funded with revenue from dedicated
recurring sources, making revenue-based funding the "backbone" of stormwater funding. Revenue-
based funding tends to fall into two broad categories: recurring, sustainable revenue sources and
intermittent funding.
5.2. J. I Recurring, Sustainable Revenue Sources
Almost all activities undertaken in a stormwater program are ongoing (excluding capital costs such as
construction) and therefore must have ongoing, stable, dependable sources of revenue. Activities that
require recurring, sustainable revenue include ongoing services to plan, rehabilitate and maintain the
stormwater system, conduct programs to meet regulatory requirements and accomplish a variety of
ancillary responsibilities related to stormwater management.
5.2.1.1.1 Taxes/General Funds
Taxes (of several types) are by far the largest source of revenue for local governments. Such taxes,
unless dedicated, are placed into a local government's "general fund." While the types of taxes assessed
and the proportion of revenue generated from each vary from state to state, the bulk of local
government revenue most commonly comes from property tax and income tax assessments. This is true
even though communities are increasingly looking to other revenue sources such as stormwater utility
user fees.
* Real estate/property taxes, also called ad valorem taxes, are charged to property owners as a
percentage of the assessed value of real estate or personal property. They are administered by local
governments and require voter approval. Property taxes are an important form of revenue for local
governments; they are often used as a funding mechanism for parks and open space measures.
# Individual income taxes, also called personal income taxes, are assessed at the state and federal
levels (and, in some places, also at the county or municipal levels).
~ Specialized taxes can be levied on a large number of activities, including property transfer,
occupancy, gambling, estate, motor vehicle sales and licensing, etc.
The primary advantage of using general fund taxes to fund stormwater programs is that they can
provide a reliable (but fluctuating) revenue stream. They are also common and well understood.
However, there is significant competition for such funds, with most communities finding it difficult to
cover all general fund activities (e.g., police, fire, streets, general government) with available funding. As
a result, communities often find that stormwater programs are prioritized lower than other municipal
needs, and thus risk losing funding from year to year unless there is a dedicated source of funding for
the stormwater program. Another disadvantage is that the use of general fund tax revenue as a
stormwater funding source raises equity issues, as system revenue recovery generally bears no relation
to use of, or benefit from, a stormwater system. This causes an inequity between the level of service
provided and the cost property owners incur. In addition, tax-exempt properties do not pay general
fund taxes, causing further inequity as the costs they incur must be recovered with revenue from other
properties.
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5.2.1.1.2 Taxes/Dedicated
Beyond general fund taxes, many communities use dedicated taxes to fund stormwater program costs.
These may take the form of dedicated sales taxes, motor fuel taxes or special assessments.
A Local sales taxes are often add-ons to state general sales and use taxes. They may also exist where
there is no state sales tax. Depending on state constitutions, statutes and home rule traditions, most
local governments must seek voter approval to levy local sales taxes. State authorization processes
vary. States may give approval to all counties or communities or limit authorization to specific
localities. Local taxes are usually limited to a specified time period (i.e., a sunset provision) or a
dollar collection total, and are generally dedicated to a specific use. The dedicated revenue stream
may be used for operation and maintenance costs, to back local general obligation or revenue bonds
or to pay for a specific stormwater program directly.
• Motor fuel taxes are imposed at the state and federal levels and are levied on gasoline and other
fuels. All 50 U.S. states and the District of Columbia assess gasoline taxes. State gasoline tax rates
generally range from 14.65 cents to 58.7 cents per gallon.18 State and federal motor fuel tax
revenues are typically dedicated to highway construction and maintenance. Revenues from state
and federal motor fuel taxes could be earmarked to fund stormwater infrastructure related to
roadways, though competition for such funds is fierce; roadway resurfacing and repair are normally
the top priority.
* Special assessments or special taxing districts or service/drainage districts are recurring surcharges
levied by local jurisdictions on subgroups of the population or even the entire population, in the
case of districts that cover the entire community. Some localities levy them in the form of taxes
dedicated to stormwater management; others levy them as fees. The group paying the recurring
charges receives benefits from a stormwater service or improvement not enjoyed by others in the
area. For example, if a community wants to finance regional stormwater improvements, residents
within the protected area or the contributing area could be charged a special assessment. Special
assessments are generally charged by local governments and authorized by local ordinance.
Although some states bar special assessments, where allowed these surcharges generally are
charged by local government and authorized by local ordinance. Special assessments are used to
fund water works systems, sanitary sewer systems, installation or repair of water and sewer service
lines, flood protection projects and other purposes.
5.2.1.1.3 Stormwater Utility User Fees
Stormwater management resembles drinking water and wastewater utilities far more closely than
municipal responsibilities such as police, schools and roadway maintenance, in that the cost recovery for
utility services provided can be closely aligned with the service demands of the users.
This has led to the concept of a stormwater utility user fee. A stormwater user fee is similar to a
wastewater user fee in that it is developed to recover the costs of the stormwater program based on
each property's estimated use of the stormwater system. The first user stormwater fee systems
appeared in the United States in the mid-1970s. Their apparent success in generating significant,
sustainable revenue while keeping the typical homeowner's fee below a critical reactionary level led
many other communities to follow suit. Local water quality and flood control agencies/districts or
18 As of 2018; excludes the federal excise tax of 18.4 cents per gallon (httpsi//taxfoundation.org/state-gas-tax-
rates-iuly-2018/).
* «
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utilities are typically responsible for designing, assessing and collecting user fees (or taxes, as noted
above) based on a property's contribution to the stormwater management system. Today there are
about 1,716 stormwater enterprise funds (stormwater utilities) employing user fees to fund their
programs and to fund revenue bonds for capital construction. Stormwater user fees provide the greatest
opportunity to provide communities with local sustainable, recurring revenue to fund stormwater
needs.
A stormwater user fee falls into the municipal revenue generation mechanism called a "service charge."
Service charges are not established simply to generate general fund revenue but must be tied to the
objectives of a specific program to
which they are associated. A
stormwater utility generates its
revenue through user fees, and the
revenues generated from the
stormwater user fees is placed in a
separate fund—called an enterprise
fund—that can normally be used only for stormwater services. Stormwater user charges are designed to
provide a nexus between the user fee and the service provided. As such they differ from taxes.
The amount each rate payer is charged must be related to the "use" of the system (rational nexus),
which can be interpreted as either direct use through runoff contributions or use through protection
from flooding of the property and streets by local stormwater program efforts. When a forested or
grassy area is paved, a greater flow of water (runoff) is placed on the drainage system. This is the
demand. The greater the demand (i.e., the more the parcel of land is paved or otherwise covered with
an impervious surface), the greater the user fee should be.
While there are similarities between a stormwater utility and drinking water/wastewater utilities, a
stormwater utility differs from drinking water and wastewater utilities in several key ways:
# There is no way to remove or discontinue services for non-payment, as long as the physical property
exists.
~ The stormwater management service is provided within the entire jurisdiction regardless of whether
one or more property deems it necessary or not. This is because stormwater management is
performed as a community-wide level of service and not distinctly as an individual property level
service (though mandatory drinking water and wastewater service makes this difference less of a
distinction).
# The demand placed on the system can only be roughly measured or approximated, as it is not
possible to directly measure stormwater flow.
~ The actual service rendered to a particular property is often difficult to quantify without the use of a
reasonable and consistent approximation approach.
Despite these differences, the utility concept can be a viable and flexible revenue generation approach
to stormwater funding. According to the 2019 version of an annual survey by Western Kentucky
University, at least 1,716 stormwater utilities currently exist across 40 states and the District of
Stormwater user fees provide the greatest
opportunity to provide communities with
local sustainable, recurring revenue to fund
stormwater needs.
m m <
32
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Columbia, serving a total population of nearly 115 million (35 percent of the U.S. population).19 The
authority (enabling legislation) to implement such an approach varies from state to state, and even from
municipality to municipality, depending on the details of state-granted authority and/or home rule
requirements. Of the 10 states that do not have utilities, three are either conducting feasibility studies
or exploring changes in state law to allow implementation of stormwater utilities.20
Even for utilities that have a dedicated user fee, which can be used to support debt service associated
with capital program financing, many utilities rely only on annual revenues to support any capital
investment. A Black & Veatch 2018 biennial survey reports that most responding stormwater utilities (87
percent) use cash financing instead of long-term debt financing for funding their capital program
investments.21 This indicates that stormwater utilities seldom use the capital markets to augment their
financial capacity, which can delay needed upgrades and/or affect the pace of compliance programs.
Further, only 15 percent of respondents indicated that utility revenue is adequate to meet all needs. The
median annual revenue per capita reported in Black & Veatch's survey was $54, with the maximum
annual per capita revenue reported being $200. The Western Kentucky University survey does not
provide annual revenue details for all utilities surveyed, but found roughly $1.7 billion in annual utility
fees, for those 677 utilities reporting annual revenues. More research is needed to provide a full
accounting of all public revenue that is raised toward stormwater management and compliance.
Despite their value as a local source of dedicated revenue for stormwater management, state statutes
may prevent the creation of a stormwater user fee without a ballot measure or enabling state
legislation. This is discussed in detail later in the report.
5.2.1.2 Infermiffenf Funding
It is imperative that communities have in place recurring, sustainable funding sources. However, some
types of intermittent funding can provide additional benefit and help recover certain costs of
stormwater management.
5.2.1.2.1 Special Fees
An increasingly common practice is the use of fees and specific charges to help fund services by local
and state government. Special fees tend to focus on specific government services, while charges are
defined more broadly in terms of receiving special benefit or service. "When certain services provided
especially benefit a particular group, then governments charge fees on the direct recipients of those
that receive benefits from such services." Often the size or level of the fee is derived from the actual
cost of such provision. "However, many governments provide subsidies to various users for policy
19 Campbell, C. W. 2019. Western Kentucky University Stormwater Utility Survey 2019.
httpsi//digitalcommons, wku.edu/seas faculty pubs/1
20 Campbell, C. W. 2019. Western Kentucky University Stormwater Utility Survey 2019.
https://digitalcommons.wku.edu/seas faculty pubs/1
21 Black & Veatch. 2018. "Stormwater Rate Structure and Billing." In 2018 Stormwater Utility Survey.
httpsi//www.bv.com/sites/default/files/2019-
10/18%20Stormwater%20Utility%20Survey%20Report%20WEB O.pdf
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reasons, including the ability of residents or businesses to pay. Well-designed charges and fees not only
reduce the need for additional revenue sources but promote service efficiency."22
Special fees tend to fall into several categories:
A Fees for development-related services such as plan review, inspection, environmental permit fees,
septic system inspections and other similar types of services.
i Fees to defray the cost of specific government services such as specialized disposal (e.g., oil),
recycling, tolls, certification, bond issuance, licenses, etc.
* Fees for government services or land, such as franchise fees, or indirect cost allocations from other
enterprise funds for general governmental purposes.
Such fees focus costs on recipients of special services and not the general public, and they address
potential stormwater impacts during the critical construction phase. On the other hand, it is often
difficult to set such fees at a level that recovers the full cost of the activity necessitating the fee. In
addition, revenues from such fees are intermittent; when that activity does not occur, no funds are
received even though local government costs (such as personnel) may be stable and ongoing.
5.2.1.2.2 Special Charges
Special charges are often not distinguished from fees in that they tend to be associated with specific
government services or benefits. They do tend to be more complex or related to higher government
functions. Examples include connection fees, impact fees, special assessment or improvement districts,
tax increment funding, developer extension fees, in-lieu fees, latecomer charges and other exactions.
Connection Fees
Connection fees, also called hookup fees, are typically charged to property owners when they connect
with existing municipal drinking water and wastewater treatment facilities. But they could be used for
stormwater as well. Connection fees are generally levied by local governments or county governments.
Impact Fees
Impact fees are often assessed on the construction of new buildings. Local governments and county
governments levy impact fees. The revenues are used to pay for improvements to services and
amenities for the occupants of new development (including expansions of police and fire stations,
wastewater and water supply systems, parks, libraries and schools) and the building of new roads. In
addition, impact fees are often assessed based on the projected environmental impacts of a
construction project, with their revenues used to mitigate those impacts. The drawback of impact fees is
that they can only be used to improve an adequate stormwater system in the face of increased demand,
and many systems cannot be shown to be adequate. They typically have sunset provisions as well.
22 Government Finance Officers Association. 2018. "Establishing Government Charges and Fees."
httpsi//www,gfoa,org/establishing~government~charges~and~fees
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Case Study: Five San
Francisco Bay Area
Voter-Approved Fee
Measures
Five small- to mid-sized
municipalities in the San
Francisco Bay Area put
new stormwater fee
structures out for voter
approval in 2018 and 2019
(with mixed results). Each
municipality followed a
similar approach including
developing a
comprehensive needs
study or master plan,
conducting a scientific
survey of the community's
priorities and willingness-to-
pay, and executing a
community outreach and
education process aimed
at increasing awareness
regarding local flooding;
storm drainage
infrastructure operations,
maintenance and capital
improvements; and water
quality.
Exactions
Exactions, also called proffers, are conditions or financial
obligations imposed on developers to aid local governments in
providing public services needed to support new developments.
They are administered by local governments. Exactions can take
a number of different forms. They can include financing of
existing infrastructure facilities or infrastructure improvements;
donations of in-kind services; and donations of land, drinking
water and wastewater lines, and road and parking facilities.
Exactions can also take the form of impact fees paid in lieu of
the types of donations described above. Exactions allow more
flexibility than strict impact fees because they are not required
to be financial contributions. They may be offered voluntarily by
developers; local governments often negotiate them with each
developer. Most localities use exactions in some form. Some
localities assign building permits competitively based on the
level of exactions offered by different developers.
Special Assessments
Special assessments are recurring surcharges levied by local
jurisdictions on subgroups of the population. Some localities
levy them in the form of taxes; others levy them in the form of
fees. The sub-group paying the recurring charges receives
benefits from a stormwater service or improvement not enjoyed
by others in the area. For example, if a community wants to
finance stormwater quality improvements that contribute to
lake cleanup, residents with waterfront property could be
charged a special assessment. Special assessments are generally
charged by local governments and authorized by local
ordinance. Special assessments are used to fund water works
systems, wastewater systems, installation or repair of drinking
water and wastewater service lines, stormwater and flood
protection projects, and other purposes, and are sometimes used in conjunction with a neighborhood
development projects to fund the construction and ongoing maintenance of a stormwater detention
pond or water quality feature.
Special Assessment or Improvement Districts
Another form of local fee comes from the creation of a special assessment or improvement district. In
this case, a district is designated to need stormwater management upgrades—typically green
infrastructure or low-impact development—as part of a broader economic development strategy. The
district then creates a special tax assessment that is paid by the property owners within the district's
geographic boundary. State and local laws differ on how these districts are created and voted into
existence, what funds are acceptable to be assessed, and how often assessments can be billed. These
assessments may be a one-time or ongoing assessment depending on their purpose. One-time
assessments tend to be raised for capital construction simultaneous to a broader economic
development process. Ongoing assessments may pay for capital construction, administration of the
• • •
35
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entity in charge of governing the district, and operations and maintenance of district-owned projects.
Most special assessment districts are subject to periodic renewal based on a vote by their members;
some are mandated by state law to have a sunset clause (e.g., 5, 10, or 20 years).
Following are some of the advantages and disadvantages of Special Assessment or Improvement
Districts:
# Advantages:
o Improve cost causation equity match,
o Allow special services to be paid for by recipients.
o Provide additional funding in a manner acceptable to the general public,
o Recover the cost of negative impacts of other activities on the stormwater system.
# Disadvantages:
o Funds flow is not generally predictable and steady,
o Can be hard to administer.
o May be seen as discouraging development or other desirable activities,
o May be difficult to price accurately.
o Typically, cover staff time only—not funding for O&M or capital improvements,
o Typically, cannot be used as leverage for raising debt capital.
5.2.2 One-Time Funding Sources for Financing of Capital Projects and/or Other
One-Time Initiatives
The use of one (or more) recurring funding sources such as user fees and charges is necessary for any
sustainable stormwater program. However, there are other types of funding sources including debt
financing, grants and other sources that are available to communities and are more conducive to
funding of capital projects and/or help fund special capital program initiatives.
Repository of Funding Sources: The Task Force worked with the EPA to develop a compendium of
existing funding sources. Sources of funding at the federal, state and local levels as well as private
funding were compiled, to the extent possible. The database is described in Appendix IV. While the
database should not be construed to be comprehensive, it is an extensive database and the Task Force
feels it is mostly complete as it relates to federal funding sources. The sources identified at the state,
local and private level should be considered representative of the types of funding that may be
available. This database includes multiple federal grant programs that may be available to stormwater
programs, through EPA, the U.S. Department of Housing and Urban Development (HUD), USDA Rural
Utility Service (RUS) and other agencies.
This funding sources database is available as a starting point for communities that are interested in
examining potential sources of funding primarily for their stormwater capital programs.
* « <
36
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5.2.2.I Capital Financing Sources (Financing Vehicles, Require Repaymentj
Debt financing, with either short-term or long-term amortization, is an important capital financing
instrument that is available for stormwater capital programs just as it is for the drinking water and
wastewater sectors.
Use of debt financing instruments for capital
program funding requires dedicated, recurring and
sustainable revenue source(s) for the repayment of
principal and interest. Therefore, it is important to
recognize that capital program debt financing is
not just an alternative for recurring sources of
revenue but rather a valuable complement to one-
time sources of capital for funding infrastructure projects.
Debt financing mechanisms can greatly enhance a community's ability to complete large capital projects
that would not otherwise be possible with just limited cash resources (whether generated through user
fees, taxes or other sources), and enable a community to plan and execute a larger capital program.
Long-term financing of capital projects provides the additional benefit of spreading the costs of projects
over the life of the asset, with the principal and interest paid by those who benefit from the project.
Following are the primary types of capital financing available
to communities for stormwater capital program
management.
5.2.2.1.1 Bonds
"Municipal bonds are debt securities issued by states, cities,
counties and other governmental entities to fund day-to-day
obligations and to finance capital projects"23 including
stormwater projects. Municipal bonds in the U.S. are tax-
exempt, meaning that interest is exempt from federal
income tax. Interest generated from these bonds may also
be exempt from state and local taxes in some states.
General obligation bonds and revenue bonds are the most
common types of municipal bonds. "General obligation
bonds are issued by states, cities or counties and not
secured by any assets. Instead, [they] are backed by the 'full
faith and credit' of the issuer, which has the power to tax
residents to pay bondholders. Revenue bonds are not
backed by government's taxing power but by revenues from
a specific project or source," which could include a
stormwater enterprise fee. "Some revenue bonds are 'non-
recourse,' meaning that if the revenue stream dries up, the
bondholders do not have a claim on the underlying revenue
Debt financing mechanisms can
greatly enhance a community's
ability to complete large capital
projects that would not otherwise
be possible.
Green Bonds A1
"A green bond is a bond
whose proceeds are used to
fund environment-friendly
projects...Green bonds
provide investors with a way to
earn tax-exempt income with
the benefit of personal
satisfaction, knowing that the
proceeds of their investment
are being used in a
responsible, positive manner.
The issuers of green bonds also
benefit, since the green angle
can help attract a new subset
of investors, namely younger
investors, whom the issuers can
profit from over an extended
period vs. a base of older
investors..."
• • •
37
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source."23 "A 'double barreled' bond is a municipal bond in which the interest and principal payments
are pledged by two distinct entities—revenue from a defined project and the issuer and its taxing
power."24
An advantage of bonding is that projects can be constructed earlier and more rapidly; as well, the
payment for the capital project better matches the life of the project, with newer residents participating
in the payment according to their longevity within the municipality. Disadvantages include the potential
to build up a large debt balance (limiting investment to meet other stormwater needs), the technical
and legal requirements to obtain bonds, the limitations on bond capacity within a local government, the
potential need for voter approval and often the limitations on the use of the funds to capital
construction but not the full suite of life-cycle costs.
There are many variations on the two general types of bonding, including anticipation notes, asset-
backed securities, moral obligation bonds, special assessment bonds and tax increment bonds.
5.2.2.1.2 Loans
There are a few federal, state and private loan-type funding mechanisms—many of them originally
targeted toward drinking water and wastewater programs—that can be leveraged for local stormwater
programs. Relative to borrowing in the bond market, loans can often provide lower cost debt financing,
as under special circumstances loans can be structured to include features such as zero interest, very
low interest or even in some cases principal forgiveness. Some of the loan programs are targeted at
"green" objectives and programs.
This section provides an overview of the following loan programs,
i CWSRF and Drinking Water State Revolving Fund (DWSRF)
# USDA Water and Waste Disposal Loan and Grant Program
i WIFIA Loan Program
# State-Based Loan Programs
i Private Investments
# CWSRF: One of the most commonly used loan programs in the wastewater sector is the CWSRF.
Under Title VI of the CWA, states receive federal monies to capitalize CWSRF loan programs.
Through CWSRF programs, loans are made to
communities to provide low-cost financing for a
wide range of different projects to protect I A// 50 U.S. States and Puerto Rico
water quality. Examples of activities funded f operate CWSRF Programs.
with these loans include non-point source
pollution control, watershed protection and restoration, estuary management, wetlands
restoration, brownfields remediation and improvements to municipal wastewater treatment
23 U.S. Securities and Exchange Commission, n.d. "Municipal Bonds." httpsi//www,investor,gov/introduction-
investing/basics/investment-products/municipal-bonds
24 Chen, J. 2019. "Municipal Bond." Investopedia. httpsi//www,investopedia,com/terms/m/municipalbond,asp
A1 Kenny, T. 2020. "How Green Bonds are a Cornerstone of Responsible Investing". The Balance.
httpsi//www,thebalance.com/what-are-green-bonds-417154
* « <
38
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infrastructure. Loans are made at low interest rates (0 percent to market rate) for terms of up to 20
years. In addition, states use CWSRF money to repurchase debt to get these loans to 30 years. States
may set the criteria for determining which municipalities can access the loans each year. All 50 U.S.
states and Puerto Rico operate CWSRF programs. Some CWSRF and Drinking Water State Revolving
Fund (DWSRF) loan programs make short-term loans for planning, design and initial construction in
localities that may later receive long-term CWSRF and DWSRF loans. In addition, state revolving fund
loans may be used to pre-finance other federal or state drinking water loans or grants.25
* USDA Water and Waste Disposal Loan and Grant Program: This program "provides funding for
clean and reliable drinking water systems, sanitary sewage disposal, sanitary solid waste disposal,
and storm water drainage to households and businesses in eligible rural areas...Funds may be used
to finance the acquisition, construction or improvement of: drinking water sourcing, treatment,
storage and distribution; sewer collection, transmission, treatment and disposal; solid waste
collection, disposal and closure; and stormwater collection, transmission and disposal."26
* WIFIA: WIFIA is the latest federal loan program administered by EPA for eligible drinking water,
sewer and stormwater infrastructure projects. The program funds development phase activities,
construction/reconstruction/rehabilitation/replacement, acquisition of real property or interest in
real property, environmental mitigation, construction contingencies and equipment acquisition;
capitalized interest necessary to meet market requirements, reasonably required reserve funds,
capital issuance expenses and other carrying costs during construction. Applicants must submit a
letter of interest, and based upon several criteria, EPA invites qualified projects to apply for the
WIFIA loans.
* State Based Loan Programs: There are also many state-based loan programs with a variety of
objectives and requirements. For example, the Georgia Fund Loan Program currently "supports
water, wastewater, and solid waste infrastructure improvements...[with] loans available at a low-
interest rate for a maximum of 20 years."27
i Private Investments: Private investment can take the form of loans or other financial assistance
originating from private sources other than commercial banks or finance companies. Sources of
private investment can include, but are not limited to, insurance companies, pension funds, venture
capital funds, individual venture capitalists, corporation partners and general capital investors.
Private investment funds billions of dollars' worth of new business start-ups in the United States
each year. The potential uses of private investment for supporting environmentally related
businesses and/or activities are only limited by the degree of profit associated with them; if it can be
shown that an idea or activity will make money, then private investment can be found to support it.
Applying for private investment is typically much faster than for government loan programs. Private
investors usually have no set eligibility criteria and may have no predetermined limits on the total
amount of loan capital available. Private investors tend to demand a significantly higher rate of
25 U.S. EPA. 2019. "Learn About the Clean Water State Revolving Fund (CWSRF)."
https://www.epa,gov/cwsrf/learn-about-clean-water-state-revolving-fund-cwsrf
26 U.S. Department of Agriculture, n.d. "Water & Waste Disposal Loan & Grant Program."
https://www.rd.usda.gov/programs-services/water-waste-disposal-loan-grant-program
27 GeorgiaGov. n.d. "Environmental Loans & Tax Credits." https://georgia.gov/popular-topic/environmental-loans-
tax-credits
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39
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return on their money, though, than other sources of capital. Note that a private investment can
develop into a public-private partnership if an operational component is added to the mix.
5.2.2.1.3 Grant Type Funding
A variety of one-time grants are available for supporting specific initiatives of capital projects from
government and private foundation sources. The advantage of such grants is that there is no repayment
requirement and the amounts can be substantial. The disadvantages include the competitive nature of
the grants, the requirement for pre-positioned matching in-kind or funds for some grants, the
limitations on the use of some grant funds, the effort required to file the applications and the need to
harmonize the grant requirements with the needs of the local government.
There are several federal and state grant programs, including both ongoing programs and one-time
opportunities. Several websites provide a good source for learning about federal grants. Sites for
agencies that participate in the water world will present many opportunities, as will http://grants.gov.
For example, the 1987 amendments to the CWA established the Section 319 Nonpoint Source
Management Program. Under Section 319, states, territories and tribes receive grant money that
supports a wide variety of activities including technical assistance, financial assistance, education,
training, technology transfer, demonstration projects and monitoring to assess the success of specific
non-point source implementation projects. Grantees must use these funds to implement EPA-approved
non-point source pollution management programs. A 40 percent non-federal match, in the form of
supplies, equipment and/or funding, must be provided by grantees. Regulatory and nonregulatory
programs assessing the success of specific non-point source pollution control projects also may be
eligible for these grants. Grant totals for the last few years were in the $170 million range.28
Many foundations and charitable organizations have begun supporting various aspects of stormwater-
related needs through grant-making. Foundation and corporate grants are a significant and growing
source of funding for environmental protection projects. Most grants of this type fund well-defined
projects with specified time frames and costs and deliverables that meet the immediate priorities of the
funding source and are not funded by governments. Foundation and corporate grant programs tend to
favor the most innovative environmental projects. Funding such things as green infrastructure strictly
through grants generally is not a sustainable financing strategy, but may be a way to fund some high-
profile demonstration projects that will attract subsequent sustainable government or property-owner
financial support.
5.2.2.1.4 Other Resources/Approaches for Funding Stormwater Management
In addition to more traditional funding sources discussed previously, there are new and evolving
approaches to funding stormwater management that could be leveraged in many cases. These include
public/private partnerships, private site stormwater development and volunteer programs. The ability to
utilize such approaches, and the impact to the stormwater program vary but these are important
options to evaluate in developing a comprehensive funding strategy.
28 U.S. EPA. 2019. "319 Grant Program for States and Territories." https://www.epa,gov/nps/319~grant~program-
states-and-territories
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5.2.2.2
One-Time Sources
One-time funding and financing sources are sometimes used for specific stormwater infrastructure
projects or for certain aspects of the projects. Many of these one-time sources are described throughout
this section (i.e., they can be grants, private investments, charitable donations, bonds, etc.). While these
one-time sources are critical in the current funding implementation for many communities, they lack the
security to create sustainable infrastructure investment and long-term watershed planning.
5.2.3 Other Resources/Approaches for Funding Stormwater Management
In addition to more traditional funding sources discussed previously, there are new and evolving
approaches to funding stormwater management that could be leveraged in many cases. These include
public-private partnerships, private site stormwater development, and volunteer programs. The ability
to utilize such approaches, and the impact to the stormwater program vary but are important options to
evaluate in developing a comprehensive funding strategy.
5.2.3.1 Public-Private Partnerships
Public-private partnerships (P3s) are receiving increasing attention in the United States and
internationally as an innovative way of financing a wide range of environmental protection initiatives.
The point of P3s is that partnering with private enterprise can expand access to resources and capital
and offer better economies of scale. There are many types of P3s: design/build,
design/build/operate/maintain, pay-for-performance (similar to pay-for-success), community-based P3s,
etc. They may include private financing or a combination of public and private financing. Community-
based P3s have a "commitment to social goals through setting robust requirements for local jobs, and
providing a platform for economic growth and revitalization associated with large-scale Gl investments.
Additionally, in this framework (based upon the military housing private investment model), the
community benefits through the structure of the community-based public-private partnerships (CBP3)
to reinvest savings through efficiencies in implementation back into more 'greened' acres rather than
simply taking the savings as profits realized. Interest in CBP3s has been growing across the country, as
there is recognition of the universal applicability of this approach."29
29 California Stormwater Quality Association. 2019. "The Community-Based Public-Private Partnership Approach: A
Revolution in Funding and Financing Green Infrastructure." httpsi//www,casqa,org/asca/community~based~public-
private-partnership-approach-revolution-funding-and-financing-green
* « #
41
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Clean Water Partnership (CWP)
A Water Quality P3 Approach in Prince 01
George's County, Maryland
Prince George's County, Maryland
adopted the Clean Water Partnership
initiative which began March 26, 2015 as
a P3 delivery approach to modernize
and retrofit its stormwater infrastructure
and meet total maximum daily load
(TMDL) goals by 2025 in a cost-effective
way. This program is a community based ^
P3 that strives to meet MS4 goals,
engage the community, provide jobs
and spur business growth. After three
years of program implementation, the
county goal was met to retrofit 2,000
acres, in half the time, for half the price,
while increasing outreach to community
stakeholders and investing in small, local
minority and disadvantaged businesses
according to their third annual progress
report. The County reports that as of the
end of May 2019, there are 100 sites over
2,165 acres, no growth in the number of
County employees needed for the
program, $ 100.4 million spent on
local/minority business participation with
53% of county resident workforce
utilization and significant investment in
youth and educational programs.
In some cases, it is possible to capitalize on
specific private sector resources through the use
of P3s. The availability of those resources
depends upon the nature of the partnership
arrangements, the resources available to the
private partners, the circumstances in the
locations where they are set up and other factors.
Access to sophisticated technologies and
specialized expertise often allows the private
sector to provide specific types of services that
the public sector may be unable to provide. In
addition, private financing can reduce the burden
on public debt capacity. Private sector
procurement and construction methods
sometimes save time and provide significant cost
savings. Though P3s involving ownership
transfers from government entities to private
companies, responsibilities for financial risk can
be transferred from the government entity to the
private company.
P3s have some important limitations. Local
governments may not always have the legal
authority to enter into contracts with private
parties. A government joining a P3 might lose
oversight opportunities—a major concern. When
government officials cease to be involved with
the day-to-day operations of a facility, they may
have to give up opportunities to monitor things
such as compliance with environmental standards
and permits. In addition, public employees and
unions may oppose the use of P3s due to
concerns about the loss of jobs. Finally, tax-exempt and/or other low-cost financing that is available for
(federal and state) government-run projects may not be available for P3s.
Thus, the appropriateness of a particular type of P3 for a given environmental protection initiative and
location depends on many factors, such as the type of environmental media being protected, availability
of public funding for the partnership, demographics and the tax code.
5.2.3.2 Volunteer Programs
Volunteers can provide free labor for a variety of local stormwater program efforts. Examples include
education, technical assistance to homeowners, inspections, cleanups, adoptions of various stormwater
systems and rivers, grant writing, watchdogs and more. Volunteers and volunteer organizations can
bolster support for stormwater programs or funding approaches. Citizen groups can assist in decision-
making and in selling decisions to the public. Riverkeeper-type groups can provide a sense of
• • •
42
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stewardship of precious water resources and can serve as great allies with local governments. Some can
help run and manage programs such as rain gardens, citizen monitoring and stream cleanups.
Some volunteer groups require significant supervision and training for the perceived return on
investment, and there can be safety and liability concerns when volunteers partner with local
governments for activities.
While volunteer programs do not mitigate a substantial cost of the overall stormwater program, they do
provide valuable services and also help to engage the community and can be helpful in gaining public
understanding of stormwater management needs in the community.
5.2.3.3 Coordination with Other Community Departments
Synergies can be gained among agencies that influence some aspect of stormwater management when
they cooperate and when a better-funded department or agency provides funding or services to a
stormwater program. Examples include:
* A solid waste agency providing household hazardous waste assistance in lieu of households dumping
hazardous waste into stormwater systems.
4 A wastewater agency working to eliminate seepage of wastewater into the stormwater system as
part of an inflow and infiltration (l&l) program.
4 A public affairs office helping the stormwater program implement certain activities.
~ An agency that bills for service providing inserts explaining some aspect of the stormwater program.
A public works or transportation department can add stormwater components or green infrastructure
features as a small part of a construction project. This can even work with different agencies or at
different levels of government.
Outside programs or organizations can incentivize such partnerships (e.g., watershed groups spanning
several local governments or transportation departments) through coordination and funding efforts.
5.2.3.4 Market-Based Solutions
Local and state agencies, often in collaboration with the EPA, have created market-based solutions to
tackle various water quality challenges—including nutrient reduction, volume control and wetland
mitigation, among others. These markets are designed to attract private capital, take advantage of
efficiencies gained from private delivery of projects and/or direct solutions geographically to where they
are needed most. An EPA memo from February 6, 2019 reiterated the Agency's support for market-
based solutions, particularly for nonpoint-source pollution (i.e., stormwater), and provided clarity to
state and local regulators and policymakers on best practices to implement locally appropriate
solutions.30 The most common form of market-based solution is through the creation of a credit or unit
of measure that denominates and quantifies an environmental outcome against a specific regulatory
mandate (e.g., Total Maximum Daily Load). The supplier of a credit is typically a non-regulated private or
public entity that has the financial wherewithal to build a project or a regulated entity that can go
30 U.S. EPA. 2019. Updating the Environmental Protection Agency's (EPA) Water Quality Trading Policy to Promote
Market-Based Mechanisms for Improving Water Quality. httpsi//www,epa,gov/sites/production/files/2019-
02/documents/trading~policy~memo~2019.pdf
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Case Study: Washington, D.C.
Stormwater Retention Credit
Training
The U.S.' First Stormwater Retention
Trading Market in the Nation's
Capital
In 2013 Washington, D.C.
promulgated stormwater retention
regulations for new development or ^
substantial improvement projects.
Part of these new regulations was
the introduction of the Stormwater
Retention Credit Trading market,
which allows regulated projects to
purchase up to 50% of their
stormwater management
requirements offsite, in the form of
Stormwater Retention Credits (SRCs).
This allows regulated properties to
pursue more cost-effective
compliance methods and provides
financial incentives for properties to fm
voluntarily install stormwater
management practices.
beyond what is required of it. In both cases, this
supplier generates additional environmental
capacity that can be sold to offset a regulated
private or public entity's regulatory
requirements. A functioning market will have
many buyers and sellers and a dynamic price
based on what the market will bear.
Examples include wetland mitigation banking,
nutrient trading and stormwater volume trading.
The last of these, stormwater volume trading, is
an emerging local solution pioneered by the
District of Columbia's Department of Energy and
the Environment and profiled in a case study in
Appendix III. It involves purchase of "Stormwater
Retention Credits," seen as more cost effective
for regulated property owners or developers but
equally effective in attainment of the District's
regulatory standard.
A Advantages:
o Create cost efficiencies in placement
of stormwater controls.
o Can allow for aggregation for better
overall control and treatment.
o Can shift and target controls to more
critical locations and be combined
with other public incentives (e.g.,
grant programs) to further incentivize credit suppliers to develop projects in specific places.
* Disadvantages:
o Can be complex to administer.
o Require clear and enforceable policies on ownership and maintenance.
o Markets may not be initially viable and may need to be jumpstarted with local funding.
5.2.3.5 Newer Innovative Approaches
Market-based solutions are just one of many new approaches that can attract new forms of funding and
financing. A wide variety of approaches that seek to exploit unique or unusual funding sources are being
explored in the stormwater space. Examples include:
* Sponsorship of stormwater or green infrastructure sites by private and/or public organizations,
similar to adopt-a-road advertising.
* Tax increment financing that can be leveraged if a new green infrastructure facility is designed to
increase surrounding property values, owners of those properties agree to a new tax levy, and an
agency is designated legally to issue tax increment bonds.
• • •
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# Use of private land for public infrastructure through various partnership and payment mechanisms
between public agencies and private landowners.
# "Complete" or "green" street policies that mandate road repairs and include stormwater
management, often combined with vegetative practices or other aesthetic improvements.
# User fee credits that incentivize reduction in impervious area.
# Green ratio ordinances that require developers in certain zoning districts to dedicate a percentage
of their property to natural area, which can manage stormwater runoff.
# Various development incentives, including floor-area-ratio bonuses, expedited permitting, and
others in exchange for voluntary construction of stormwater management practices.
4 Strategic partnerships between communities and philanthropic sources to enhance public spending.
# Advantages:
o Can provide funds at little cost.
o Can motivate the private sector through name recognition.
o Can provide good return on seed money investment when paired with private actions.
# Disadvantages:
o Can be complex to administer and explain.
o May require opinions and analysis on legality.
5.3 Availability of Funding
The previous section describes the different types of funding sources for stormwater programs. Even
though there are several sources of funding, it is important to recognize challenges that exist when
evaluating the overall stormwater funding aspect of stormwater management. In addition, only a few
funding sources can provide reliable, sustainable and dedicated revenue for stormwater programs. In
fact, about 60 percent of the respondents to a recent survey indicate that their top challenge is the lack
of funding or availability of capital for their programs.31
5.3.1 Key Funding Challenges by Types of Funding
A User Fees: User fees, as discussed earlier, can provide a reliable, sustainable and dedicated revenue
mechanism for stormwater programs. However, many communities need expertise, resources and
financial assistance to even plan for, develop and launch a user fee program. Perhaps more
importantly, any public initiative to enhance stormwater funding cannot succeed without the
engagement and acceptance of citizens within a local community and the support of local elected
officials.
31 WEF Stormwater Institute. 2019. National Municipal Separate Storm Sewer System (MS4) Needs Assessment
Survey Results. httpsi//wefstormwaterinstitute,org/wp~content/uploads/2019/Q8/MS4~Survev~Report~2019,pdf
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In addition, the level of funding that utilities with dedicated user fees or dedicated stormwater tax type
fees generate is not adequate to meet all of the stormwater community needs.
i Debt Financing: Despite the benefits of debt financing discussed earlier, the challenge that a
majority of communities currently face in leveraging debt financing is that they simply do not have
the annual financial capacity to repay the debt service.
Consequently, stormwater programs have not leveraged capital financing sources to the extent
available. This is primarily due to the lack of a sustainable, recurring funding source to provide the
funding necessary for repayment. According to the 2018 Black & Veatch Stormwater Survey, only 13
percent of stormwater utilities responding to the survey indicated that the majority of their capital
program is debt-financed. Eighty-seven percent indicated that the majority of the capital program was
cash-funded. Therefore, it seems that even where stormwater utilities (with user fees) are in place,
communities are not leveraging capital financing vehicles to the extent available.
i Grants: Many of the grant programs are predominantly focused on specific regions (e.g.,
Appalachian Regional Commission, Region 1 Healthy Communities Grant Program); specific
demographic group (e.g., Special Evaluation Assistance for Rural Communities and Households,
Clean Water Act Indian Set-Aside Grant Program); or specific activity (e.g., Beaches Environmental
Assessment and Coastal Health Act Grants). Hence, not all communities nation-wide have access to
grants.
Further, in most cases, grant allocations are much smaller in magnitude and are limited to a certain
percentage of the overall project, with matching funds required. The qualifications for each program
vary, depending upon the requirements of the specific program. In addition, grants typically have a
window of opportunity to apply for funding each year, with the total amount available dependent upon
the level of appropriation for the year.
t P3s & Market-Based Solutions: Many of the capital financing sources such as P3s, Market-Based
Solutions, and other such programs are still in their infancy or just emerging, and may not be a
viable option especially for smaller and rural communities.
# Volunteer Programs: While volunteer programs are a beneficial tool in the overall stormwater
management toolbox, they unlikely to contribute in any material manner to bridging the significant
funding adequacy issues that many communities face.
5.3.2 Estimate of Current Dedicated Stormwater Recurring Revenue Generation
Currently, there is no robust tracking of the annual revenue that is generated in the United States from
even the annually recurring and dedicated stormwater revenues sources discussed earlier in this
section. However, there are several national level surveys that have gathered information on annual
revenues generated by stormwater utilities that have a dedicated stormwater user fee. Therefore, the
Task Force attempted to leverage the annual revenue information available from (i) the 2019 Western
Kentucky University survey on stormwater utilities, and (ii) the 2018 Black & Veatch Stormwater Survey
of utilities that have stormwater user fees.
Out of the more than 1,700 stormwater utilities from which Western Kentucky University gathered user
fee, population and annual revenue information, the annual revenue data were available only for 678
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utilities. Based on this available information, the median annual stormwater user fee revenue per capita
was determined to be $32.00. To the contrary, based on the annual revenue information that survey
participants reported in its survey, Black & Veatch reported a median annual stormwater user fee
revenue per capita of $54.00.
Given the two sources of information available, the Task Force chose to extrapolate the potential annual
revenue generation from the more than 1,700 stormwater utilities identified in the Western Kentucky
University survey. These utilities encompass a total population of roughly 114,850,631. Using the
median annual revenue per capita figures determined from the two surveys, applied to the population
covered by the utilities in the Western University survey, the following low end and high-end range of
annual revenue generation is estimated, at the current time, from the more than 1,700 stormwater
utilities nationwide:
# Low end annual revenue generation estimate: 114,850, 631 * $32 = $3,675 Billion (rounded)
~ High end annual revenue generation estimate: 114,850, 631 * $54 = $6,202 Billion (rounded)
This annual revenue generation range off $3,675 to $6,202 billion is based on the extrapolation done on
a per capita basis from the 1,700+ stormwater utilities.
However, the annual stormwater revenue generated from dedicated recurring funding sources will be
higher as there are also a few utilities nationwide that have dedicated stormwater taxes and other
stormwater special assessments discussed earlier in this section. Currently, there is no readily available
information on the revenues generated from these other dedicated stormwater revenue sources, and
hence it is not feasible to estimate the aggregate annual stormwater revenues that are generated
overall from the existing revenue sources that are explicitly dedicated to stormwater management.
However, it is important to note that the revenue from dedicated stormwater funding sources such as
taxes, special assessments, etc. is not likely to be significant as few utilities in the country have these
types of dedicated stormwater revenue generation mechanisms.
Based on the annual stormwater revenues estimated just from the user fee revenues of over 1,700
stormwater utilities, it is evident that there is an enormous "funding gap" between the overall
stormwater management funding needs and the level of funding that appears to be currently generated
in the United States. As described in Section 4.0 of this report, the funding gap is estimated to be
approximately $7 to $10 billion annually. This range is based on limited surveys described in that
Section.
To address this funding gap, diverse types of proactive measures including federal, state and local
legislative actions and policies; enhanced technical and financial assistance; significant public education
and engagement; and a drive towards establishing dedicated sources of stormwater funding at the local
level, are necessary.
5.4 Barriers to Obtaining Funding
Previous sections summarize the plethora of funding opportunities for stormwater programs. However,
this discussion would not be complete without mention of the many barriers to funding stormwater
programs in any meaningful way. As with most public funding schemes, there is a tension between the
need for funding and the access to funding—as well there should be in a public arena. Blank checks do
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not exist, nor should they. But the barriers are often substantial, and thus stormwater programs across
the country are experiencing a huge gap between needs and available funding.
This section focuses on barriers to funding from recurring, sustainable sources (such as taxes and user
fees), because they form the backbone of any funding portfolio and can be the most difficult to secure
at required levels.
5.4.1 Political Decision Making
A key principle in public governance is that it is done with the permission of those governed. Financial
support for publicly funded programs and services cannot be effectively established without substantial
buy-in from the members of the community and, equally important, without the legislative action of
local elected officials.
The most common political decision-making barrier stems from each community's local political
environment. Members of local governing bodies face a wide range of competing needs and are hesitant
to increase taxes and fees due to various political, economic and constituent obligations concerns (not
least, the desire to be re-elected). The local decision makers typically refrain from proactive stewardship
for establishing a new source of funding such as a new stormwater user fee or for enhancing existing
stormwater fees and charges, even when the community has significant stormwater management needs
and the associated need for significant funding. There are many drivers for political barriers including
public perception, historical context of stormwater management and funding, competition from other
public programs and a general cynicism for any new proposal for taxes or fees.
To garner support from local decision makers, stormwater program managers must engage in extensive
and timely education of their public and elected officials, and thoughtfully plan and prioritize O&M and
capital program investments to maximize benefits community-wide over the planning horizon. To help
create buy-in, community members and elected officials should contribute to the overall running of
programs as well as establishing funding structures.
5.4.2 Public Perception
Across the United States, there is general fatigue from taxes, fees and charges, particularly for utility
bills when drinking water and sewer bills seem to increase much faster than other household costs. This
often translates to public cynicism and limits the ability to generate stakeholder support for a new user
fee or tax. The lack of support intensifies when the population is not familiar with stormwater programs
and funding needs and does not have a clear understanding of the potential and tangible community-
wide benefits.
In addition, stormwater management often is not seen as an essential service. As with drinking water
and sewer utilities, the average citizen may not be aware of the complex network of stormwater
drainage systems or how it enhances their quality of life, safety, and potentially, property values. In
many communities, chronic system failures may only be evident as a minor nuisance such as
intersection flooding. In contrast, other common property services such as drinking water, sewer and
garbage collection have been historically seen as essential public health services. The average citizen
turns on the kitchen sink faucet and flushes toilets multiple times each day and puts the garbage out at
the curb once a week; stormwater services are much less visible. So, it is not surprising to find a general
lack of understanding about stormwater systems.
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This is the setting in which a municipality or utility may ask for a new stormwater user fee or some other
source of funding (e.g., a sales tax dedicated to stormwater). When the issue of stormwater funding and
a user fee is initiated in such an environment of limited public awareness and perception, the road to
successful funding becomes challenging.
5.4.3 Competing Needs
Municipalities are one of our most potent forms of government, providing the widest array of public
services to their citizens. These typically include police, fire, parks and recreation, roads, utilities,
libraries, other facilities and other general social services. Stormwater programs and facilities compete
for public funds in this crowded field. Whether through strategic planning, annual budget requests or
electoral politics, stormwater service is often prioritized much lower than other municipal services.
5.4.4 Legal Barriers and Enabling Legislation
Funding for public programs must comply with a variety of legal requirements, many of which are noted
in previous sections of this report. In some cases, these legal requirements can be barriers to developing
funding for stormwater programs.
5.4.4.1 Legal Requirements
Many states have legal restrictions that supersede a local governing body's authority to impose a
stormwater fee. For instance, until March 2019 the State of New Jersey prohibited forming a
stormwater utility or imposing fees A2. The NJ Department of Environmental Protection will now provide
technical assistance, rate setting guidance, asset management and public education to help
municipalities establish stormwater utilities. In California, voters in 1996 approved Proposition 218, a
constitutional amendment making it more difficult for local government to impose taxes, fees and
assessments. One provision (clarified in a 2002 court ruling32) requires stormwater fees to be submitted
to a ballot measure requiring either a 50 percent majority of affected property owners or two-thirds
majority of registered voters to impose (or increase) a stormwater fee. Since 2002 only 31 stormwater
ballot measures have been pursued statewide (among more than 500 municipalities); voters have
approved about two-thirds of them.
Overall, 41 states and the District of Columbia have at least one stormwater utility each. The other nine
states have none, and legal barriers may play a part in that.
5.4.4.2 Legal Challenges
Legal challenges of new stormwater fees are a concern to many municipalities, particularly small ones
that are limited in the resources needed to sort through complex and sometimes ambiguous enabling
legislation. "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
32 California Sixth Appellate District, Howard Jarvis Taxpayers Association versus the City of Salinas, 2002. That
decision acknowledged that Proposition 218's text is ambiguous as to whether stormwater falls under the
definition of "sewer," which did not have the ballot requirement. In 2017, the California Governor signed SB-231,
clarifying that definition to also exempt stormwater fees from the ballot requirement. The Salinas plaintiff has
vowed to sue any municipality that sets fees accordingly. However, the threat of litigation alone has caused most
cities to continue to take fees to the ballot.
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implementation is concern about the confusing details of the enabling legislation and fear that
implementation won't confirm and will be mired in legal challenges."33
Legal challenges do occur. Previously mentioned was the Salinas case in California, which significantly
changed the stormwater funding landscape in that state. The 2013 Western Kentucky University survey
summarized legal challenges across the country. "We have now identified 76 legal or political challenges
to stormwater utilities in the U.S. ... Of the 76 challenges, 44 were decided in favor of the utility, while in
16 cases the utilities received unfavorable decisions or were struck down. Twelve of the cases are still
pending or we were unable to find whether or not a court decision had been reached. Five challenges
were successful political challenges. Stormwater utilities in Birmingham, Alabama; Colorado Springs,
Colorado; Nampa, Idaho; Manitowoc, Wisconsin; and in Cumberland County, North Carolina were
repealed."34
The 2018 edition of the Black & Veatch Stormwater Utility Survey35 asked the 75 participating agencies
whether their stormwater user fees ever faced legal challenges. They found that 27 percent of the
respondents said "yes." The basis of challenge varied as follows:
§ Tax and not a user fee (38 percent)
# Lack of authority to assess stormwater fees (24 percent)
# Equity and fairness (17 percent)
# Rate methodology (14 percent)
# Rational nexus between costs and user fees (3 percent)
# Constitutionality (3 percent)
5.4.5 Equity Issues
As many as 92 percent of stormwater utilities base their fees on relative impervious surface area.36 This
is a well-accepted method to ensure fair distribution of costs to customers, one of the distinguishing
features of a user fee (as opposed to a tax). An unintended consequence of that fee basis is the
potential of a disproportionate financial burden placed on properties in disadvantaged areas. Residential
densities tend to be higher, which is often accompanied by a much higher percentage of impervious
surfaces (and thus a higher proportion of the fee base).
Low-income areas also are more likely to be in low-lying, flood-prone areas where insufficient
stormwater capacity is first felt. These neighborhoods also tend to be rental properties where landlords
have little incentive to invest in green spaces or low-impact development.
33 Environmental Financial Advisory Board. 2016. Developing Dedicated Stormwater Revenues.
A2 NJ DEP. Stormwater Utility Guidance and Information. httpsi//www,ni,gov/dep/dwq/stormwaterutility,html
34 Campbell, C. W. 2013. Western Kentucky University Stormwater Utility Survey 2013.
httpsi//www,wku,edu/seas/documents/western kentucky university swu survey 2013.pdf
35 Black & Veatch. 2018. "Stormwater Rate Structure and Billing." In 2018 Stormwater Utility Survey.
httpsi//www,bv,com/sites/default/files/2019-
10/18%20Stormwater%20Utility%2QSurvey%20Report%20WEB O.pdf
36 Ibid.
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50
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Rate discounts or exemptions for low-income residents or seniors are sometimes difficult to provide.
With no rational basis for reducing rates based on impervious surface, some states do not permit such
discounts unless subsidized by non-stormwater funds (such as a city's general fund).
5.4.6 Administrative
Sometimes the greatest barrier to forming a stormwater utility is the agency's internal administrative
structure. This is particularly true for local municipalities where various stormwater functions have
evolved within different departments or divisions. For example, infrastructure maintenance may reside
in the streets or sewer departments, NPDES compliance in the environmental group, capital planning in
the engineering division, and financial services in the finance department. In other words, it is all too
common to find these functional units distributed throughout a municipal organization without unified
leadership or cohesive functionality.
Without such leadership, it can be very difficult to champion a cause such as initiating a stormwater user
fee. Support for change must often come from senior management in order to be implemented.
5.4.7 Limited Resources
Managing a complex municipal utility requires significant resources that are often lacking—particularly
in small/mid-size municipalities or ones that are attempting to launch a stormwater utility structure for
the first time. These resources may include:
A Strategic and financial planning
A Asset management
# Technology (GIS, data)
# Public engagement (branding, outreach)
The path to a dedicated and sustainable revenue stream includes all of the above (needs analyses,
financial planning, fee study, community engagement). These activities can cost $300,000 to $1 million
or more and take two or more years to implement. In addition, competing in the grant funding arena
demands that a stormwater agency possess expertise in grant writing and grant administration.
Finally, basic NPDES permit compliance is a complex and time-consuming endeavor to which an MS4
must devote resources to keep abreast of changing regulations and implementing NPDES programs,
public education and enforcement.
5.4.8 Lack of Public/Policymaker Awareness and Understanding of Needs
The first step in establishing a stormwater utility is determining the needs and calculating the associated
costs. Once done, the bigger challenge may be communicating this need to the municipality's
policymakers and the community at large in a compelling way. "The most effective stormwater business
plans recognize community expectations. In some cases, expectations must be elevated by convincing
demonstrations that stormwater problems exist and can be solved. Stormwater management rarely
captures public support unless problems impact the daily lives of citizens. Many drainage systems are
underground and essentially invisible to the public. If they are designed, constructed, and maintained
properly, most people are unaware of them. More visible problems such as potholes in roadways
consistently rate higher than drainage problems. The most effective programs identify and publicize the
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51
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problems they must address, seek public participation and support, and orchestrate the use of various
tools and resources overtime."37
This can be accomplished from the technical side with engineering and financial analyses. But moving
public opinion is much more difficult and requires expertise not often found in the ranks of stormwater
managers. A successful utility would employ public information personnel and develop an early branding
effort from which is built a full public engagement program that can begin to move the opinion of both
policymakers and the public at large.
5.5 Summary Conclusions
Stormwater programs face many challenges to developing the resources needed to deliver programs, as
well as the projects that will achieve the goals of flood protection and clean water. Progress has been
made on many stormwater funding fronts, including federal and state grant programs. While primary
funding remains a local municipal responsibility, it is widely recommended that any stormwater program
or utility develop a portfolio approach to funding. A solid foundation for that portfolio should be a
dedicated, sustainable revenue stream such as user fees, supplemented with a robust array of other
funding and financing mechanisms such as loans and other debt tools, grants, partnerships and multiple
creative approaches using the resources of other like developers and private interests.
The role of the federal government may be limited by comparison, but its presence is invaluable in
helping provide much needed capital funding for large projects, as well as in providing education,
offering training and making all opportunities to meet the challenges of funding available to all local
programs.
37 National Association of Flood and Stormwater Management Agencies. 2006. Guidance for Municipal Stormwater
Funding.
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6.0 Infrastructure Affordability
Identify how the source of funding affects the affordability of the infrastructure,
including consideration of the costs associated with financing the infrastructure.
Section 5.0 of this report details the types of funding sources and financial resources that are used to
manage stormwater operations and infrastructure. It also presents an overview of the key barriers that
municipalities face in obtaining the requisite ongoing funding for effective stormwater management.
This section of the report focuses on how the funding sources affect three aspects of a municipality's
stormwater management capabilities and household affordability: efficient management of
infrastructure, financial capability and customer household affordability.
6.1 Infrastructure Efficiency
An integral and critical aspect of stormwater infrastructure management is how efficiently utilities
manage stormwater infrastructure. Generally, infrastructure efficiency pertains to a deliberate focus on
best practices such as proactive asset management, effective use and leveraging of resources, strategies
that help achieve economies of scale, and risk mitigation and resiliency building efforts. An area of
opportunity identified by the Task Force is the highly decentralized nature of stormwater service
provision.
The types of stormwater systems in the U.S. and the organization of responsibilities both significantly
influence infrastructure efficiency. The following subsections discuss these two issues.
6.1.1 Types of Stormwater Systems and Implications
Stormwater is discharged not only through MS4 conveyance infrastructure but also via Combined Sewer
System (CSS) conveyance infrastructure. MS4s and CSS's have similar obligations under the CWA and its
related amendments. However, the two systems impose unique levels of service and infrastructure
management burdens and obligations, and consequently exert differing levels of impact on
infrastructure efficiency, financial capability and customer affordability.
Excessive wet weather (stormwater) flows in a CSS could trigger Combined Sewer Overflows (CSOs),
where the untreated combined stormwater and sanitary sewage is discharged directly to surface
receiving waters without even primary treatment. Consequently, the environmental responsibilities and
exposure to regulatory mandates such as the Long Term Control Plan (LTCP) requirements for CSS can
be vastly more expensive, as measured in both operating expenses and capital commitments necessary
to eliminate CSOs. Further, stormwater inflow into non-CSS wastewater collection systems can cause
similar overflow conditions.
Excessive wet weather flows also affect MS4s in a number of ways, including flooding, habitat
degradation, stream and channel erosion, and other significant water quality issues such as
sedimentation and pollution resulting from stormwater runoff. These, in turn, create the need for
stormwater treatment facilities.
• • •
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Both CSS's and MS4s involve significant financial investment in the treatment and management of wet
weather flows. Typically, funding for CSS management is covered by wastewater fees. Funding for MS4
management, the subject of this Task Force, is covered by a variety of sources as described in Section
5.0; however, many municipalities have no dedicated, consistent or reliable funding mechanisms in
place.
Regardless of the types of systems and funding mechanisms, customer affordability and the public's
understanding of the need for these services are critical.
6.1.2 Delineation of Stormwater Responsibilities
The Task Force has observed significant differences among municipalities with respect to the
distribution of stormwater management and regulatory compliance responsibilities. Some of these can
be attributed to the types of stormwater management systems that exist within a jurisdictional area
(discussed above); largely, though, they can be attributed to the institutional framework established by
the state in which the municipality is located, as well as local and regional stormwater needs. The
distribution of responsibilities can affect affordability by creating situations where there are overlapping
responsibilities and limited accountability for program implementation.
In some municipalities (e.g., Philadelphia or Newark, New Jersey), the drinking water/sewer utility—a
city department—is responsible for managing all aspects of stormwater management including
LTCP/NPDES and MS4 regulatory compliance; both CSS and MS4 types of stormwater infrastructure; and
all associated O&M requirements, including green infrastructure initiatives. In these cases, the
management of the entire stormwater infrastructure rests within a single entity with a single point of
accountability.
Responsibility is divided in other municipalities. In Washington, D.C., for example, an independent
authority (DC Water) manages the CSS and separate sanitary sewer systems while the municipality
(specifically, the Department of Energy and Environment) is responsible for all MS4 requirements. Even
in a municipality that has only an MS4 system and a separate sanitary sewer system, the stormwater
management responsibilities may be distributed between a drinking water/sewer utility, a department
of public works, and for example a department of transportation. In addition, in many communities, the
MS4 responsibilities for developing and implementing specific permit requirements such as stormwater
pollution prevention plans or nutrient management plans are given to school districts or fire, police or
parks departments. In these cases, holistic management of stormwater infrastructure requires a clear
understanding of roles and responsibilities, delineation of ownership of stormwater assets, and effective
coordination among the various entities to enhance infrastructure efficiency. An integrated planning
framework could especially enhance efficient management of infrastructure in these situations where
multi-entity coordination is critical. Such a framework would put municipalities in a position to optimize
capital investments—making this a concept worth the investment of grant dollars.
Such significant differences in the distribution of stormwater service responsibilities among municipal
jurisdictions also directly influence the overall financial capability aspects of stormwater management
(discussed in Section 5.0), as funding and cost recovery mechanisms differ significantly. Note also that,
in some municipal jurisdictions, USACE may support the implementation of stormwater management-
related projects (mainly large flood risk management projects) by providing partial funding and technical
assistance.
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6.2 Financial Capability
Stormwater capital infrastructure investments are driven by the need to enhance and/or maintain
existing drainage capacity, flood mitigation, repair and rehabilitation of aging infrastructure, coastal
resilience, climate resilience and other community needs. In CSS communities with consent decree
requirements to mitigate CSOs, the pressure on stormwater infrastructure investments such as tunnel
or gray infrastructure, and/or the need to enhance pumping and wastewater treatment capacities, can
be significant. The critical challenges for a municipal entity managing stormwater infrastructure (for
CCS's or MS4s), are funding availability, funding adequacy and timeliness of funding.
Municipalities tend not to have enough funding for stormwater infrastructure, though they range on a
spectrum from "no dedicated funding" to "adequate funding." For example, the national WEF
Stormwater Institute and Black & Veatch stormwater surveys38 and other state-level stormwater,
drinking water and clean water surveys indicate that utilities cite "lack of funding availability" as their
highest-ranked challenge with respect to timely infrastructure investments. While there are many
funding sources for stormwater, as described in Section 5.0, the Task Force believes the funding is
inadequate and that there are significant barriers to accessing the available funding sources.
The following subsections present four factors affecting financial capability for effective stormwater
management:
• Stormwater financial reporting
4 Impact of various funding sources on building financial capacity
* Implications of the financial capability assessment methodology
~ Customer household affordability
6.2.1 Stormwater Financial Reporting
Stormwater infrastructure is, generally, an entirely municipal proposition. The footprint of publicly
traded investor-owned utilities and private companies that own and operate stormwater systems is
small—not a material share of the total infrastructure universe. Therein lies a major area of opportunity:
there are roughly 42,158 units of local government,39 and while not all are directly responsible for every
category of municipal asset, they are very diverse in management and governance structures as well as
financial reporting. This makes summary observations of financial capabilities as well as affordability to
households more difficult. Municipalities generally do not produce independently audited financial
statements with the same timeliness as publicly traded companies, nor do most publish intra-year
unaudited statements such as quarterly financials.
38 WEF Stormwater Institute. 2019. National Municipal Separate Storm Sewer System (MS4) Needs Assessment
Survey Results. httpsi//wefstormwaterinstitute,org/wp-content/uploads/2019/Q8/MS4~Survev-Report-2019,pdf;
Black & Veatch. 2018. 2018 Stormwater Utility Survey. httpsi//www,bv,com/sites/default/files/2019-
10/18%20Stormwater%20Utilitv%2QSurvev%20Report%20WEB O.pdf
39 Hogue, C. 2013. Government Organization Summary Report: 2012.
httpsi//www.census.gov/content/dam/Census/library/publications/2013/econ/gl2-cg-org.pdf. (This Census
summary identifies 38,910 general purpose governments. It excludes special and school districts but does include
3,248 special districts categorized as "drainage and flood control.")
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Specifically, the differences in management and governance have direct implications for stormwater
funding and financial reporting, as follows:
i General government (most common). When stormwater management responsibilities lie with a
general government (e.g., with its public works or streets and transportation department), the
primary source of funding is typically general tax revenues. There may not be any dedicated source
of funding for stormwater management. This governance and funding structure is usually associated
with a modified accrual basis of accounting or, worse, a cash basis. Neither includes a balance sheet
with assets and liabilities. Similarly, the statement of revenues over expenditures does not have an
explicit line item for depreciation for those assets that are even depreciable. The Task Force believes
that without a clear correlation between dedicated funding and revenue requirements, sufficient
funding for stormwater cannot be allocated through such governance structures.
~ Utility department (varies by state, but generally less common). Some municipalities have stand-
alone stormwater enterprise funds. However, not all local governments have state statutory
authority to establish separate and discrete stormwater utilities, meaning stormwater management
responsibilities lie within the purview of a larger drinking water and sanitary sewer utility
department within the municipality. The primary source of ongoing funding is typically user rates
and user charges. However, the way rates and charges are levied varies from municipality to
municipality. Some utilities (e.g., Philadelphia, Pennsylvania; Portland, Oregon; Wilmington,
Delaware; and Chesterfield County, Virginia) levy a fee based on the property's actual or estimated
impervious surface area to recover the costs associated with stormwater management. Other
communities levy a flat recurring charge based on type of land use (residential, commercial, etc.).
Still other municipalities—such as New York City, where the Department of Environmental
Protection is responsible for drinking water, sewer and stormwater management—recover costs
through sanitary sewer user charges. Still, for transparency purposes, a rate-based funding structure
typically is associated with traditional enterprise financial reporting, using an accrual basis of
accounting that does include an income statement, balance sheet and depreciation. This makes it
less difficult to assess whether ongoing funding is sufficient to cover stormwater needs, even
without uniform reporting standards.
A Independent authority (least common). If stormwater management responsibility lies with an
independent municipal authority or separate political subdivision, stormwater funding may have to
rely on either the taxing authority or its own rates and charges. Comparability and assessment of
financial capacity and affordability to the household is therefore subject to financial accounting and
transparency.
6.2.2 Impact of Various Funding Sources on Building Financial Capacity
The Task Force reviewed the key funding sources discussed in Section 5.0, evaluating most of those
sources' potential impact on a municipal entity's overall ability to build financial capacity, for O&M and
capital infrastructure investment.
In the summary below, the Task Force describes the criteria for this review, summarizes the findings and
presents a case study example.
6.2.2.1 Assessment Criteria
The Task Force defined the following key criteria for evaluating the ability of various funding sources to
help build a municipality's overall financial capacity:
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* Sufficiency—measures the total annual revenue that a municipality can generate from one or more
funding sources.
# Stability/sustainability—assesses the ability of the combination of funding sources to provide
consistent and reliable levels of dedicated funding to support immediate and long-term sustained
infrastructure management, including capacity expansion and to meet O&M service obligations.
These criteria also measure the sustainability of the revenue source.
• Scalability—measures the flexibility of the utility to increase funding commensurate with increases
in revenue requirements.
i Legislative requirements—funding options such as user fees, impact fees and debt issuance often
require internal approval from boards, councils or commission, and/or potentially voter
approval/referenda through ballot measures. These legislative requirements and challenges can
influence the ability to generate timely funding.
i Acceptability—evaluates the benefits and risks of the various funding sources as judged by elected
officials, utility management and external stakeholders.
* Customer equity—evaluates the measure of equity, which can be defined in a variety of ways, in
cost recovery from the customer base within the jurisdiction.
6.2.2.2 Summary Assessment of Funding Sources on O&M and Capital
Infrastructure Investments Financial Capacity
Section 5.0 summarized the various types of funding sources, along with their advantages and
disadvantages. It broke those sources into three categories:
# Recurring and/or intermittent revenue funding
~ One-time funding sources for capital projects and/or one-time initiatives
# Other resources/approaches
This section further examines the impact of the first two of those categories in building a utility's
financial capacity for stormwater management.
i Figure 1-1 (Appendix I) summarizes the impact of recurring and/or intermittent funding sources on a
utility's ability to effectively fund O&M operations. All of the sources listed in Figure 1-2 and Table 1-2
are applicable to a municipal entity's stormwater O&M revenue requirements.
~ Figure 1-2 (Appendix I) summarizes the impact of the one-time sources/initiatives on a utility's ability
to adequately fund capital infrastructure investments.
* « #
57
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6.2.2.3 Case Study Example: Flexibili:
The Iowa SRF program has funded stormwater
projects, without affecting user fees, through the
Water Resource Restoration Sponsored Projects
program. A CWSRF project can carve out 1
percent of the interest that would have otherwise
been paid to the CWSRF program on its
infrastructure loan, using that money for a non-
point source project (see Figure 2). The SRF
program allows about $100,000 per $1 million
CWSRF loan to be used for water quality projects.
Through this overall interest rate reduction, the
utility's ratepayers do not pay any more than they
would have for just the wastewater
improvements.
Stormwater projects— including permeable
paving, bioswales, rain gardens, streambank
restoration and soil conservation projects on agricultural lands— have been funded in this manner.
About $50 million for these projects have been approved for nationwide funding.
6.2.3 Implications of Financial Capability Assessment Methodology
Financial capability assessments (FCAs) are distinct from various measures of household or individual
customer affordability (discussed below) in that an FCA relates to the ability of a community (or
permittee) to finance infrastructure investments. For a broad array of purposes, EPA has used a static,
two-phase methodology to conduct FCAs. Phase I involves calculation of a residential indicator (Rl),
which examines the average per household cost of services relative to a benchmark of 2 percent of
service-area-wide median household income (MHI).
Phase II involves the calculation of a financial capability index (FCI), a simple arithmetic average of scores
for six economic indicators:
* Bond rating
* Net debt as a percentage of full market property value
* MHI
* Local unemployment
* Property tax revenues as a percent of full market property value
* Property tax collection rate within a service area
A higher FCI score suggests relative economic strength; a lower FCI indicates weak economic conditions
and relatively lower financial capability. EPA's existing FCA guidance40 has been subject to extensive
review and critique for a variety of reasons that are particularly resonant for application to stormwater-
related infrastructure financing. For example, the diversity of governance structures and financial
40 U.S. EPA. 1997. Combined Sewer Overflows—Guidance for Financial Capability Assessment and Schedule
Development. EPA 832-B-97-004. February 1997. https://www3.epa.gov/npdes/pubs/csofc.pdf
fy in the Use of CWSRF
concern
ft*
¦ Loan Costs
(interest and fees)
a Sponsored project
principal
~ 'Wastewater
principal
$1 mXion CWSRF Si million loan with
ban sponsored project
Figure 2. Graphic illustrating the use of sponsored
projects through the CWSRF program.
• • •
58
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reporting protocols noted above makes even baseline evaluation of current funding complicated.
Financing stormwater infrastructure is often less straightforward than issuance of the revenue bonds
assumed to be available in EPA guidance. And profound complexities may be involved in assigning the
residential vs. non-residential flow contribution responsibilities required in EPA's matrix methodology.
Emerging concepts to address the limitations of EPA's current FCA methodology could also improve
evaluation of community financial capabilities to fund stormwater infrastructure (though the diversity of
governance configurations will continue to impose complexities). For FCAs, these concepts call for a
direct evaluation of a community's (or communities', in cases where stormwater services involve
multiple jurisdictions) financing capacity through cash-flow analyses. Current and potential new
methods for funding stormwater infrastructure would require explicit recognition (rather than being
subsumed within general government financial reporting). Projected tax or fee cost impacts on
individual households and non-residential entities may be calculated and gauged in relation to various
income metrics (e.g., median and lowest quintile, gross and disposable). Financial capabilities would be
assessed in terms of the community's ability to fund O&M expenses and capital spending given tenable
annual adjustments to stormwater-dedicated tax and fees. The pace and magnitude of these tax or fee
increases would be established by reference to new measures of household or individual customer
affordability as discussed below.
6.3 Customer Household Affordability
In the context of drinking water and wastewater services, customers' hardships include various costs
associated with challenges in paying service bills, including even service interruptions. For stormwater
services, such customer affordability issues may manifest less explicitly or dramatically, but they
nevertheless are important considerations for stormwater finance policy development. And, as with
FCA, both how household affordability is measured and what constitutes burdensome levels of cost are
being reconsidered as concerns rise about water affordability across all water-resource-related services
(i.e., drinking water, wastewater and stormwater).
Historically, EPA has measured drinking water and wastewater service cost affordability largely in terms
of how estimates of annual household costs compared to MHI as reported in U.S. Census data. EPA's
historically used FCA matrix methodology may render a determination of "High Burden" for
communities where household costs are above 2 percent of MHI. Logically, though rarely done, the
same methodology can be applied to evaluation of stormwater service costs—especially (or at least
more easily) if such costs are explicitly calculable by reference to stormwater utility rates or fees rather
subsumed within general government funding sources. The historical underfunding of stormwater
management costs (even if recovered through separately established fees and charges) means that
stormwater management costs are unlikely to be deemed as currently imposing an undue burden using
historically applied metrics referencing MHI. In addition, the use of MHI as an affordability metric has
been widely criticized.41
Emerging concepts related to household water affordability measures (like those for FCAs) offer new
measures and methodologies for assessing water resource management costs beyond reference to MHI.
Cost as a percentage of lowest quintile income is advocated for its focus on the economically
41 AWWA. 2013. Affordability Assessment Tool for Federal Water Mandates.
https://www.awwa.Org/Portals/0/AWWA/ETS/Resources/AffordabilitvAssessmentTool.pdf
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disadvantaged; cost as a percentage of a measure of disposable incomes is advanced as a means to
gauge whether households will face undue substitutions of health care, food or other essential services.
Most importantly, these concepts call for inclusion of stormwater-management-related costs (incurred
via separate charges or through general taxes and fees) in the pantheon of claims imposed on
households for water resource management services.
» « <
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Appendix I: Tables and Figures
Table 1-1. Funding Type Matrix, including a Description of the Funding Source and Associated Advantages and Disadvantages.
Funding Source
Description
Advantages
Disadvantages
1.0 "Revenue-Based" Funding Sources used to pay on-going Operation & Maintenance and Debt Service of the Stormwater System
l.A Recurring, Sustainable Revenue Sources for On-going Stormwater Program Funding
• Provide regular, recurring revenues to fund both operating and capital related costs
Taxes/ General
Funds
Funds raised through taxes such as
property, income, and sales that are
paid into a general fund.
• Consistent from year-to-year
• Utilizes an existing funding system
• There can be significant competition for funds;
• Tax-exempt properties do not contribute;
System is not equitable (does not fully reflect
contribution of stormwater runoff)
Taxes/ Dedicated (e.g.,
local option sales tax,
Gas Tax, drainage or
special assessment
district)
Funds raised through taxes such as
property, income, and sales that are
restricted, in part or in whole, for
funding stormwater costs.
• Consistent from year-to-year but can vary
(e.g., changes in property values or rise and
fall with economic cycles)
• Utilizes an existing funding system
• Can be targeted for a specific purpose
(ongoing maintenance, capital, etc.)
• May be competition for funds if not exclusively
restricted to stormwater;
• May require approval by vote of the local legislative
body and public if a new tax
• Often have a "sunset" clause resulting in stable
funding only for a specified period of time (e.g., 10
years)
• Tax-exempt properties do not contribute;
System is not equitable (does not fully reflect
contribution of stormwater runoff)
• • •
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Funding Source
Description
Advantages
Disadvantages
Stormwater Utility User
Fee (Enterprise Fund)
A stormwater utility generates its
revenue through user fees and the
revenues from the stormwater
charges will go into a separate fund
(e.g., enterprise fund) that can be
used only for stormwater services.
• Dedicated funding source
• Directly related to stormwater impacts
• Sustainable, stable revenue
• Shared cost
• Equitable apportionment of costs
• Improved watershed stewardship
• Addresses existing stormwater issues
• All properties served pay fee
• Feasibility study required for implementation, fee
structure, and administration of utility
• Requires approval by vote of the local
legislative body, in some cases public vote
required
• Perception by the public of a "tax on rain"
• Public acceptance for a first-time fee is difficult
• Some states have not yet allowed SW Utilities
l.B Intermittent Revenue
• To recover a portion of costs related to which fee or charge is assessed
Fees
Revenue raised through charges for
services such as inspections and
permits.
Revenue raised through developer
related fees are one-time charges
linked with new development.
• Specific permit and inspection fees allow for
more direct allocation of costs for services
provided
• Fees can be set to fully recover cost
• Certain kinds of fees can provide funding for
long-term maintenance
• Addresses potential stormwater impacts
related to new construction
• Not available for larger projects or system-wide
improvements
• Developer impact fees may be an unreliable source
when development slows (due to market
downturns/contractions)
• Requires administrative framework to assess and
manage
• Legal limitations may constrict or restrict usage
Special Charges (e.g.,
impact fees, latecomer
fees, system
development charges,
special assessments,
surcharges on other
utilities)
A number of different fees that
attempt to shift certain program
costs to provide a better cost
causation match. Payees might be
other local programs, development
interests, or parties requiring a
myriad of special services or
penalties.
• Improves cost causation equity match
• Allows special services to be paid for by
recipients
• Provides additional funding in a manner
acceptable to the general public
• Recovers the cost of negative impacts of
other activities on the stormwater system
• Level of funding is unpredictable and can vary
significantly year to year
• Can be hard to administer
• May be seen as discouraging development or
other desirable activities
• May be difficult to price accurately
• While some sources may fund certain O&M
(e.g., staff time), others, such as impact fees
and SDCs are generally restricted to capital
funding only
» « <
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l.C Capital Financing Sources (Financing Vehicles, require repayment)
• Borrowing for capital projects
Bonds (Debt
Obligations)
Bonds are not a true revenue
source, but are a means of
borrowing money to finance capital
projects. Bonds are generally issued
with a term less than the expected
useful life of the assets financed.
Bonds may be general obligation
(GO) bonds backed by taxes, or
revenue bonds, backed by a secure
revenue source (most commonly a
stormwater user fee). "Green"
bonds are a designation of bonds
dedicated to environmentally
friendly projects, including clean
water projects.
• Existing sources available for
stormwater-related funding
• Can support construction-ready projects
• Allows a community to complete large
projects sooner than revenue cashflows
become available, or a significant
stormwater capital program more quickly
• Spreads the cost of the capital project over
time, allowing beneficiaries of the
improvements to pay over the life of the
bonds, rather than current property owners
paying up front.
• Mitigates the risk of construction cost
escalation
• Accelerates ability to address important
health and environmental issues
• May require approval for each issuance, in
some cases, voter approval
• Requires access to funding for full repayment of
principal borrowed
• Interest costs can vary but will add to total project
cost
• Requires dedicated repayment revenue stream
• May require design-level documents to be
prepared in advance of debt funding
• Cannot be used to fund O&M if they are tax
exempt bonds.
• Will require additional funding for costs of
issuance
• May require significant administrative preparation
to issue and for post-issuance compliance activities
and disclosures.
Loans (Debt Obligation)
Low-interest loans, for example the
SRF loans, may be secured, and are
generally used for planning and
capital projects.
• Existing sources available for
stormwater-related funding
• Offers low- or no-interest financing
• Low interest loan programs may offer ease of
issuance relative to public offerings
• One-time source of funds
• Requires full repayment of principal borrowed
• Administrative requirements can be time-
consuming
• Low loan programs may come with inflexible
mandates and restrictions
l.D One-time Sources
• Generally used for capital projects
Grants
State, federal, local and non-profit
grants provide additional funding for
water quality improvements.
• Existing sources available for
stormwater-related funding
• Does not require repayment
• Competitive
• Typically, one-time, project- specific, or time-
constrained funds
• Often requires a funding match
• Does not fund post-project O&M
• Grant requirements may not correspond with
project needs
» « <
63
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2.0 Other Resources/Approaches for Funding Stormwater Management
Public-Private
Partnerships (P3)/
Alternative
Service Delivery
(ASD)
Contractual agreement between a
public agency and a private sector
entity—generally used for capital
projects. Partnering with private
enterprise can expand access to
resources and capital and offer
better economies of scale. P3/ASD
shifts both risks and duties from the
traditional procurement and project
management context. Examples
include: Design/Build,
Design/Build/Operate/Maintain/Fin
ance, and Pay-for-Performance (also
sometimes referred to as Pay-for-
Success). May include private
financing, or a combination of public
and private financing.
• May be structured to require minimal to no
initial cash outlay for public sector, assuming
the private sector partner is providing
financing
• Efficiency through bypassing bureaucracy or
economies of scale
• Flexibility & creativity of project approach,
new technology adoption and
contracting/procurement
• Access to flexible & creative private sector
financing
• Significantly leverages public resources
• Draws on private sector expertise
• Enables transfer of compliance from one
development to another
• Partnerships can be with not-for-profit
entities
• Considers a project's full lifecycle, potentially
including O&M
• Risk is shared with or passed entirely to
private entity
• A local revenue source is needed to fund the
partnership
• May be structured so as not to require new
funding; may rely on underlying public revenue
stream (e.g., user fees, taxes)
• May require enabling legislation
• Substantial education and socialization required
to manage public perceptions related to loss of
control and escalated costs
• Initial financing costs inherent within P3/ASD may
be higherthan municipal debt.
• A lack of public agency experience may
necessitate the need for additional resources to
complete a successful contract negotiation
Private
Development
Sites
Private sites build distributed
stormwater infrastructure (Low
Impact Development, BMP's,
conveyance, etc.) that contributes to
the overall municipal goals OR
contribute funding in lieu of
construction. Usually required by
local ordinance or conditions of
approval OR set up as a development
impact fee. The proper construction
and ongoing maintenance of these
sites constitutes a major stormwater
expenditure of significant
importance.
• When well-regulated and inspected these
structures and systems are the first, and most
important line of defense against flooding,
erosion and pollution
• Inspection and enforcement costs are
comparably low but with significant return on
investment
• Capital expenditure and permitting costs are
borne by private development
• Often required by regional NPDES permits and
enforced by municipalities
• Political will, budget, and legal capability to enforce
long-term maintenance, and sometimes initial
construction standards may be lacking
• Funding is only triggered when regulated
development occurs, which can be hard to plan
around and predict - particularly in a low
investment environment or with regulations that do
not capture the majority of development and
redevelopment activities
• Development may not happen in areas of greatest
need in watershed/community
• Additional education may be required to build
public knowledge
• Impact of such programs is hard to measure unless a
high percentage of the watershed has been
constructed with modern requirements
• Distributed infrastructure may not be efficient in
• • •
64
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treating and managing stormwater flows
• Ensuring O&M is difficult and requires municipal
resources
• Development impact fees require robust needs
analysis and nexus findings (although a strong
finding could be an advantage)
Volunteer
Programs
In-kind initiatives that can help
support stormwater priorities
• No cost to stormwater program
• Can help increase public awareness
• Some not-for-profits come trained and ready
to work
• Can bolster public support for a user fee
• Limited impact from overall revenue perspective
• Requires coordination, training and supervision
Coordination with
other Municipal
Departments and
State Agencies
Creating synergies with other city
departments, agencies, etc. to
leverage available community funds
for stormwater needs
• Eliminate duplication of effort
• Move toward a "water agency" that can
integrate water as a single resource
• Allows easier/quicker response for
emergencies
• Multiple funding or resources may be
harmonized; the "whole being greater the
sum of the parts"
• Transportation projects can add stormwater
elements for marginal costs (sometimes)
• State DOTs right of way limitations often
compel them to partner with municipalities to
achieve stormwater goals
• Stormwater may be seen as a secondary priority
behind water and wastewater or public works focus
on roads
• Can lose ability to react to stormwater needs if
equipment and manpower are not dedicated
• May require additional education of personnel or
additional resources with stormwater expertise to
make stormwater decisions
• Disparate-agency partnerships can be difficult to
manage
• Mixing funding sources (particularly with grants) can
be challenging
Market-Based
Solutions
The off-site provision of required
stormwater controls on another site,
or in another way, that is seen as
more cost effective to a property
owner or developer, but equally
effective in attainment of the
regulatory standard.
• Creates cost efficiencies in placement of
stormwater controls
• Can allow for aggregation for better overall
control and treatment
• Can shift and target controls to more critical
locations
• Can be complex to administer
• Requires clear and enforceable policies on
ownership and maintenance
• Markets may be not be initially viable and may need
to be jumpstarted with local funding
* « #
65
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Newer Innovative
Approaches
A wide variety of approaches that
seek to exploit unique or unusual
funding sources: sponsorship of
stormwater or green infrastructure
sites, adopt-a-road advertising, tax
increment funding, use of private
land for public infrastructure, shared
right-of-way, seed money and
expertise, leveraging user fee
credits, philanthropy, etc.
• Can provide funds at little cost
• Can motivate the private sector through name
recognition
• Can provide good return on seed money
investment when paired with private actions
• Can be hard to administer and explain
• May require opinions and analysis on legality
* « <
66
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Table 1-2. Financial Capacity Impact of Recurring/Intermittent Funding Sources—O&M Operations.
Evaluation
Criteria
Recurring or Intermittent "Revenue Based" Funding Sources
Taxes/General
Funds
Stormwater
Dedicated Taxes
Stormwater Utility
User Fee
Other O&M Fees
Surcharges or
Special Assessments
Revenue
Sufficiency
Low: general
funds typically
have different
priorities such as
public safety
Moderate: better
transparency via
correlation
between revenues
and revenue
requirements
Moderate to high:
generally, the rates
and charges are
objectively aligned
with the revenue
requirements of the
stormwater system
Low: don't always have
a clear correlation or
justification to annual
revenue requirements
and may be fungible
with other general
government needs
Moderate: generally,
have somewhat
limited revenue-
raising ability
Stability of
Revenues
Volatile: property
and sales tax
bases can rise and
fall with economic
cycles
Volatile: property
and sales tax bases
can rise and fall
with economic
cycles
Strong: revenues are
tied to either the size
of the property's
impervious surface
area or the category of
the property, not to
economic cycles
Variable: very low
volatility if tied to a per-
parcel fee and not
subject to property
valuation, very high
volatility if tied to non-
recurring cash flows like
development
Low to moderate:
special assessments
often are tied to
property valuation
and surcharges
sometimes are
related to water
consumption
Scalability to
Meet
Increasing
Needs
Low: major line
item increases are
generally subject
to political
scrutiny
Very low:
dedicated taxes are
typically voter-
approved and may
not even exist in
perpetuity
High: a dedicated
funding source allows
the user fees to be
leveraged to address
both O&M and capital
expenditure; however,
fee increases are
typically not well
received by elected
officials or the public
Low: would mostly
likely need some kind of
authorization to scale
up the fee structure,
from a municipality or
even a homeowners'
association
Moderate: limited
ability to increase
revenues creates
finite financial
capacity
Legislative
Requirements
High: subject to
annual
appropriation,
sometimes even
voter approval
Very high: subject
to voter approval
and annual
appropriation
Low: usually only
requires a one-time
authorization via
either state general
assembly or municipal
ordinance
Very high: subject to
voter approval and
annual appropriation,
perhaps public
education to get buy-in
from the developer
community
High: likely subject to
some kind of initial
legal authorization
Community
Acceptability
High: aside from
politicization of
where in the
municipality to
fund projects,
usually not
controversial
Moderately high:
establishing a new
tax may not be
politically palatable
unless a recent
flood event is
driving the measure
High: aside from
politicization of where
in the municipality to
fund projects, usually
not controversial
Moderately high:
establishing a new tax
may not be politically
palatable unless a
recent flood event is
driving the measure,
but possibly offset by a
user-pay
Moderately high:
establishing a new
tax or fee may not be
politically palatable
unless a recent flood
event is driving the
measure
Community
Financial
Capability
Barriers
High: many states
have established
and/or
municipalities
have self-imposed
limitations related
to taxation
Moderate:
comparably easier
to assess financial
capacity and assign
resources even if
that capacity may
be statutorily
limited
Low: a dedicated,
user-based, non-tax
revenue stream
creates dedicated
financial capabilities
and improves ability to
do multi-year planning
Moderate: if there is a
high degree of revenue
fluctuation, it may be
difficult to appropriate
funding to retain
dedicated full-time
equivalent staffing;
municipality could lose
institutional knowledge
Moderate:
comparably easier to
assess financial
capacity and assign
resources even if
that capacity may be
statutorily limited
Household
Afford ability
Impact
High: property
taxes are generally
deemed as
regressive
High: property
taxes are generally
deemed as
regressive
Low: User fees are still
somewhat regressive
but usually much
smaller in actual
dollars compared to
water and sewer
charges
Low: if tied to a "user
pay" levy, would mostly
likely be borne by those
directly benefitting
from the infrastructure
Moderate: not as
regressive as a pure
tax but still
correlated to
property valuation
without explicit
income recognition
• • •
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Figure 1-1. Impact of recurring and/or intermittent funding sources on a utility's ability to effectively fund O&M operations.
• • •
68
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Figure 1-2. Impact of one-time sources/initiatives on a utility's ability to adequately fund capital infrastructure investments.
• • •
69
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Table 1-3. Financial Capacity Impact of One-Time Financing Sources—Capital Infrastructure.
Evaluation
Criteria
One-Time Financing Sources for Capital Projects/Initiatives
G ra nts
Bonds
Low-Interest Loans
Capital Revenue
Fees
Developer
Contribution
Revenue
Sufficiency
Moderate: will
usually be
sufficient for a
single project but
rarely for an
entire system on a
recurring basis
Strong: allows for
payment over
extended period,
creating ability to pay
for larger projects and
still have cash flow for
ongoing O&M;
however, a dedicated
funding source is
needed to pay the
bond commitments
Strong: allows for
payment over extended
period of time, creating
ability to pay for larger
projects and still cash
flow for ongoing O&M;
however, a dedicated
funding source is
needed to pay the loan
Low: generally,
municipalities
earmark this revenue
stream for pay-as-
you-go infrastructure
investments, and
capital plan needs in
any given year may
exceed that
Low: generally tied
to economic
development or
redevelopment,
which can be very
volatile
Cost of
Borrowing
Impacts
Moderate:
typically requires
some financial
commitment or
cost share by the
municipality,
which is
sometimes itself a
barrier
High: interest
expense, ongoing
disclosure
requirements and
debt and financial
management
obligations recur
through the life of the
bonds
Moderately high:
typically rates are
subsidized and below
market; has fewer
disclosure and other
recurring requirements,
but still requires good
debt and financial
management practices
None: generally
municipalities
earmark this revenue
stream for pay-as-
you-go infrastructure
investments
None: one-time
cash inflow, against
which
municipalities
generally do not
borrow or pledge
toward debt
Flexibility in
the Use of
Funds
Low: federal and
maybe even state
grants require
single audit and
related
verification
High: if the bonds are
tax exempt, the main
restrictions are those
related to IRS
requirements
High: generally the only
restriction is that the
project must be
associated with the
lender agency's mission
Very high: local,
internally generated
revenues generally
do not have
restrictions
High: only
restriction might be
that contributions
be used for growth-
driven investments
in the immediate
area of
development
Legislative
Requirements
Almost none:
grants are well-
established tools
that may only
require formal
approval and
acceptance by the
municipality
Low: while some
states and many
municipalities impose
some guidelines or
limits, generally local
governments are not
restricted to use
bonds
Low to moderate: some
lending agencies
require more collateral
or a pledge of a
supplemental revenue
stream, which may
require further
authorization by the
municipality
Low: there may in
some states be a
requirement to
justify based on cost
of service
Low: political
willingness to
implement impact
fees (or equivalent)
is generally the only
barrier
Community
Acceptability
High: assuming
the local match is
not a barrier,
municipalities
generally
welcome grants
Moderate to high:
there may be some
aversion to debt in the
community but
generally this does not
preclude bond
issuance
High: federal or state
agencies may also be
more willing to work
with a financially
distressed community
than the capital market
creditors
Moderate:
introduction of fees
may be more
politically palatable
than taxes
Moderate: may
galvanize resistance
among the
developer
community as
being disruptive to
their business
model
Community
Financial
Capability
Barriers
High: many
communities lack
the institutional
knowledge or
funding for grant
application
writers and grant
administrators
High: generally
bonding relies on
access to credit
markets, which can be
a barrier to poor or
small municipalities
and requires good
financial management
Moderate: still requires
good financial
management practices
but federal and
especially state
agencies often can
provide technical and
administrative
assistance that small,
poor or rural
communities might not
otherwise be able to
access
Moderate:
recommended best
practices include
segregated financial
accounting and
reporting to show
citizens revenues are
being deployed as
represented—a
potential barrier for
small, poor or rural
communities without
the requisite staff
Moderate: requires
financial and
technical expertise
to properly track
and account for
these non-recurring
revenues
• • •
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Evaluation
Criteria
One-Time Financing Sources for Capital Projects/Initiatives
G ra nts
Bonds
Low-Interest Loans
Capital Revenue
Fees
Developer
Contribution
Household
Afford ability
Impact
Low: one of the
most favorable
weighted cost of
capital options
High: borrowing, even
at favorable interest
rates, is still the
highest cost of capital
Moderately high: few
programs offer pure
"zero interest"
borrowing
Low: capital-related
fees are often small
in absolute dollars
None: in most
cases, developers
typically bear the
upfront costs, and
many cities require
"growth pays for
growth" so that
costs are not
subsidized by the
general rate base
• • •
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Appendix II: Municipal Financial Reporting and Asset
Management
In 1999, in a document known as Statement 34,42 the Governmental Accounting Standards Board paved
the way for a fairly large shift in the way public sector entities produce financial reports.
Statement 34 discussed infrastructure assets: "long-lived capital assets that are normally stationary in
nature and normally can be preserved for a significantly greater number of years than most capital
assets. Examples of infrastructure assets include roads, bridges, tunnels, drainage systems [emphasis
added], water and sewer systems, dams, and lighting systems. Buildings, except those that are an
ancillary part of a network of infrastructure assets, should not be considered infrastructure assets for
purposes of this statement."
In the excerpt below, Statement 34 encourages asset management:
[Depreciation expense] may be calculated for (a) a class of assets, (b) a network of assets,1 (c) a
subsystem of a network," or (d) individual assets...
Infrastructure assets that are part of a network or subsystem of a network1" (hereafter, eligible
infrastructure assets) are not required to be depreciated as long as two requirements are met. First,
the government manages the eligible infrastructure assets using an asset management system that
has the characteristics set forth below; second, the government documents that the eligible
infrastructure assets are being preserved approximately at (or above) a condition level established
and disclosed by the government.™ To meet the first requirement, the asset management system
should:
a. Have an up-to-date inventory of eligible infrastructure assets
b. Perform condition assessments7 of the eligible infrastructure assets and summarize the results
using a measurement scale
c. Estimate each year the annual amount to maintain and preserve the eligible infrastructure assets
at the condition level established and disclosed by the government.
1 A network of assets is composed of all assets that provide a particular type of service for a
government. A network of infrastructure assets may be only one infrastructure asset that is
composed of many components. For example, a network of infrastructure assets may be a dam
composed of a concrete dam, a concrete spillway, and a series of locks. [This footnote
" A subsystem of a network of assets is composed of all assets that make up a similar portion or
segment of a network of assets. For example, all the roads of a government could be considered a
network of infrastructure assets. Interstate highways, state highways, and rural roads could each
be considered a subsystem of that network.
111 If a government chooses not to depreciate a subsystem of infrastructure assets based on the
provisions of this paragraph, the characteristics of the asset management system required by this
paragraph and the documentary evidence required by paragraph 24 [which leaves documentation
to professional judgment] should be for that subsystem of infrastructure assets.
42 Governmental Accounting Standards Board. 1999. Basic Financial Statements—and Management's Discussion
and Analysis—for State and Local Governments.
http://www.gasb.org/cs/ContentServer?site=GASB&c=Document C&pagename=GASB%2FDocument C%2FGASBD
ocumentPage&cid=1176160029121
• • •
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IV The condition level should be established and documented by administrative or executive policy, or
by legislative action.
v Condition assessments should be documented in such a manner that they can be replicated.
Replicable condition assessments are those that are based on sufficiently understandable and
complete measurement methods such that different measurers using the same methods would
reach substantially similar results. Condition assessments may be performed by the government
itself or by contract.
The Louisiana Division of Administration spoke for the vast majority of public sector entities across the
U.S. when it recommended in 1999 that the state "...choose the alternative, to depreciate the
capitalized infrastructure assets. We feel that this is the most cost-effective approach for reporting since
there would not be any significant burden involved in depreciating the infrastructure assets once they
have been identified and capitalized. The schedules of capitalized infrastructure assets would simply
include a column to compute the amount of annual depreciation. Under the modified approach, the
capitalization requirements are the same as under the depreciation alternative. However, the cost and
effort to follow the requirements of the modified approach would be significant and therefore more of a
burden than depreciating the infrastructure assets. In addition, with the uncertainty of state funding to
cover the additional costs of maintaining the state's infrastructure at specified condition levels as
prescribed in the modified approach, it is possible that the state would have to revert to the
depreciation alternative at some point in the future and face a qualification in the year we fail to
maintain at the designated level."43
To date, less than 10 percent of the roughly 42,15844 units of government are estimated to be using the
modified approach. Municipal finance officials already face burdensome reporting and financial
statement preparation requirements that greatly inhibit their ability to produce independently audited
financial statements much before 120 to 180 days from the end of the previous fiscal year. Assuming
infrastructure assets have an expected useful life of 10 to 30 years, this completely ignores changes over
time in inflation, labor, building materials and technology and potentially introduces a very material gap
between "book value" and replacement cost. In a 2017 piece of research, RBC Capital Markets noted, "A
comprehensive inventory of public assets is a critical prerequisite to identifying opportunities to create
new value."45 Reliance instead on a depreciation-based, historical cost reckoning of infrastructure assets
rather than an assessment that explicitly correlates asset condition to financial value not only introduces
public policy-making risk but also makes it more challenging to establish a baseline FCA.
43 Louisiana Division of Administration, n.d. "GASB Statement 34 Implementation Issues: Infrastructure
Reporting—Modified Approach vs. Depreciation."
http://www,doa,la,gov/osrap/librarv/gasb34/infrastructure%20reporting,pdf
44 Hogue, C. 2013. Government Organization Summary Report: 2012.
httpsi//www,census,gov/content/dam/Census/librarv/publications/2013/econ/gl2-cg-org.pdf. (This Census
summary identifies 38,910 general purpose governments. It excludes special and school districts but does include
3,248 special districts categorized as "drainage and flood control.")
45 RBC Capital Markets and HR&A Advisors. 2017. "Unlocking Value from Public Assets: Leveraging Private-Sector
Expertise to Generate New Public Benefits." p. 46.
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Appendix III: Case Studies
1. Washington, D.C. Stormwater Retention Credit Trading:
The U.S.'s First Stormwater Retention Trading Market in the Nation's Capital
2. Five San Francisco Bay Area Voter-Approved Fee Measures:
Stormwater Infrastructure User Fees
3. Stormwater Utility, Goodlettsville, TN:
Watershed Protection through Stormwater Management
4. Los Angeles Parcel Tax Approved by Voters in 2018 (Measure W):
Stormwater Infrastructure User Fees
5. How Operation and Maintenance Costs Effect Resiliency in Coralville, IA:
Managing Flooding and Quality of Life
6. Stormwater Utility, Downers Grove, IL:
Flood Risk Reduction, Erosion Control, Water Quality Protection, and Drainage
Infrastructure Management
7. Watershed Protection in Austin, TX:
Flood Risk Reduction, Erosion Control, Water Quality Protection, and Drainage
Infrastructure Management
8. Stormwater Program Implementation in Atlanta, GA:
Water Quantity (Aging Infrastructure, Flood Management, Drainage) Water Quality
(Regulatory Compliance, TMDLs), Expanding Expectations (public outreach, multi-use
areas)
9. Washtenaw County, Ml:
Summary Report of Stormwater Program Needs
10. City of Raleigh, NC:
Basin Master Planning
11. City of Bellevue, WA Storm and Surface Water System Plan 2015:
WQ, Flood, Infrastructure, WIPs, Drainage
12. City of San Diego, CA:
Watershed Asset Management Plan (2013)
13. City of Grand Rapids, Ml:
Flood Protection, Sediment Reduction, and Stormwater Quality Compliance in Water
Quantity (MS4 Permit and TMDLs Compliance)
14. City of Griffin, GA:
Stormwater Pipe Assessment: Water Quantity (Infrastructure, Drainage)
15. Ventura County, CA:
Flood Protection and Stormwater Quality Compliance
Water Quantity (Flood Protection) and Water Quality (MS4 Permit and TMDLs
Compliance)
• • •
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16. Stormwater Utility, Lawrence, KS:
Flood Risk Reduction, Erosion Control, Water Quality Protection, and Drainage
Infrastructure Management
17. Metropolitan Water Reclamation District of Greater Chicago:
Working hard to manage stormwater, clean wastewater and recover valuable resources.
18. Stormwater Environmental Utility, Sarasota, FL:
Control water quantity, enhance water quality, effectively manage stormwater
19. Gentilly Resilience District, Orleans Parish, LA
A unique pilot program to finance reduced flood risk, slow land subsidence and improve
energy reliability
20. Clean Water Partnership (CWP)
A Water Quality P3 approach in Prince George's County, Maryland
Figure ftl-l. Map depicting the location of various utilities included in the case studies.
• • •
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Washington, D.C.
Stormwater Retention
Credit Trading
The U.S.'s First Stormwater Retention
Trading Market in the Nation's Capital
In 2013 Washington, D.C. promulgated new
stormwater retention regulations for new development or substantial
improvement projects. Part of these new regulations was the introduction
of the Stormwater Retention Credit Trading market, which allows these
regulated projects to purchase up to 50% of their stormwater
management requirements offsite, in the form of Stormwater Retention
Credits (SRCs). This allows regulated properties to pursue more cost-
effective compliance methods and provides financial incentives for
properties to voluntarily install stormwater management practices. The
underlying regulation and the new market are designed to help the
District meet its MS4 permit requirements and 2025 TMDL goals in a cost-
effective way, using private investment and private property.
Challenges
County or Municipality
Washington, D.C.
Population
702,445
Annual Rainfall
40.78 inches
Land Area
68.34 square miles
Poverty Level
17.4%
Total Identified Need
$10 billion
Annual Capital Budget
$10 million
Annual O&M Budget
N/A
Polluted stormwater runoff is a primary threat to water quality
nationwide and is one of the biggest threats to the Chesapeake Bay. The
Chesapeake Bay is the largest and most productive estuary in North
America. Economists value fishing and hunting, tourism, and shipping
activities along with increased property values in the Bay at over $1 trillion
per year. Stormwater runoff represents the second largest source of
nutrient and sediment pollution and is the only sector in the Chesapeake
watershed growing in its impact, due to population growth and land
development. At the same time, many cities are struggling to finance the water infrastructure
improvements needed to prevent stormwater runoff.
Washington, D.C. is 43% impervious and is a major source of this stormwater runoff, which impacts the
local Anacostia River, Potomac River and Rock Creek as the water flows out to the Chesapeake Bay.
However, getting retrofits installed to serve the 43% of D.C.'s land area that is impervious is a difficult
challenge. The majority of this impervious surface achieves little or no retention, is not required to
retrofit, and does not have financing available to support a retrofit.
Further, Washington, D.C.'s Department of Energy and the Environment (DOEE) estimates that to meet
its permit requirements and achieve its water goals, $10 billion in investment is necessary. However,
DOEE only collects ~$10 million in revenue per year.
Solution
DC's Department of Energy and the Environment (DOEE) has developed a first-of-its-kind in the country
stormwater retention credit trading program for new development and major renovations. This
• • •
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program requires new projects to retain the stormwater generated from their development. However,
to help land-constrained property owners meet these requirements, the city instituted a credit market
for stormwater, which allows these regulated projects to purchase up to 50% of their stormwater
management requirements offsite, in the form of Stormwater Retention Credits (SRCs). The SRC market
was designed with two goals in mind: i) provide a cost-effective solution for developers to meet their
retention requirements, while achieving significant co-benefits for the city; and ii) allow the District to
meet its own green infrastructure goals at a lower cost than it could using only public land and financing.
Currently, SRCs are trading at close to half the cost of public delivery of equivalent infrastructure and it
is estimated that the 2013 rule and subsequent SRC activity will increase spending on stormwater
mitigation by lOx historic public investment. Further, DOEE recently introduced a public purchase
program, Price Lock, whereby the District purchases projects at a market rate that best meet DOEE's
clean water goals. These public purchases reduce the cost of compliance for the District and help bolster
development of credit supply in parts of the District where stormwater mitigation is most needed.
Mitigating runoff at the cheapest cost possible is a major hurdle for jurisdictions in the Bay and around
the country. Washington, DC is using the SRC market to prove that market forces can accelerate the
deployment of green infrastructure through private investment and in doing so, obviate the need for
future public gray infrastructure spending to reduce stormwater runoff.
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Five San Francisco Bay Area
Voter-Approved Fee Measures
Stormwater Infrastructure User Fees
Challenge 1:
In an effort to meet all NPDES permit requirements and
provide adequate operating and capital funding for local aging
stormwater infrastructure, five local municipalities needed to
separately generate significant new revenue sources.
Challenge 2:
California's 1996 Proposition 218 created a new category of user
fee called a "property-related fee" that was subject to rate-payer
approval in two steps: 1.) a noticed hearing where written protests
from owners of a majority of the properties could stop a new or
increased fee; and 2.) a ballot measure requiring a simple majority
of property-owner voters. Although water, sewer and solid waste
fees were exempted from the second step, stormwater was not,
thereby severely limiting efforts to implement stormwater user
fees over the past 23 years for most California municipalities. A
common alternative is a parcel tax, subject to a typically more
challenging two-thirds supermajority vote.
Challenge 3:
Municipalities needed to determine whether their communities
would support this 2-step balloting process to implement a new
local fee structure (or increase an existing one) to fund water
quality and infrastructure needs.
Solution:
Five small- to mid-sized municipalities in the San Francisco Bay
Area put new stormwater fee structures out for voter approval in
2018 and 2019 (with mixed results): Alameda, Berkeley, Cupertino,
Los Altos and Moraga. Each municipality followed a similar approach including developing a
comprehensive needs study or master plan, conducting a scientific survey of the community's priorities
and willingness-to-pay, and executing a community outreach and education process aimed at increasing
awareness regarding local flooding; storm drainage infrastructure operations, maintenance and capital
improvements; and water quality.
Table 111-1 below compares the five municipalities including population, median income, stormwater
needs and proposed rates. Notable is that the most affluent cities were the least supportive. Other
trends included fee levels (higher fees had lower support) and the presence of an existing fee (more
support if voters were accustomed to paying a fee).
County or Municipality
City of Alameda, City of
Berkeley, City of Cupertino,
City of Los Altos, Town of
Moraga, CA
Population
307,000 (total over five cities)
Annual Rainfall
15.1 to 26.8 inches
Land Area
55.4 square miles
Poverty Level
3.25% to 19.80%
Total Identified Need
$513 million
Annual Capital Budget
$4.3 million
Annual O&M Budget
$8.78 million
• • •
78
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Alameda
Berkelev
Cupertino
Los Altos
Mora^a
Population
78,000
120,000
61,000
31,000
17,000
Capital Needs
$170 m
$208 m
$79 m
$29 m
$27 m
O&M Needs (annual)
$4,450,000
$1,966,000
$1,440,000
$522,000
$409,000
Annual Rev Req't
$2,892,000
$2,300,000
$1,064,000
$1,133,000
$788,000
Existing Fee ($ /mo)
$4.67
$4.17
$1.00
$0.00
$0.00
Proposed Fee ($/mo)
$6.50
$3.57
$3.70
$7.33
$10.03
Voter Support
57.0%
60.8%
51.2%
44.2%
48.0%
Result
Pass
Pass
Pass
Fail
Fail
Median Size Lot (sf)
4,792
4,792
7,405
10,454
7,405
Median Home Price
$891,700
$862,000
$1,370,000
$2,000,000
$1,040,000
Median HH Income
$89,979
$76,000
$153,000
$208,000
$139,000
Poverty Rate
8.10%
19.80%
4.70%
3.25%
3.90%
Table lll-l. Comparison of five municipalities in California.
It should also be noted that all five of these fee mechanisms were property-related fees, which, under
California law, is voted on by property owners - not registered voters - with one parcel equal to one
vote. This balloting process excludes renters from voting, but includes owners of commercial, multi-
family residential, schools and other public agencies; all of which are hit the hardest and are less likely to
support such a fee.
Each municipality conducted a scientific survey ahead of time to help identify the most desired services
and project, develop outreach messaging that resonated with the local community, and determine fee
levels that would be supported. In the two communities that did not approve the fee, there was an
effective, organized opposition campaign which generally focused on financial prudence, not
stormwater issues - this type of opposition is particularly difficult to counter by a non-advocacy-bound
public agency.
Statewide since 2002 (after a court decision that solidified the ballot requirement for stormwater fees),
there have only been approximately 25 ballot measures for stormwater services funding in California, a
state with over 500 cities, counties and towns - and about half have been approved by voters.
-------
Stormwater Utility,
Goodlettsville, TN
Watershed Protection through
Stormwater Management
Overview
The City of Goodlettsville, TN is located in the North Central area of
middle Tennessee. In 2013, the City completed a Stormwater
Management Master Plan identifying the city's drainage basins and
recommended the enactment of a stormwater utility fee as a
dedicated funding source.
History
The Stormwater Utility Ordinance, implemented in 2013, is organized
into three main sections: Capital Improvements, Capital Maintenance,
and Engineering review. The utility is responsible for all activities
related to the operation and maintenance of the stormwater system,
including master planning, the capital improvement program, and
inspections.
As one of the first stormwater utilities created in middle Tennessee,
the City of Goodlettsville has been a leader among local governments
in developing such a program. The City of Goodlettsville assesses its
residential customers on Equivalent Residential Units (ERU's) which are
based on the effective impervious area of the average single-family
parcel of $3.67 per month. The assessment of Commercial and
Industrial properties is based on the actual impervious surface with on
ERU equivalent to 2900 sq. ft. at $5.50 ea. per month.
County or Municipality
City of Goodlettsville, TN
Population
16,859 (2018)
Annual Rainfall
62.3 inches
Land Area
14.1 square miles
Poverty Level
18.1%
Total Identified Need
$1.25 million
Annual Capital Budget
$400,000.00
Annual O&M Budget
$850,000.00
Flooding Level of Service is intended to protect habitable structures up to the 100-year, 24-hour rain
event. Water quality requirements from regulatory ordinances include all new development or re-
development of greater than one acre, or less than one acre if part of a larger common plan.
Capital Needs
To-date, the City has collected $3,200,000 in stormwater utility fees and has spent $1,400,000.00 in
stormwater flood improvements, operations and maintenance throughout the city. Since
implementation of the program, a rate increase has not occurred and the program has not taken out
loans to fund projects. Future projects include Drainage Basin Area Study, Box Culvert Replacement and
Upgrades, Major Roadway Drainage Study, and completion of a Flood Mitigation Program.
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Los Angeles Parcel Tax
Approved by Voters in 2018
(Measure W)
Stormwater Infrastructure User Fees
Challenge 1:
In an effort to meet all the TMDLs for the Los Angeles basin area, the Los Angeles area municipalities
needed to generate significant new revenue to pursue capital projects and other improvements.
Challenge 2:
California's 1996 Proposition 218 created a new category of user fee
called a "property-related fee" that was subject to rate-payer approval
in two steps: a noticed hearing where written protests from owners of
a majority of the properties could stop a new or increased fee; and a
ballot measure requiring a simple majority of property-owner voters.
Although water and sewer fees were exempted from the second step,
stormwater was not, thereby stifling the move to a stormwater user
fee mechanism over the past 23 years for most California
municipalities. A common alternative is a parcel tax, subject to a two-
thirds supermajority vote.
Challenge 3:
Municipalities needed to craft a measure(s) to please multiple
constituencies:
* Regulators, who would ultimately evaluate TMDL compliance
under the NPDES Permit,
* LA County elected Officials who would need to put a ballot
measure out;
* Local officials from nearly 80 cities within LA County who will be
affected by any fee structure;
* Voters who would have the final say in whether a fee structure and attendant projects, programs
and outcomes were acceptable; and
* Special interests who have significant influence with various voters in the Los Angeles area
Solution:
After a 2012 effort to create a county-wide property related fee mechanism was abandoned due to an
inability to form necessary coalitions with local municipalities, school districts and the business
community, the Los Angeles County Flood Control District (LACFCD) started again in 2017 to develop an
expenditure plan to increase stormwater capture and reduce stormwater and urban runoff pollution
under the auspices of the Safe, Clean Water Program. Specifically, the revenue would be allocated for
regional multi-benefit projects, municipal projects, and District programs. The proposed tax, set at 2.5
cents per square foot of impervious surface, would bring in revenues of $300 million per year in the Los
• • •
81
County or Municipality
Los Angeles County Flood
Control District, CA
Population
9.5 million
Annual Rainfall
18.7 inches
Land Area
2,700 square miles
Total Identified Need
$20 billion
Annual Capital Budget
$300 million
Annual O&M Budget
N/A
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Angeles region. Forty percent would be allocated back to local municipalities within the District; fifty
percent would be allocated to the nine watershed areas to fund regional watershed-based activities;
and ten percent would be eligible for management and administration of the program.
The LACFCD contracted with Conservation and Natural Resources Group, LLC to provide ongoing and
extensive water education and outreach.
On November 6, 2018 voters in Los Angeles County approved Measure W with a 69.5% majority (a two-
thirds majority was required). The key to this success was the development of a robust and transparent
expenditure plan and public outreach that focused on stormwater capture in a drought-prone region
where up to 85% of storm flows went straight to the Pacific Ocean.
From the Safe, Clean Water Program website, their goals, "developed in collaboration with public
health, environmental groups, cities, business, labor, and community-based organizations" are:
# Implement a new plan for L.A.'s water system to capture the billions of gallons of water we lose
each year.
# Help protect our coastal waters and beaches from the trash and contaminants in stormwater that
make people sick and threaten marine life.
# Modernize our 100 year-old water system infrastructure, using a combination of nature, science,
and new technology.
i Help protect public health, ensuring safer, greener, healthier, and more livable spaces for all.
# Prepare our region for the effects of a changing climate — including recurring cycles of drought,
wildfire, and flooding.
# Require strict community oversight and independent auditing to ensure local monies raised would
stay local.
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How Operation and
Maintenance Costs Effect
Resiliency in Coralville, IA
Managing Flooding and Quality of Life
The City of Coralville, IA funds the operation and
maintenance of stormwater infrastructure through a
local stormwater utility fee, property taxes, and
federal/state road use tax.
Operation and maintenance activities related to local
water quality include compliance of the City's MS4
permit, which consists of staff time, training, and
maintenance of water quality practices installed as part
of public infrastructure projects (roadway projects); street sweeping;
and catch basin cleaning.
Operation and maintenance activities related to flood control and
water quantity include staff time and training, maintenance of the
flood protection system (pump stations, permanent flood
walls/barriers, earthen berms, and detention basins), and maintenance
of the storm sewer system (catch basins, pipes, and outfalls).
In the last 25 years, Coralville has experienced two major flooding
events on the Iowa River. In 1993, a flood described as a "100 year
event" devastated homes and businesses, and caused millions of
dollars in damage. Of the businesses affected, 20% chose to not
rebuild. In 2008, the Iowa River flooded again. This time, it was a 500
year event with costs totaling $21 million for commercial properties, $4
million for residential properties, and $7 million in damages to public
infrastructure. After the 2008 flood, 40% of the businesses chose to
not rebuild.
County or Municipality
Coralville, IA
Population
21,664
Annual Rainfall
37 inches
Land Area
12 square miles
Poverty Level
14% of citizens are
considered impoverished
Total Identified Need
$3 million
Annual Capital Budget
$0
Following the 2008 flood, Coralville was awarded $65 million in federal
and state grants to create a flood control system, which the City
implemented. This permanent flood control system is essential to protecting our community.
Maintaining the floodwall and stormwater pump stations accounts for 40% of the total stormwater
budget. The remaining budget covers staff and all other operations and maintenance-related activities
mentioned above, leaving a deficiency in maintenance objectives and very little funding for capital
improvement projects. One of the largest deficits can be seen in the maintenance of our regional
detention ponds. These ponds protect residents from localized flooding events driven by heavy rainfall
This maintenance cost is estimated at 3 million now with an annual expense of $50,000 in continuing
unmet need.
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One of the largest complaints Coralville receives from residents is related to localize flooding concerns
on their property. Residents expect their municipality to protect them from flooding, whether it is from
the Iowa River or stormwater in the roadway or behind their home. Maintaining regional detention
ponds and the local storm sewer system is essential for reducing the risk of localized flooding. The
maintenance of local detention ponds is not being completed due the deficit in the stormwater budget.
Over the past five years, the Iowa Flood Center has observed a 40% increase in the precipitation
amounts of large rain events. We see that data in action. We are experiencing an increased need to
protect our community during these heavy rain events. We project that the ongoing maintenance
requirements of our system will increase as our storm events become larger and more destructive.
None of our stormwater systems are large enough to carry the rain events we have been experiencing.
The oldest sections of town, where the storm systems tend to be the most undersized also coincide with
our most impoverished and vulnerable populations.
Without additional funding to support the operation and maintenance cost of our stormwater system,
we will continue to fall further behind. As storm events increase in size, these systems will be essential
to protecting the quality of life of our residents.
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Stormwater Utility,
Downers Grove, IL
Flood Risk Reduction, Erosion Control,
Water Quality Protection, and Drainage
Infrastructure Management
Overview
The Village of Downers Grove, IL is located 22 miles
west of Chicago. In 2006, the Village adopted a Stormwater
Master Plan that provided information about the existing
stormwater problems in the Village, the condition of the
stormwater system, the adequacy of system components, and
estimated costs for necessary maintenance, capital
improvements and regulatory requirements at the time of
publication.
A Stormwater Utility Fee was established in 2012 to provide a
dedicated revenue for the identified stormwater management
needs.
History
This 2006 Master Plan document provided the Village with
information for establishing strategies for future infrastructure
management, identifying preliminary budgetary needs, and
identifying alternatives for financing an adequate stormwater
program.
County or Municipality
Village of Downers Grove, IL
Population
49,649
Annual Rainfall
38 inches (Illinois)
System Attributes
• Approximately 7,000
drainage structures
• 315 stormwater detention
facilities
• 130 miles of storm sewer
pipes
• 12 miles of streams
• 140 miles of roadway
ditches
• 47,000 feet of culverts
Prior to the Stormwater Utility, operating costs for the
stormwater system were funded primarily through property
taxes. Shifting the source of funding to a utility/fee-based system
resulted in a reduction in the property tax levy by approximately
$2.48 million, beginning with the 2012 levy.
The Stormwater Utility Fee model represents an equitable
method to collect revenue from those properties that place a
demand on the system. Revenue is generated by charging all
property owners a monthly stormwater fee, based on the
property's impact to the stormwater system. The Village has
created a plan that increases revenues over a 15-year period,
allowing the Village to move from the current level of service to
the recommended level within that time frame.
Poverty Level
5.39%
Total Identified Need
$340 million
Annual Capital Budget
FY19 Budget includes $7.08
million for stormwater capital
projects.
Annual O&M Budget
$2 million
The plan calls for annual increases in the stormwater utility fee of approximately 8.5% per year, which
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would increase the annual revenue available for stormwater management fees from the level of $4.6
million to about $11.4 million in 2028.
Capital Needs & Funding Sources
The 2007 Watershed Infrastructure Improvement Plan identified estimated cost of $340 million for
stormwater management projects. The more recent 2014 Stormwater Project Analysis identified 17
non-floodplain and 3 floodplain projects to provide 95% protection for the 21 areas throughout the
Village that were identified as significantly impacted by the April 2013 floods. The estimated cost to
complete the 17 non-floodplain projects is $11.6M and they are planned to be completed in 2020. The
annual cost for stormwater maintenance activities are $2.0M each year. However, it would cost about
$4 million per year to perform the recommended annual maintenance activities.
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Watershed Protection in
Austin, TX
Flood Risk Reduction, Erosion Control,
Water Quality Protection, and Drainage
Infrastructure Management
Overview
The mission of the City of Austin's Watershed Protection
Department (WPD) is to protect the lives, property, and
environment of the community by reducing the impacts of
flooding, erosion, and water pollution. The department
provides services for the City of Austin and its extraterritorial
jurisdiction through a combination of capital improvement
projects, operating programs, and regulations. The department
also serves as the City's drainage utility—it is responsible for
the operation, maintenance, renewal, and upgrade of the
public stormwater infrastructure system. This includes the
inspection and maintenance of assets that convey, store, and
treat stormwater runoff while complying with state and federal
regulatory requirements, such as the Municipal Separate Storm
Sewer System (MS4) permit issued by the Texas Commission on
Environmental Quality (TCEQ).
Over the years the City of Austin has received numerous awards
for its watershed protection and management programs. In
2017, the Watershed Protection Department was the highest
scoring Phase I MS4 program nationally among those
submitting nominations for the annual Water Environment
Federation / USEP MS4 awards program. Austin was also
received gold-level recognition that year for innovation and for
program management.
History
County or Municipality
City of Austin, TX Watershed
Protection Department
Population (Jan 2019)
981,035
Average Annual Rainfall
34 inches
Estimated Rainfall in 24-hour
Storm Event
25-year: Up to 9 inches
100-year: Up to 13+ inches
Land Area
326 square miles
Poverty Level (Jan 2018, U.S.
Census)
15.4%
Total Identified Capital Need
(10-Year Planning Estimate)
$2 billion
Annual Capital Budget (FY19)
$35 million annual transfer +
developer mitigation fees +
bonds
For more than three decades, WPD has been recognized as a
national leader in watershed protection. The two most
important events that helped shape the City's watershed
protection program were uncontrolled development in the late
1970s and the Memorial Day Flood of 1981. In the late 1970s,
sediment from widespread construction visibly entered Lake
Austin, the City's water supply, and Barton Creek, a beloved
community swimming and hiking area. Public concern led to calls for improved environmental
protection through water quality and erosion controls for development. Around the same time, the
Memorial Day Flood of 1981 underscored Austin's geographic location in what is known as America's
Annual O&M Budget (FY19)
$104 million
Workforce (FY19)
349 full time employees
26 temporary employees
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"Flash Flood Alley"—an area of unusually intense flooding events. In response to the storm's devastating
effects and loss of life, the City implemented a Drainage Charge in 1982 to provide funding for an
expanded stormwater management program. In 1991, the City established a Drainage Utility to oversee
and directly fund its stormwater management programs. The Watershed Protection Department (WPD)
was created in 1996 through the merging of the flood and erosion programs in Public Works with the
water quality protection programs of the Environmental and Conservation Services Department.
Capital Needs and Funding Sources
To fund its capital projects, WPD utilizes a combination of funding sources, including general obligation
bonds, drainage fees, payment-in-lieu developer mitigation programs, and Certificates of Obligation
from tax increment financing.
The department has identified more than $2 billion in capital needs to address the City's most severe
flood, erosion, water quality, and infrastructure maintenance needs over the next 10 years. With an
estimated capital budget of approximately $700 million over that same timeframe, the department
utilizes principles defined in the department's Watershed Protection Master Plan, Strategic Asset
Management Plan, and City of Austin Long-Range CIP Strategic Plan to prioritize solution
implementation within its budget.
The department continues to evaluate and update its best practices for stormwater management and
CIP prioritization by incorporating community priorities, policy decisions, and the latest technical data,
such as the Atlas 14 historic rainfall study.
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Stormwater Program
Implementation in Atlanta, GA
Water Quantity (Aging Infrastructure, Flood
Management, Drainage), Water Quality
(Regulatory Compliance, TMDLs), Expanding
Expectations (public outreach, multi-use
areas)
The City of Atlanta is a regional center located in the
Southeastern United States. Situated in the headwaters of
two river basins, the City provides drinking water,
wastewater, and watershed management services to
nearly half a million people within the City's jurisdictional
boundaries and some areas outside the boundaries. The
Department of Watershed Management (DWM) is
responsible for the NPDES MS4 permit in addition to state
and regional requirements. DWM stormwater functions
include watershed improvement planning, drainage
improvements, asset management, water quality
improvements, regulatory compliance, and public
education and outreach. The City has a combined sewer
system (CSO), which has resulted in increased emphasis on
stormwater infiltration practices to reduce the stormwater
runoff load to the CSO.
Stormwater Program Funding
County or Municipality
City of Atlanta, GA
Population
498,044 (2018 US)
Average Annual Rainfall
49.71 inches (NOAA)
Land Area
136.7 square miles
Poverty Level
22.4% (U.S. Census)
Total Identified Needs
FTEs- 122
Annual Operating Costs - $12 million
Annual Capital Costs - $18 million
Annual Total Costs - $30 million
Current Capital and O&M Budget
FTEs-60.5
Annual Operating Costs - $6.6 million
Annual Capital Costs - $12.5 million
Annual Total Costs - $19 million
The City of Atlanta does not have a dedicated funding
source for stormwater management activities and
stormwater management is currently limited to meeting
regulatory mandates and addressing emergency repairs.
Much of the existing stormwater drainage infrastructure
within the City is nearing the expected lifespan and will need to be repaired or replaced. In addition,
many customer requests for stormwater infrastructure improvements have not been addressed due to
the lack of adequate funding.
Increasing stormwater-related regulatory requirements, changing weather patterns, more frequent
nuisance flooding issues, and aging infrastructure needs have prompted the DWM to consider a
dedicated funding source and develop annual operating and capital funding needs. An evaluation of
future resource needs identified 122 full time equivalent (FTE) employees, $12 million in annual
operating costs, and $18 million in annual capital expenditures to meet stormwater program
requirements and level of service. This is an approximately 50% increase over current resource and
funding levels.
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Extent of Service Area
Stormwater services will be provided for the following areas:
i Municipally owned rights of way
i Municipally owned drainage easements
A Municipally owned ponds and structural stormwater control facilities
# Rivers and streams on municipally owned property or the ROW
The City's inventory within municipally owned property or within public Right of Way includes an
estimated 150 miles of stormwater pipe; 9,500 catch basins; 10,000 headwall, manholes, outfalls,
culverts, and other miscellaneous stormwater structures. A significant portion of this stormwater
infrastructure is not maintained on a routine basis; is reaching the normal engineering lifespan and is in
need of repair or replacement. Stormwater facilities on private property are excluded from the City's
Extent of Service.
The City of Atlanta is a leader in implementing green infrastructure programs and developing creative
funding solutions such as MOST, grants, and an Environmental Impact Bond. However, meeting the
identified funding needs gap will take additional creative planning, coordination, and communication
with local and national stakeholders.
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Washtenaw County, Ml
Summary Report of Stormwater Program Needs
We have completed Master Plans for some of our larger sub-
systems (8 of some 550). We have an asset management plan
(AMP), but no predictable means of planning capital work due
our organizational structure as a special assessment agency by
statute. Our current goal is to increase annual spending on
minor, pro-active preventative maintenance where we have
authority (we can spend $0.97 per foot of drain without a
petition). We are working to raise awareness of capital needs
to achieve a goal of petitions that result in $5-$10M of capital
projects annually. Information from our AMP suggests that
we could proceed for 10-15 years in this fashion (working on
whatever people are willing to ask us to work on at their
expense) without compromising any logical sequence of
capital improvements.
Our system replacement value is estimated at $430M in
today's dollars. Our data source is our Asset Management
Plan which indicates that about 15% of our system is in
immediate need of replacement due to complete lack of
function. We are currently seeking to raise awareness of
these and other poorly performing sections of infrastructure
with those who would pay. Our only mechanism for capital
project initiation is by petition, so long-range planning is a
challenge. Because we can receive a petition from either a
group of citizens or as a Resolution from a municipal agency,
we have started a process of seeking regular approval of
major maintenance on an annual basis with municipalities
within our jurisdiction. We have currently done this with 6 of
the 28 municipalities and hope to use this process for capital
work also. We have currently done a 5-year plan with each.
The idea is to annually have an approved one-year budget
and acceptance of a rolling 5-year budget forecast - for most of our municipalities.
County or Municipality
Washtenaw County, Ml
Population
360,000
Annual Rainfall
35 inches
Land Area
446 square miles
Poverty Level
14.5% population below poverty level
Total Identified Need
$64.5 million
Annual Capital Budget
Varies by petitions received
Annual O&M Budget
$4.1 million
Due to having systems that pre-date current water quantity management design standards, all of our
capital work focuses on improving water quality while striving to maintain the quantity management of
the original system. In some cases, the water quality measures (such as extended storage) may provide
an ancillary quantity benefit in smaller storms (85th percentile or smaller, so first flush to one-year
storm sizes may have quantity benefit).
The County does include MS4 permittees, but not the entire system as our service area includes
urbanized and rural census tracts. Generally, our enclosed pipes in our urbanized area are designated
MS4s and open ditches are not. Our biggest problems are in the urbanized areas but those are generally
not available for federal or state funding for improvements, because we are supposed to be responsible
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for those through the unfunded mandate of MS4. (Incidentally, the Ml State Supreme Court ruled that
MS4 regulations were NOT an unfunded mandate, stating that [paraphrased] "municipalities have never
been mandated to provide drainage systems, so MS4 regulations only apply to those communities who
have chosen to have stormwater systems.").
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City of Raleigh, NC
Basin Master Planning
The City of Raleigh, NC has performed and completed a
number of past drainage basin and watershed-based
studies. Approximately % of the city area has been covered
by basin studies, although some of these were completed
more than twenty years ago. The studies have looked
primarily at infrastructure hydraulic capacity and flood
hazard reduction needs and projects. Some studies have
also reviewed water quality-related needs with projects
identified including lake restoration/retrofit and stream
stabilization/restoration opportunities along with other
water quality-oriented projects. Recently (earlier in 2019)
the City completed the first phase of a multi-phase
integrated watershed master planning project. As part of
this recent work, the City asked its consultant to identify and
summarize stormwater projects identified from past basin
studies but not yet constructed. In this context, the total of
stormwater projects identified from past basin studies is
approximately $280 million, escalated to 2019 dollars.
County or Municipality
Raleigh, NC
Population
458,862
Annual Rainfall
46 inches
Land Area
145.98 square miles
In addition to this, the City has approximately $60 million of
projects that are assumed to be beyond what has been
identified from past studies. The current CIP plan includes
master planning, water quality retrofits, flood hazard
reduction, lake-related projects, stream restoration, and
neighborhood and street drainage system repair projects.
Poverty Level
16.8% households under $25K income
Total Identified Need
$470 million
Annual Capital Budget
$11.1 million
Annual O&M Budget
$14.3 million
We have developed a preliminary estimate of citywide needs
related to stream stabilization/restoration, which has not
been included in past studies. The preliminary estimate for
citywide stream stabilization/restoration needs is
approximately $120 million, which is beyond stream-related
projects identified in the basin studies. Within the past several years, the City's Stormwater Program
has also expanded its scope and assumed responsibility for City owned/operated Stormwater Control
Measures (SCMs) and Dams. Approximately $10 million in capital repair needs has been identified for
dams while assessment continues for both SCMs and Dams.
In summary based upon the above, a preliminary estimate of capital improvement program needs for
the City's Stormwater Management Program is approximately $470 million.
The planning period for this portfolio is assumed as 20 to 30 years, although implementation will be a
function of future stormwater program revenues that may be available over time. (Note this
preliminary planning level CIP total does not include the estimated annual needs for MS4 operation,
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maintenance, and MS4 repairs and rehab from a developing asset management perspective. The annual
needs related to asset management are included within the response to Question #3.)
Stormwater
Management
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City of Bellevue, WA Storm and
Surface Water System Plan 2015
WQ, Flood, Infrastructure, WIPs, Drainage
The City's Storm and Surface Water plan evaluates the operational
management of the Utility, providing a "roadmap" for future planning.
It is a tool to help the City meet federal, state, and regional regulations.
Key focus areas include: control damage from storms (100
year, 24 hour storm event), protect surface water quality,
support fish and wildlife habitat and protect the
environment.
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County or Municipality
City of Bellevue, WA
Primary challenges include aging infrastructure, reduced
forest cover, global climate change and a new class of
pollutants has emerged as a potential threat to aquatic and
human health over the last decade. Pharmaceuticals and
endocrine disrupters (found in some pesticides or other
products applied to the landscape) are increasingly being
detected in receiving water bodies. Stormwater has been
identified by the Puget Sound Partnership as a primary
pressure impacting the health of Puget Sound.
Bellevue does not have widespread flooding problems. The
City is in 100% compliance with Phase II NPDES Municipal
Permit
Rate Structure: Accounts are billed at different rates
depending on the intensity of development (undeveloped,
lightly developed (20%), moderately developed (40%),
heavily developed (70%), very heavily developed (over 70%)
and wetlands). 2019 rates include billing charge $5.88, plus
charge per 2,000 square feet depending on intensity of
development noted previously, $0 wetlands, $.098
undeveloped, $7.08 lightly developed, $8.84 moderately
developed, $13.26 heavily developed and $17.65 very heavily
developed.
Bellevue has a successful and established asset management program.
The Renewal and Replacement (R&R) reserves were established by the City Council in 1995 to better
position the City for the future by planning for the inevitable replacement of the utility system
The Utilities Department has assets with a replacement value of over $3.5 billion in 2010 dollars, and
about half of this aging infrastructure is past mid-life.
Population
147,599 (recent US census estimates)
Annual Rainfall
42 inches of rain, on average
Poverty Level
7.37% of overall population. Median
household income 2019 $105K
Total Identified Need
$275 million next 20-years
Annual Capital Budget
$13.5 million annual rate funded
capital from operations and asset
replacement account funding
(average $11.5 million 2016 - 2019).
No debt funding
Annual O&M Budget
$13.4 million
(average $12.5 million 2016 - 2019)
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Accumulating R&R reserves in a measured way to pay for the proactive replacement of aging systems
before they fail. Managing reserves that fund the replacement of that infrastructure is critical to
financial sustainability. R&R reserves ensure that the Utilities Department is financially prepared to
respond to emergency events. Use of R&R reserves is governed by state law and the Utilities financial
policies (established by City Council resolution in 1995; see Chapter 4 Policies).
R&R needs are projected using asset management data to determine the timing and estimated cost of
replacing systems over time. Annual revenues set aside for infrastructure replacement are based on
projected replacement cash flow needs over a 75-year forecast period less projected interest earnings.
In 2015, the storm and surface water repair and replacement fund had a balance of $43.8 million and
projected to increase to $70 million by 2044 (Figure 111-2).
Recommendations include:
Continue investing in the Flood Control Capital Program to reduce or eliminate local flooding caused by
insufficient public drainage system capacity. Continue to use King County Flood Control Zone District
Sub-Regional Opportunity funds. Invest in cost-effective water quality projects. Consider emerging
technologies and techniques that improve water quality for pilot projects. Continue to invest in the Fish
Passage Improvement Program to remove fish passage barriers created by impassable culverts, debris
jams, or accumulated sediment, which opens spawning and rearing habitat for salmon populations.
Continue to invest in the Stream Channel Modification Program to construct habitat improvements on
stream channels. Invest in the Stream Restoration for Mobility and Infrastructure. Continue to invest in
the Stormwater System Conveyance Infrastructure Rehabilitation Program to rehabilitate or replace
defective storm drainage pipelines and ditches identified in the condition assessment program.
Continue to invest in Minor (Small) Storm and Surface Water Capital Improvement Projects, to resolve
deficiencies, improve efficiencies, or resolve maintenance problems. When possible, complete in
conjunction with other Bellevue programs such as the transportation overlay program.
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Description
20-Year Total % of Total
Minor Storm & Surface Water Capital Imp. Projects
$
2,052,000
0.75%
Storm WaterSystem Conveyance Infrastructure Rehabilitation
$
10,457,000
3.80%
Replace Coal Creek Pkwy. Culvert at Coal Creek
$
26,000
0.01%
Replace NE 8th St Culvert at Kelsey Creek
$
136,000
0.05%
Stormwater Pipeline Video Inspection Enhancement
$
246,000
0.09%
Long-Term R&R- Mains
$
97,492,738
35.41%
Long-Term R&R - Facilities
$
348,166
0.13%
Long-Term R&R - Additional Costs
$
6,852,242
2.49%
Long-Term R&R- Contingency (40% of Aging Infrastructure)
$
39,136,362
14.21%
Fish Passage Improvement Program
$
2,533,000
0.92%
Stream Channel Modification Program
$
3,642,000
1.32%
Flood Control Program
$
5,790,000
2.10%
Stream Restoration for Mobility & Infrastructure Initiative
$
108,000
0.04%
Lower Coal Creek Flood Hazard Reduction
$
6,128,000
2.23%
Storm Water Quality Retrofit in Kelsey Creek
$
342,000
0.12%
Long-Term Environmental Preservation Projects
$
36,752,063
13.35%
Long-Term Mobility & Infrastructure Projects
$
63,295,219
22.99%
Long-Term Mandate Compliance Projects
$
-
0.00%
Total
$
275,336,791
100.00%
Figure 111-2.2015 stormwater-related budget for the City ofBellevue, l/l/A
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City of San Diego, CA
Watershed Asset Management Plan (2013)
J..
i x
In order to anticipate and justify current and projected
costs of complying with federal, state, and local
stormwater regulations, the City of San Diego developed
an integrated Watershed Asset Management Plan
("WAMP") for its stormwater management system. The
WAMP was finalized in 2013 and aims to lay the
groundwork for meeting regulatory requirements by
'annualizing' long-term compliance needs as well as documenting
and communicating expectations of citizens regarding functions of
the storm drain system and the quality of water and related
services. The first element of the WAMP assesses the current
inventory, costs, and condition of the City's stormwater system.
Assets are categorized as "hard," "natural," or "soft" and valuated
accordingly. After assessing the current state of City-managed
assets, the WAMP goes on to quantify a long-range forecast of
funding necessary to maintain a baseline level of service. The
projections are calculated using a custom-built database which
balances refurbishment and replacement costs to keep assets
functionally above a minimum acceptable threshold. The result of
this forecasting projected a 100 year need of nearly $20 billion (in
2013 dollars); equating to about $200 million per year, accounting
for regulatory compliance, capital, and O&M costs. Lastly, the plan
articulates various potential funding sources and scenarios for
achieving targeted levels of service. Scenarios range from current
budget to full funding attainment and lay out resulting backlog of
needed infrastructure upgrades that would result from each
scenario. Developing a WAMP is an iterative process requiring
continual input from stakeholders, new or improved data, and
updates to fiscal modelling efforts as awareness of costs becomes
more sophisticated, particularly in accounting for effects of climate
change. Currently, the City is undertaking a comprehensive update of its WAMP in order to reflect new
regulations, assets, and cost estimates. The process of developing a WAMP can also serve to inform the
regulatory process. In particular, an asset management perspective in context of a TMDL could
substantiate reasonable compliance schedules for water quality attainment. In the context of
stormwater permitting, an asset management plan could be used as a compliance mechanism
alternative to meeting water quality-based limitations.
1 E-l Population Estimates. Demographics. California Department of Finance website.
2 Western Regional Climate Center website
3 2018 Census Gazetteer Files-Places. United States Census Bureau website
4 United States Census Bureau website-QuickFacts City of San Diego.
City of San Diego Watersheds
County or Municipality
San Diego, CA
Population
1,419,845 million1
Annual Rainfall
10.13 inches2
Land Area
325 square miles3
Poverty Level
14.5%4
Total Identified Need
$3,128,424,9385 (FY2019-35)
Annual Capital Budget
$2,666,667 (FY2020)
Annual O&M Budget
$51,967,670 (FY 2020)
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City of Grand Rapids, Ml
Flood Protection, Sediment Reduction, and
Stormwater Quality Compliance Water
Quantity (MS4 Permit and TMDLs
Compliance)
The Environmental Services Division (ESD) is responsible
for managing stormwater within the City of Grand Rapids.
The primary goals of the City's stormwater program
are to reduce the impacts of flooding and erosion
(water quantity) and to improve water quality in local
rivers, lakes, and streams. This includes complying with
the City's MS4 permit and TMDL requirements for E.
coli and biota. To help meet these goals, the City
developed a stormwater master plan that incorporates
a 20-year asset management plan and capital
improvement plan (CIP), as well as other stormwater-
and sustainability-related City initiatives.
The City's asset management plan identifies four level
of service scenarios for stormwater management,
including three new levels of service (A, B, and C) and
the existing level of service. The new levels of service
were designed to meet regulatory requirements, goals
for infrastructure renewal and replacement, and
operations and maintenance. In addition, each
scenario allocates a percentage of capital investment
to green infrastructure practices. Under the City's plan,
level of service A represents the highest level of
service, while B and C result in subsequently lower
service requirements.
County or Municipality
City of Grand Rapids, Ml
Environmental Services Division
Population
198,829 (2017)
Annual Rainfall
37 inches
Land Area
45.3 square miles
Poverty Level
15.8% (persons in poverty, 2017 1-year
estimate)
MHI $48,521
Annual Revenue
$599,986 (FY 2018) - from licenses and
permits, state grants, charges for services
Annual Budget*
$3,867,433
Total Identified Need
$6,509,567 per year (through 2033)
Based on an evaluation of existing stormwater assets
and a comprehensive risk assessment, the City
developed a 20-year CIP for level of service B, which represents the mid-range level of service from the
asset management plan. The City estimated that total annual funding requirements for this desired level
of service would amount to $14.7 million per year (for 20-years). However, due to funding constraints,
the City is now aiming to achieve the levels of service associated with scenario C of the asset
management plan, which will require $10.4 million in annual expenditures. This compares to annual
funding requirements for maintaining existing levels of service of $3.6 million.
In Michigan, it is difficult to establish a stormwater utility because of legal circumstances. Thus, the
City's stormwater program is funded from the City General Fund, as well as the Local and Major Streets,
Refuse, and Vital Streets Funds. The Vital Streets program, which includes green infrastructure and other
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stormwater components as part of comprehensive street improvement projects, has been funded for
the last 15-years through a voter-approved income tax.
In FY 2018 the City's budget for stormwater management and maintenance was $2.7 million, while the
capital budget amounted to $1.2 million (including approximately $674,00 from the General Fund and
$536,000 from Vital Streets). The total $3.87 million budget is below the funding needed to meet the
City's level of service goals. While the City continues to make progress and has been recognized
nationally for its excellence in service and innovation,46 bridging this funding gap will require additional
sources of funds and/or a longer timeline for achieving the City's goals.
46 In 2017, the City of Grand Rapids received a gold recognition in program management award through the Water
Environment Federations' National MS4 and Green Infrastructure Awards Program.
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City of Griffin, GA
Stormwater Pipe Assessment: Water
Quantity (Infrastructure, Drainage)
The City of Griffin lies on the continental divide with
watersheds draining to two different basins. Located about
an hour south of Atlanta, thissmall MS4 Phase 2
community created the first stormwater utility in the state
of Georgia and has been on the forefront of
stormwater management for many years.
The City prepared a condition and risk assessment of
all stormwater infrastructure within the City
boundaries in 2016. The assessment included 6,792
pipes and associated infrastructure. Condition
assessment was developed using a standardized
approach and defined criteria. Only infrastructure in
the poor category were considered for replacement
estimates as a capital expense. Not included in the
estimate is on-going maintenance expense associated
with clearing pipes blocked with debris. Up to 30% of
the stormwater infrastructure is considered blocked in
some areas, reducing the effectiveness of the
conveyance system and increasing maintenance costs.
Risk assessment criteria included FEMA floodzones,
proximity to buildings, and road classification.
Infrastructure determined to be high risk and poor
condition will be prioritized for maintenance and/or
replacement.
County or Municipality
Griffin, GA
Population
22,878 (US Census 2018)
Annual Rainfall
49.7 inches (US Climate Data)
Land Area
14 square miles (US Census 2018)
Poverty Level
31.4% (US Census 2018)
Total Identified Need
$23 million
Annual Capital Budget
$443,000
Annual O&M Budget
N/A
As part of this study, a replacement cost estimate was
developed based on comparable construction costs and included factors such as pipe material, pipe
diameters, and replacement method. Only for stormwater infrastructure determined to be in poor
condition, the replacement cost is estimated to be $23 million.
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Ventura County, CA
Flood Protection and Stormwater Quality
Compliance
Water Quantity (Flood Protection) and
Water Quality (MS4 Permit and TMDLs
Compliance)
The Ventura County Public Works Agency's Watershed
Protection District (VC WPD) is the regional flood protection
service provider in Ventura County in addition to local
systems in ten incorporated Cities of Camarillo, Fillmore,
Moorpark, Ojai, Oxnard, Port Hueneme, Ventura, Santa
Paula, Simi Valley and Thousand Oaks. VC WPD is also
leading collaborative efforts by the County of Ventura and
ten incorporated Cities to implement requirements of the
Ventura 2010 Municipal Separate Storm Sewer System
(MS4) Stormwater Permit No. CAS004002 since 1992, when
Ventura County Board of Supervisors adopted a benefit
assessment levy for stormwater and flood management in
Ventura County. Since passage of Proposition 218 in 1996,
the assessment rates have not changed, because voter
approval is required. Consequently, annual revenue of
approximately $40,499,155 has not changed, while the
recent annual budget for MS4 Permit/TMDLs compliance
and VC WPD's flood control was over $74 Million* (this
amount does not include Cities' flood control budgets). The
funding gap is supported by the County and Municipal
General Funds, Grant funding, and fund balance, which are
highly variable sources due to competing needs for General
Fund funding, competitive nature of grant programs, and
short-term availability of fund balance. In addition, fees for
municipal services, e.g., inspections of businesses, industrial
facilities, and construction sites, help fund MS4 compliance
activities.
County or Municipality
County of Ventura, Ventura County
Watershed Protection District, and ten
incorporated Cities of Camarillo,
Fillmore, Moorpark, Ojai, Oxnard, Port
Hueneme, Ventura, Santa Paula, Simi
Valley and Thousand Oaks, CA
Population
850,967
Annual Rainfall
18 inches
Land Area
2,208 square miles
Poverty Level
9.5% (persons in poverty)
MHI $81,972
Annual Revenue
$40,499,115
Annual Budget*
$74,129,564
Total Identified Need
$2,305,178,303 (2021-2050 CIP)
$87,530,290/year (O&M after 2050)
Flood protection needs in the County are driven by aging
infrastructure and flood risk reduction. It is estimated that
over 50% of facilities will need to be replaced or rehabilitated within the next 30 years at a significant
cost not supported by current revenues.
The Ventura MS4 Permittees are subject to 16 Total Maximum Daily Loads (TMDLs), of which 13 TMDLs
are enforceable after incorporation into the MS4 Permit in 2010. Compliance with the upcoming new
Permit and approaching TMDL deadlines will require for planning and implementation of costly
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stormwater treatment structural best management practices (BMPs).
The roughly estimated structural BMP implementation cost for Ventura MS4s are driven by the three
effective and assumed two future watershed-wide Bacteria TMDLs. In particular, the wet weather
compliance is very expensive undertaking for each watershed in Ventura County. Significant new CIP
funding is already needed to meet upcoming 2023, 2026, and 2029 deadlines for existing Bacteria
TMDLs. Past the year of 2050, anticipated as final compliance deadline for future TMDLs and completion
of flood control improvements, the annual operation and maintenance (O&M) cost was estimated at
approximately 3% of the total estimated CIP costs. As discussed with regulatory agencies, the current
and future funding gap continues to be a significant challenge for Ventura MS4s.
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Stormwater Utility, City of
Lawrence, KS
Flood Risk Reduction, Erosion Control,
Water Quality Protection, and Drainage
Infrastructure Management
Overview
The City of Lawrence, KS, is located 35 miles northwest
of Kansas City. In 1996, the City adopted a Stormwater Management
Master Plan that analyzed the performance capability of the existing
drainage system, recommended improvements to the facilities, and
recommended the creation of the Stormwater Utility and
corresponding stormwater fee.
County or Municipality
City of Lawrence, KS
Population
97,286
History
The 1996 master plan provided a framework for the City to create
and operate a Stormwater Utility. The utility is responsible for all
activities related to the operation of the stormwater system,
including planning, capital facility construction, street sweeping, and
educational programs.
The plan also recommended the implementation of a stormwater
fee to provide a dedicated source of revenue. The impervious area
fee is an equitable means of collecting revenue from users in
proportion to their demands on the system. In 1996, the fee was set
at $2.00 per equivalent residential unit; this fee was increased to
$4.00 by 2003 and was not adjusted again until 2016. Currently the
fee is $4.37.
The City has recently begun a comprehensive stormwater rate study
and financial plan in anticipation of increasing the size of the utility's
capital program and completing the capital projects identified in
1996.
Capital Needs
Annual Rainfall
39.92 inches
Land Area
26.3 square miles
17 main watersheds
Poverty Level
21.8%
Total Identified Need
$62 million
Annual Capital Budget
$1.3 million
Annual O&M Budget
$1.9 million
Annual Stormwater
Revenue
$3,233,000
The initial master plan identified 41 individual projects at a total cost of approximately $62 million (2019
dollars), while implementing a stormwater fee that would generate approximately $1.2 million per year.
Average revenue has been $2.9 million since 2003, which has been sufficient for annual operating costs
and debt service but left little for new capital facilities. The current five-year capital improvements plan
identifies projects totaling $26 million, which the utility plans to meet after paying off its outstanding
debt in 2018 and establishing a program of regular rate increases.
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Metropolitan Water
Reclamation District of
Greater Chicago
Working hard to manage stormwater,
clean wastewater and recover
valuable resources.
Overview
The Metropolitan Water Reclamation District of
Greater Chicago (MWRD) serves approximately 10.35 million
people each day, residents of Chicago and 128 suburban
communities.
Through a variety of engineered solutions, both green and gray,
and flood-prone property acquisitions, MWRD's Stormwater
Management Program addresses both regional and local flooding
problems throughout Cook County, IL.
In 2015, the MWRD adopted a Green Infrastructure Plan to
increase the acceptance and investment of Gl throughout Cook
County. Since that time, the MWRD has partnered with dozens of
agencies to fund Gl projects such as rain gardens,
bioswales/bioretention areas, permeable pavement systems, and
rain water harvesting systems. These projects will provide up to 5
million gallons of stormwater runoff storage to over 1,400
benefiting structures.
County or Municipality
Metropolitan Water Reclamation
District of Greater Chicago,
Cook County, IL
Population
10.35 million (service area)
Annual Rainfall
38 inches (IL)
Land Area
822.1 square miles
Poverty Level
15.9% (Cook County)
Annual Capital Budget
$34.5 million (FY19 Budget)
History
For years, stormwater management in Cook County had been a patchwork of efforts by local, regional,
state and federal agencies. In 2004, the Illinois General Assembly enacted Public Act 93-1049 allowing
for the creation of a comprehensive stormwater management program in Cook County under the
supervision of the Metropolitan Water Reclamation District of Greater Chicago (MWRD).
The Act required MWRD to develop the Cook County Stormwater Management Plan. The Cook County
Stormwater Management Plan provides the framework for the stormwater management program,
including its mission, goals, and program elements.
The MWRD's countywide Stormwater Management Program's mission is to provide Cook County with
effective rules, regulations and capital improvement projects that will reduce the potential for
stormwater damage to life, public health, safety, property and the environment.
Under the plan, the MWRD established Watershed Planning Councils and completed Detailed
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Watershed Plans for all six major watersheds in Cook County.
MWRD has made significant investments in developing over 140 capital stormwater projects since it
assumed the authority for stormwater management in 2004. These projects, which range in both size
and scope, provide flood protection for thousands of homes, businesses, and critical infrastructure.
Capital Needs & Funding Sources
Public Act 93-1049 gives MWRD the authority to levy a tax and to issue bonds for the development and
administration of countywide stormwater management. Although the District's authority for the
program applies to all of Cook County, the tax levy is only applicable to commercial and private property
located within the District's corporate limits. The District's stormwater management program is
currently funded by the stormwater tax levy.
The District utilizes the stormwater tax levy and additional funding mechanisms to finance the
countywide program.
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Stormwater Environmental
Utility, Sarasota County, FL
Control water quantity, enhance water
quality, effectively manage stormwater
Overview
The County of Sarasota, FL, is located in the coastal plain of
southwest Florida. In 1987, the County completed a
Stormwater Management Master Plan that identified the county's
drainage basins and recommended the enactment of a stormwater
utility fee as a dedicated funding source.
County or Municipality
Sarasota County, FL
History
The Stormwater Environmental Utility (SEU) was established in
1989 and is organized into four main sections: Master planning,
Capital improvements, Maintenance, and Development review. The
utility is responsible for all activities related to the operation of the
stormwater system, including master planning, the capital
improvement program, inspection and maintenance of the
stormwater management system, and the proper use, storage,
disposal of sediments, herbicides and other materials.
Population
419,689
Annual Rainfall
52.99 inches
Land Area
725 square miles
6 main watersheds
Poverty Level
18.6%
The assessment methodology has gone through several legal
challenges and changes since its inception in 1989. As one of the
first stormwater utilities created in Florida, Sarasota County has
been a leader among local governments in developing such a
program. In contrast to the engineering practice of impervious and
flow rate calculations, the rate structure was changed in 1994 to a
system that considers the pervious and impervious areas of each
parcel as the method of assessment (all lands act like impervious
surfaces during 5-yr, 25-hr rain events). The Sarasota County SEU
assesses its customers based on Equivalent Stormwater Units (ESU's) that are based on the effective
impervious area of the average single-family parcel.
Total Identified Need
$400 million
Annual Capital Budget
Varies
Annual Stormwater Revenue
$21 million
Flooding level of Service (LOS) is intended to protect habitable structures up to the 100-yr, 24-hr rain
event. Water quality expectations from regulatory pressures are significant and reach beyond the
Stormwater Environmental Utility to include wastewater treatment and reuse water for irrigation.
Capital Needs
To-date, the SEU has spent about $600,000,000 in stormwater LOS flood improvements, operations and
maintenance. Water quality expenditures for the SEU have been approximately $20,000,000. Current
Total Maximum Daily Load (TMDL) requirements are forecast to have an unmet need of $400,000,000
that will be distributed to various sources of nutrient loading in the County over the next 20 years.
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Various sources of local funding are being exercised in public dialog. All typical sources are under
consideration to include sales tax, ad-valorum and special assessments.
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Gentilly Resilience District,
Orleans Parish, LA
A unique pilot program to finance reduced
flood risk, slow land subsidence and
improve energy reliability
The City of New Orleans participated in HUD's National
Disaster Resilience Competition (NDRC) and proposed the creation of the City's first comprehensive
resilience district in an area called Gentilly. The district includes
projects that invest in innovative and creative solutions so that
people, culture and infrastructure can thrive. A focus on Gentilly
presents opportunities to leverage existing projects and
investments, to reduce flood risk, and to support the area's
recovery and revitalization. New Orleans was awarded more than
$141 million through NDRC to implement elements of the Gentilly
Resilience District Proposal, building on existing investments in
urban water management funded through the FEMA Hazard
Mitigation Grant Program (HMGP). Gentilly is an historic
neighborhood that was designed to provide home ownership to
middle class African Americans at a time when other housing
developments barred people of color. The NRDC competition
focused on homes in areas that are low-lying with low to moderate
income residents. Gentilly was a perfect match for this funding
source.
County or Municipality
Orleans Parish, LA
Population
391,006
Annual Rainfall
60 inches
Land Area
349.85 square miles
Poverty Level
26%
Challenges:
Total Identified Need
$141 million
Founding Source
HUD
Flooding and Recovery from Hurricane Katrina: New Orleans
receives on average 60 inches of rain per year. The drainage system
can handle one inch of rain the first hour and one-half inch
thereafter. Rainfall at greater rates causes flooding in the many
low-lying areas. Further, these low-lying areas are former
marshlands with organic (highly porous) soils that need water to
remain stable. Pumping drains these soils of the water, causing
them to shrink like a sponge and swell again when it rains. This
leads to subsidence; damaging streets and building foundations.
This area has seen a large number of flood insurance claims as identified by FEMA and reducing flood
risks to the neighborhood would be beneficial for the residents and the economy. And of course, the
rain runoff from the Gentilly neighborhood eventually drains into Lake Pontchartrain, carrying many
pollutants with the runoff, reducing the water quality within the Lake.
Solution:
Annual O&M Budget
N/A
Data Sources:
https://www.nola.gov/resilienc
e/resilience-projects/gentilly-
resilience-district/
The Gentilly Resilience District is designed to be a model for how other neighborhoods in New Orleans,
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across the region, and across the country, can adapt to thriving in a changing environment. The City is
working with partners such as the New Orleans Redevelopment Authority (NORA) and the Sewerage &
Water Board of New Orleans (SWBNO) to leverage existing investments in Gentilly and build on the
experience of relevant pilot projects - from rain gardens, to street improvements/storage, to retrofit of
existing wetlands to investments in micro-grids, to training and education programs - throughout the
City. The program includes 12 projects in both public and private areas, schools, parks and a university
(Dillard College campus). By leveraging the HUD funding with ongoing activities and investments from
planned work from NORA and SWBNO, these projects are anticipated to reduce flood risk, slow land
subsidence and encourage neighborhood revitalization.
The Sewerage and Water Board of New Orleans already has a few environmental projects planned
within the neighborhood that help meet the requirements of an existing sewer consent decree. At the
same time, NORA has a goal to enhance affordable housing through the City and abandoned housing
still remains within the neighborhood due to Katrina damages. The HUD funding provided for this
program can provide a match to already existing funding or enhance and hasten development by
creating new community amenities.
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Clean Water Partnership (CWP)
A Water Quality P3 approach in Prince George's
County, MD
Prince George's County, MD adopted the Clean Water
Partnership initiative which began March 26, 2015 as a public-private partnership (P3) delivery approach
to modernize and retrofit its stormwater infrastructure and meet TMDL goals by 2025 in a cost-effective
way. This program is a community based P3 that strives to meet
MS4 goals, engage the community, provide jobs and spur business County or Municipality
growth. Prince George's County, MD
Challenges:
Water Quality: Under state and federal regulations, the County is
working to improve water quality conditions in its streams and other
local waterbodies. The water quality in the stream had degraded
over the years due to excess pollutants such as Total Nitrogen (TN),
Total Phosphorus (TP), Total Suspended Solids (TSS) and trash. The
streams in the County flow into the Chesapeake Bay and transport
these pollutants, thereby degrading the quality of the Bay. The 2014
MS4 permit for the County requires compliance to the EPA Regional
3 TMDL for the Chesapeake Bay, which includes working with other
states in the watershed to meet TMDL reductions by 2025 with 60
percent of the reduction requirements to be met by 2017.
To reach the MS4 permit requirements, the County, under State
guidance, developed a watershed implementation plan (WIP) that
included the retrofit of approximately 8,000 acres of untreated
impervious area by 2017 and an additional 7,000 acres by 2025 in
order to meet the Chesapeake Bay TMDL goals.
Population
909,308
Annual Rainfall
41.69 inches
Land Area
500 square miles
Poverty Level
8.6%
Total Identified Need
$1.2 billion
Annual Capital Budget
N/A
Annual O&M Budget
N/A
Program Scorecard
Reaching the MS4 targets by 2025 would be difficult due to the large
amount of impervious area to be treated within the timeframe,
limited County resources and the inability of the County's CIP process to handle the increased work
required. A fast-track, efficient and cost-effective solutions would be required.
Solution:
Prince George's County selected to engage in an aggressive Urban Watershed Restoration Impervious
Area Treatment Plan that would enhance the County's traditional CIP to implement BMPs at a faster
pace and, on a parallel track, adopt a P3 approach to implement and maintain best management
practices that would treat up to 4,000 acres of untreated impervious area.
The CWP is a design-build-operate-maintain community-based public-private partnership (P3) business
model between the County and a private partner. The CWP is a long-term arrangement and successful
delivery of services are paid under a dedicated funding mechanism, the Clean Water Act Fee,
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established by the County with new authorizing legislation in 2013. Collection of the fee began in FY
2014 and is collected through the property tax bill. Even though collected on the property tax bill, this
fee is not a tax and applies to all property owners; including non-profits. The fee is used to pay the debt
service on EPA State Revolving Loan funds, which are borrowed to fund the CWP activities.
The County established the performance goals and the private entity in the partnership is expected to
meet the terms of the performance-based contract. Base and incentive fees for the services provided
are paid through the Clean Water Act Fee.
County officials believed that streamlining with the CWP processes would reduce the cost by at least 30
percent. The estimated cost of treatment per acre was estimated to be $100,000 vs $70,000 for
traditional CIP versus this P3 program. In addition, less County resources would be required for
management, over 40 County-based minority business enterprises were projected to provide services
within the first 3 years of the program, and 51 percent of the labor hours would be required to be
contributed by County residents under CWP.
After three years of program implementation, the county goal was met to retrofit 2,000 acres, in half
the time, for half the price, while increasing outreach to community stakeholders and investing in small,
local minority and disadvantaged businesses according to their third annual progress report. More
recently, the County reports that as of the end of May 2019, there are 100 sites over 2,165 acres, no
growth in the number of County employees needed for the program, $100.4 million spent on
local/minority business participation with 53% of county resident workforce utilization and significant
investment in youth and educational programs.
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Appendix IV: Stormwater Funding Database
As part of its charge, the Task Force led the development of a database of funding and financing sources
commonly used by communities and municipalities to fund their stormwater infrastructure. The
database is not a comprehensive list of all sources; rather, it includes the most commonly used sources
at the federal and state level. Local funding sources, which are often used by municipalities and
communities, were not captured in this effort. It was decided by the Task Force that local sources vary
so greatly from year to year and from community to community such that they could not be accurately
captured. The complete database can be found on the EPA's Water Finance Infrastructure and Resiliency
Finance Center webpage (https://www.epa.gov/waterfinancecenter) and has been uploaded to the
Water Finance Clearinghouse.
Data Sources
This section summarizes the variety of sources used to populate the Stormwater Funding Database.
Water Finance Clearinghouse
The Water Finance Clearinghouse, which is a web-based portal that contains information and resources
on drinking water, wastewater, stormwater infrastructure, and other areas within the water sector, was
developed by EPA's Water Infrastructure and Resiliency Finance Center. Within the Water Finance
Clearinghouse, funding sources were pulled by applying a "stormwater" filter to narrow the results to
377 sources, which were then uploaded to Microsoft Access. The data were reviewed for duplicates and
all national federal programs were limited to one entry, since some federal grants were listed several
times but in relation to only one state. The State Revolving Fund (SRF) grants, however, were broken
down into several entries, one for each state/territory.
Federal Funding Programs - Stormwater and Green Infrastructure Projects
EPA had previously developed a table containing all known federal funding programs that involve
stormwater and/or green infrastructure project components. The sources pulled from the Water
Finance Clearinghouse were cross referenced to this table and any missing data were added.
Stormwater Infrastructure Finance Task Force
The Task Force provided recommendations and documentation of potential sources to include in the
database.
Technical Approach
This section summarizes the different variables, or fields, that were used in the database as well as the
procedure for entering and quantifying the data.
The Water Finance Clearinghouse provided many fields of data that were narrowed down to what was
relevant to the charge, as seen in Table IV-1 below. A few fields were also added to directly provide
information to help answer some of the charges. A few of the fields were limited to the options
provided in bullets below to simplify filtering the data by source type, agency, funding use, etc. For the
funding amounts, if the source does not have a range and only has a fixed amount allocated each year,
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the amount was placed in the "max" field and the "min" field was left blank.
Table IV-1. Stormwater Funding Database Fields.
Program Name
Name or brief description of source
Source
Who is providing the funds?
Source Type
* Taxes/general funds
* Fees
* Stormwater utility
* Grants
4 Bonds
4 Loans
* Public-private partnerships
Agency
4 Federal
4 State
4 Local
* Private (including non-profit)
Website
URL
State
State or National
How Funds are Issued
* Application process
* Fund allocation to states and localities
* Competitive vs. non-competitive process
* Long-term programs vs. one-time allocation
* Grant vs. loan programs
How Funds are Used
* Capital
* O&M
* Compliance
How Funds are Utilized
How are funds coordinated with other sources of
funding?
Funding Amount Min
What is the typical annual minimum amount of
funding amount for this program?
Funding Amount Max
What is the typical annual maximum amount of
funding amount for this program?
Funding Requirements
What are the requirements for receiving these
funds?
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