Stormwater Utility Fees: Equitable Methodology to Cover Community Drainage Costs

Maintaining clean water standards, reducing pollution, and preventing floods— these are all goals of an effective stormwater management program. Appropriate, equitable funding structures are key to maintaining and improving stormwater systems. Still, many communities have a combined sewer system (CSS) where rainwater, wastewater, and sewage collect into one pipe, which flows into a treatment plant where it’s treated and released into a body of water. Operationally, the problem with CSS systems is that when rainfall exceeds capacity, the combined sewer overflows (CSOs) stress the system and lead to water pollution. Financially, many communities with CSS have an outdated fee structure that doesn’t support stormwater separately and can result in inequitable fees among residents and businesses who use the system.

More than 800 communities across the country have adopted a stormwater utility to help fund the costs of stormwater programs. By implementing a separate sewer system and stormwater fee structure, municipalities can fairly allocate stormwater costs between residential and commercial customers and allow communities to allocate more resources to maintain and improve stormwater systems, including Green Long-Term Control Plans (LTCP).

Although many municipalities have already changed their fee structure, many more have yet to consider implementing specific stormwater utility fees. Municipalities with a combined sewer system and high vacancy rates urgently need a more equitable methodology to cover community drainage costs and avoid placing the cost burden on meter water customers.

What are Customers Paying For? Separate vs Combined Sewer Systems

The updated fee structure for stormwater drainage is broken into three main components: water use, sewer use, and drainage use, assuring that all customers contribute their fair share to the municipal sewer system.

The Great Lakes Water Authority (GLWA) serves as a good example— each community’s sewer charge is based on GLWA’s sewer budget and allocated as a “share” – the combined flows that make up a city’s sewer. The three types of flows include:

• Dry Weather Infiltration and Intake (DWII)
• Stormwater
• Sanitary water that comes from households

In this model, the flow type and the cost per type determine a community’s charge. When all types of flows are combined, there is no way to distinguish stormwater, sanitary, and DWII – they are all sent to the Water Resource Recovery Facility for treatment, which results in an unfair allocation of fees and heavier costs for household users. This cost burden becomes especially noticeable in communities with high vacancy rates. There are multiple ways communities can control their sewer charges to lower the fees, such as separating their sewer system.

For example, under an outdated CSS fee structure, a large, vacant commercial development contributes a large amount of stormwater runoff, but the owner is not responsible for any fees since they aren’t using potable water. Cases like this are very common in highly vacant communities with combined sewer systems — when property owners and larger developments, who contribute more runoff to the system, are not paying their fair share due to no flow distinction. In the end, the cost burden tends to fall on potable water consumers.

Calculating Stormwater Fees

A collaborative, team-based approach works best to establish and calculate fair, equitable stormwater fees. We’ve experienced great success when municipalities combine forces with their GIS, engineering, and accounting teams to gather relevant data and work backward to reallocate stormwater and drainage to each and every property owner based on the assessment of each property. When making these calculations, we suggest that you keep in mind:

• Guidance and best practices per EPA and American Water Works Association
• Revenue requirements to cover expenses such as maintenance and repair
• Other considerations like the number of users, water volume, parcel size, etc.
• Pervious vs. impervious surfaces
• Historical data
• Credits and/or discounts based on the community’s green/sustainability goals

Above all, maintain clear, open communication with the community by sharing information and engaging during city council meetings and workshops, public meetings, public comment periods, and more to directly address concerns and educate your water customers on the goals and rationale behind the rate changes and reallocated fees.

Barriers to Implementation of Stormwater Fees and How Metro Helps

Setting new stormwater rates and implementing new fee structures can be an intense process. When commercial and industrial properties have paid a specific amount for decades, separate stormwater fees might at first seem like an additional cost instead of a reallocation of fees.

That’s when our team jumps in to walk through the results of our engineering and GIS assessments to thoroughly explain the data the rates are based on. Sometimes we sit down with large commercial/industrial property owners and explain what stormwater fees are, how new fee structures are calculated, how residential customers bear a greater burden under the old rates, and how the new approach helps municipalities repair and maintain their stormwater infrastructure. These honest conversations can go a long way in educating the community to reach consensus.

At MCA, we are proud to help communities struggling to maintain and improve their stormwater infrastructure. We’d love to help guide you through it. Let’s work together.