Many local officials realize the need to improve stormwater management to protect water quality, but fear constituents would oppose a new fee for stormwater services. Experience shows a transparent approach that involves community stakeholders can build consensus.

by: Adrienne Vicari, P.E.
 

(These tips are excerpted from an article we published in the October 2015 issue of Pennsylvania Township News magazine and are used here with their permission. Reprints of the entire article are available upon request.)

Increasingly stringent stormwater regulations are causing municipalities to think about how they can fund badly needed stormwater system improvements in their community. Many municipalities are considering funding their program through user fees charged by a municipal authority, as authorized by Act 68 of 2013, but some municipal leaders worry that a new fee may be unpopular with residents and businesses.

Though stormwater utility fees are still largely unchartered territory in Pennsylvania (less than a dozen communities have established one here), the use of dedicated stormwater utilities and stormwater fees is a nationwide movement that has seen steady growth over the past four decades. Western Kentucky University reports that there are more than 1,500 stormwater utilities throughout the United States and Canada, serving communities as small as 88 people to more than 3 million. Their success in building consensus among constituents for stormwater fees can show local municipalities a path to approval in their own community.

HRG has used information from the Western Kentucky University study, the nationwide non-profit Water Words That Work, and several case studies published by the EPA (along with our own experience implementing stormwater authorities) to come up with several tips on how municipalities can build local support for stormwater user fees.

1. Make sure you have identified and involved all the potential stakeholders – even those who oppose the formation of a utility – and form a stakeholder advisory committee. If you don’t attempt to address the concerns of your opposition in these committee meetings, they can come back to haunt you later when it comes time to pass the resolution. According to the EPA case studies, this is what happened in Dover, New Hampshire, and Huntsville, Alabama. Both communities had small advisory committees, but they did not engage all community groups. Though there was unanimous consent among the committee members to form a stormwater utility, the opposition of certain community groups who had not been represented on the committee ultimately drowned out their voices, and the municipal leadership declined to pass the resolution.
2. Make the stakeholder committee an open forum where people feel comfortable expressing all points of view. Again, you want to deal with any potential obstacles proactively, rather than be blindsided by them in the final stretch. Stakeholder advisory committee meetings are more conducive to problem-solving and negotiating in a deliberative way than public meetings are. By including your opposition early in the process and giving everyone a chance to speak freely, you ensure that major obstacles to support will have been addressed before a public vote.
3. Have your stakeholder committee discuss the stormwater program and what it can accomplish first. Don’t bring up funding till you’ve established a need for improvements and motivated people to support them. People need to know what they’re getting before they can be motivated to hand over their money.
4. Clearly define the benefits of the program in all public outreach efforts. Tell people exactly what improvements you intend to make with the money you raise, and quantify the benefits of those improvements whenever possible. For example: “This project will reduce the likelihood of flooding along Main Street by 75%.”
5. Show, don’t just tell. Visuals are particularly persuasive. Water Words That Work found that showing people photographs of how the fee would be used had the single most dramatic effect of any information provided in gaining approval of the fee.
6. Choose your words carefully. Name the fee to clearly convey the service you are providing. “Stormwater management” is too vague and largely meaningless to the average person, but “clean water protection” has obvious value. In the Water Words That Work survey, “pollution control and flood reduction fee” tested better than any other term containing the words stormwater, authority or utility.
7. Emphasize fairness. People generally believe that those who use a service most should pay more for it, so show them how your fee ensures that is the case. Explain why it’s important that non-profits pay the fee because they, too, contribute to stormwater discharges (often more than residents because of their large impervious parking areas). Tell them about credits that people can receive if they lower their stormwater impact by installing green infrastructure on their property. In general, people perceive fees based on actual impervious area to be the most fair and equitable (as opposed to a flat rate), but some of the communities EPA studied did successfully enact flat rates with effective public education about the reasons why that option was chosen.
8. Demonstrate cost-effectiveness and be transparent about finances. If a stormwater utility is truly the best approach for your community, the numbers will convey that, and detailed economic studies are always an integral part of the planning process. Use those numbers to prove that the stormwater fee will better accomplish program goals than general fund revenue or any other option available. Voters can often be mistrustful of a government’s ability to use funds wisely. Being transparent about program finances (how the fee was determined, how it will be used) eases minds and reduces the chance of a legal challenge.
9. Define this as a local solution to a local problem. Avoid talk about state and federal mandates or general environmental goals. If flooding is a recurring problem in your community, show how this program will reduce that problem. If pollution is a concern, talk specifically about keeping local waterways clean: the stream families teach their children to fish in, the lake where they go swimming.

Determining whether a stormwater utility is the most effective way to fund infrastructure needs in your community is a complex process that requires dual expertise in civil engineering and financial consulting. Unfortunately, some communities are afraid to even investigate the option because they believe their constituents will never approve of a stormwater fee.   In communities where utilizing general tax revenue is not the best fit approach, research by EPA and others cited in this article shows that an effective public outreach program, which includes key stakeholder groups in the earliest planning stages, can be successful in persuading people to accept stormwater management fees.

Adrienne Vicari, P.E., is the financial services practice area leader at HRG. In this role, she has helped the firm provide strategic financial planning and grant administration services to numerous municipal and municipal authority clients. She is also serving as project manager for several projects involving the creation of stormwater authorities or the addition of stormwater to the charter of existing authorities throughout Pennsylvania. Contact Adrienne about stormwater authorities.

by: Adrienne Vicari, P.E.

Two years after the passage of Act 68, many municipalities still have legitimate concerns about whether a stormwater authority would be right for their community. In a previous article, HRG addressed concerns about public opposition, up-front costs, and a loss of control over the infrastructure covered under the MS4 permit. In today’s article, we discuss the potential advantages of stormwater authorities to municipalities searching for ways to finance their stormwater management programs.

Advantage #1: Stormwater authorities enable you to collect money from tax-exempt users.

Churches and non-profit organizations like hospitals contribute a lot of stormwater runoff to the local watershed, but a tax would never collect any revenue from them because they are tax-exempt. By using the stormwater authority structure, you can charge fees to these users and collect their fair share contribution to stormwater management efforts.

Advantage #2: Stormwater authorities can collect fees from multiple municipalities who may be contributing runoff to their watershed; municipalities cannot charge anyone outside their own borders.

Political boundaries and watersheds seldom coincide. Stormwater is not neatly contained by political boundaries, and watersheds often cross through more than one municipality. But townships and cities cannot charge other local governments for stormwater management under state law. A multi-municipal (or joint) stormwater authority, however, can be set up to serve an area that extends beyond the boundaries of a single municipality, which enables everyone within a particular watershed to contribute to the stormwater management services it requires.

Advantage #3: Stormwater authority fees are more equitable than a property tax.

As stated in #1 and #2, stormwater utility fees ensure that everyone who contributes to a community’s stormwater pays for the services they use (even tax-exempt organizations, particularly if a utility is set up on a watershed-wide basis).

But stormwater fees are also much more flexible and responsive to the true nature of stormwater than a straight property tax would be. The value of someone’s land has little to do with how much stormwater it creates, so a property tax is inherently unfair for this purpose. A property could be appraised at a high value and contribute very little to stormwater, but an experienced financial consultant can help set up an authority’s rate structure based on the quantity and/or quality of runoff a property creates (rather than charging a flat fee or basing it on acreage).

A municipality can also offer credits to property owners who install best management practices for controlling runoff. (This has the added bonus of encouraging good behavior: inspiring people to install stormwater control measures like rain gardens, buffers, etc. on their property.)

Thus, a well-designed stormwater utility ensures everyone pays according to how much he or she uses the service.

Advantage #4: Stormwater authorities provide a dedicated revenue stream for stormwater improvements.

Relying on general tax revenue for stormwater improvements isn’t practical for some communities. There simply isn’t enough money to cover all of the needs the municipality must address, and stormwater often falls to the bottom of the list because money is allocated to more high profile projects such as a bridge replacement or pavement rehabilitation. Unless there is major flooding, stormwater is often forgotten and doesn’t receive the financial attention it needs.

With a dedicated stormwater fee, the money is there to maintain, repair and replace stormwater infrastructure on a proactive basis, rather than waiting till flooding causes expensive damage or impacts public safety.

Advantage #5: A dedicated revenue stream for stormwater can improve the finances of a municipality.

It can do so in several ways. First, now that the municipality no longer directs tax revenue to stormwater management, it has more tax dollars available for its other priorities.

Second, debt associated with stormwater improvements is no longer considered direct municipal debt because it can be self-liquidated by the authority’s revenue stream. Therefore, the stormwater debt doesn’t count towards the municipality’s borrowing limit, and its impact on the municipality’s bond rating is reduced. (Since municipal authorities are not subject to the same restrictions on borrowing and bond rating concerns as municipalities, they are often able to implement larger projects or make improvements in a timelier manner than a municipality could.)

Third, many agencies that offer grants and loans expect the municipality to put up matching funds, which is hard to do when you don’t have a dedicated stormwater revenue stream. Even if matching funds are not an official requirement of the grant or loan, most funding agencies place a higher preference on recipients who have money available for the infrastructure because they have a greater confidence in their ability to complete the project if there are issues and to maintain it after it’s done.

Advantage #6: Stormwater authorities are better positioned to raise rates than municipalities are to raise taxes if stormwater obligations increase.

Tax increases are not popular politically, and they are hard to pass. As stormwater infrastructure needs change, municipalities may need a revenue source that is flexible enough to meet those changing demands.

Every municipality’s financial situation and stormwater needs are different, so it’s wise to seek the counsel of a consultant with dual expertise in engineering and financial consulting to determine if a stormwater utility is right for your community. If it is, your consultant can help you organize a program that maximizes an authority’s potential advantages: providing a dedicated revenue stream for stormwater management that is more equitable than other funding sources and freeing up the municipality’s tax dollars for other priorities without adding to its direct debt or negatively impacting its bond rating.

Adrienne Vicari, P.E., is the financial services practice area leader at HRG. In this role, she has helped the firm provide strategic financial planning and grant administration services to numerous municipal and municipal authority clients. She is also serving as project manager for several projects involving the creation of stormwater authorities or the addition of stormwater to the charter of existing authorities throughout Pennsylvania. Contact Adrienne about stormwater authorities.