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HomeMy WebLinkAboutItem 01 Stormwater User Fees AGENDA ITEM SUMMARY Meeting Date: 9/23/2013 Meeting Type: Work Session Staff Contact/Dept.: Katherine Bishop/DPW Matt Stouder/DPW Staff Phone No: 541-726-3674 541-736-1006 Estimated Time: 50 minutes S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Provide Financially Responsible and Innovative Government Services ITEM TITLE: STORMWATER USER FEES ACTION REQUESTED: Staff requests Council input and direction on a conceptually proposed stormwater user fee adjustment for qualifying residential properties. ISSUE STATEMENT: At a recent meeting, Council expressed an interest in a more detailed briefing on how stormwater user fees are determined and in exploring user fee adjustments to stormwater charges. ATTACHMENT: 1. Council Briefing Memo DISCUSSION/ FINANCIAL IMPACT: Based on earlier discussions with Council regarding stormwater user fees, staff has provided preliminary details for a conceptual residential stormwater user fee adjustment program to accommodate low impact development such as rain gardens and/or onsite treatment (Attachment 1). In any discussion of possible adjustments to the City’s stormwater user fee program, it is necessary to consider changes in the context of the City’s overall stormwater services program. Therefore, Attachment 1 provides an in depth overview of the City’s overall stormwater services and user fee program, including a review of the current stormwater user fee rate structures for commercial and residential accounts. Additional topics of discussion include: • The City’s Stormwater Management Program • Stormwater Program Funding Sources and Uses • Generally Accepted Rate Structure Goals and Objectives • Stormwater Billing and Collection Services and Trends • Stormwater User Fee Adjustment Considerations If, after discussion, Council desires to move forward with any adjustment to residential stormwater user fees for low impact development, staff will develop the framework for the adjustment program, including necessary requirements and regulations, and recommend Council consider formal action on the program as part of the annual stormwater user fee rate review in spring 2014. ATTACHMENT 1 Page 1 of 7 M E M O R A N D U M City of Springfield Date: 9/23/2013 To: Gino Grimaldi, City Manager COUNCIL From: Len Goodwin, Development and Public Works Director Matt Stouder, Environmental Services Manager Katherine Bishop, Senior Finance Analyst BRIEFING MEMORANDUM Subject: Stormwater User Fees ISSUE: At a recent meeting, Council expressed an interest in a more detailed briefing on how stormwater user fees are determined and in exploring user fee adjustments to stormwater charges. COUNCIL GOALS/ MANDATE: Provide Financially Responsible and Innovative Government Services BACKGROUND: On July 1, 1989 Springfield City Council adopted Municipal Code language requiring the collection of stormwater drainage fees from all real property in the City. This basic language has remained essentially unchanged over the years. Council has, however, adopted a number of resolutions to revise the drainage user fee amounts based upon regulatory requirement changes, capital infrastructure investment needs, debt service requirements and inflation. Springfield Municipal Code 4.208 (2) requires all real property within the City which benefits from, or contributes drainage water to, the City’s stormwater system to pay a stormwater fee. As outlined in the table below, all single family dwellings pay an equal fee currently set at $12.62 per month. For property other than single family, the fee is calculated by the product of the amount of property in 1,000 square feet and a value based on the intensity of development. To this, an administrative fee of $1.456 per month is added. The first component of the non-residential stormwater fee shown in the table above is a base fee, currently set at $1.466 per 1,000 square feet. The base fee is a fixed fee incurred by all developed properties which benefit from the public stormwater system owned and operated by * Residential: $12.62 Very Heavy Heavy Moderate Light Undeveloped >70% 41-70%20-40%<20%0% Base Fee per 1,000 sq ft $1.466 $1.466 $1.466 $1.466 $0.000 Impact Fee per 1,000 sq ft $2.200 $1.284 $0.368 $0.000 $0.000 Total Rate per 1,000 sq ft $3.666 $2.750 $1.834 $1.466 $0.000 *Includes Single Family Residental and Duplex Households **Commercial is based on percenatge of property development (impervious surface) **In addition to the total Commercial rate displayed above, an adminitrative fee of $1.456 per account is applied Stormwater Monthly Fee Schedule ** Commercial ATTACHMENT 1 Page 2 of 7 the City. The base fee is independent of the amount of discharge a developed property contributes into the public system, and is intended to provide for benefits such as flood protection, water quality protection, State and Federal regulatory compliance, and general infrastructure maintenance. The second component in the table above is an impact fee, which directly relates to the impact a developed property has on the City’s system (through stormwater discharge). The values for the per 1,000 square feet impact fee are derived from a runoff coefficient according to the intensity of development, as follows: • Undeveloped: Real property which is undeveloped and unaltered by buildings, road, impervious surfaces. Coefficient = 0 • Light Development: Impervious surfaces < than 20%. Coefficient = 0.40 • Moderate Development: Impervious surfaces 20% - 40%. Coefficient = 0.50 • Heavy Development: Impervious surfaces 41% - 70%. Coefficient = 0.75 • Very Heavy Development: Impervious surfaces > than 70%. Coefficient = 1.00 The intensity of development coefficient increases as the amount of impervious surfaces which discharge to the City system increase. This allows non-residential property owners the ability to directly control their monthly stormwater bill through onsite design of their private drainage system, either through minimization of installed impervious surfaces or by installing low impact development techniques such as infiltration swales and/or rain gardens. DISCUSSION: Earlier this year, during the user fee rate review process, Council expressed an interest in exploring user fee adjustments for residential customers who install low impact development techniques that reduce stormwater runoff into the City’s stormwater system (similar to the program that currently exists for non-residential development). Staff has prepared a conceptual option for Council consideration, which is discussed at the end of this memo. To provide context with respect to how user fee adjustments may influence the City’s overall stormwater program, the following topics are discussed briefly below: • The City’s Stormwater Management Program • Stormwater Program Funding Sources and Uses • Generally Accepted Rate Structure Goals and Objectives • Stormwater Billing and Collection Services and Trends • Stormwater User Fee Adjustment Considerations Stormwater Management Program – The City’s stormwater services are regulated under a Phase II National Pollutant Discharge Elimination System (NPDES) Permit, issued by the Oregon Department of Environmental Quality (DEQ). The City’s Stormwater Management Plan, which provides policy and management guidance to meet stormwater regulations imposed in the City’s NPDES Permit, was originally adopted by the Council in 2004 and subsequently updated in 2010. Within the Stormwater Management Plan, Council adopted key outcomes for the City’s Stormwater Management Program, including: 1. Protect citizens and property from flooding. 2. Ensure compliance with State and Federal requirements to reduce risk of third party lawsuits or enforcement actions. 3. Improve surface and sub-surface waters for aquatic life and other beneficial uses. 4. Preserve and maintain surface water, wetlands, and riparian areas as functional and ATTACHMENT 1 Page 3 of 7 attractive for people, fish and wildlife. 5. Citizens, businesses, and industries understand the need to protect water quality. 6. Provide regulatory certainty for the development community while ensuring that growth is not constrained by lack of planning or facilities. 7. Urban drainageways become community amenities. Stormwater Program Funding Sources and Uses –In exploring potential adjustments to the stormwater user fee rate structure, it is important to note that the City’s stormwater services program is funded primarily through stormwater user fees which account for 98% of the total operating program revenue budget in FY14. The remaining 2% of revenues includes 1.9% from stormwater permit fees, plus an estimated 0.1% from interest income. The City provides stormwater services to approximately 18,400 accounts in total of which 93% are residential accounts (single family homes and duplexes) and 7% are commercial accounts. Of the projected $5.81 million in stormwater user fee revenue in FY14, 45% of user fee revenue is attributable to residential customers, and 55% of revenue is from commercial accounts. The City’s Stormwater Program includes the following operating programs which include personal services and materials/services budgets to continuously provide stormwater services for the community, meet regulatory permit standards, and work to achieve Council adopted key outcomes. User Fee Revenue by Customer Type FY14 Budget Percentage No. Accounts Percentage Residential 2,597,200 45%17,150 93% Commercial 3,212,800 55%1,250 7% Total $5,810,000 100%18,400 100% ATTACHMENT 1 Page 4 of 7 In addition to funding the on-going operating programs, a share of revenues from stormwater user fees are allocated to the capital program budget in the amount of $1,540,000 and to meet stormwater debt service obligations in the amount of $705,400. Rate Structure Goals and Objectives – Commonly accepted rate structure goals and objectives include, but are not limited to the following: 1. Comply with legal requirements 2. Ensure revenue adequacy to meet operating and capital needs 3. Provide equity and fairness between customers 4. Be easy to understand and administer 5. Facilitate ongoing review to maintain rate stability Stormwater Billing and Collection Services – The City’s residential stormwater service user fees are charged as a level $12.62 monthly charge to cover an appropriate share of stormwater management services citywide. The stormwater component of the customers overall utility bill is the smallest component of the total typical residential utility bill, and with the level stormwater monthly charge, residential customers can anticipate the stormwater service charge amount on their bill. As a result, the City’s billing and customer service staff received a very low level of customer inquiries specific to stormwater billing services. On average 83% of billed amounts are collected by the due date, with 14%-15% of billed amounts collected 1-30 days after the due date. Less than 2% of billed amounts remain unpaid Stormwater Programs Program Description Planning Stormwater facility master planning; capital project identification; regulatory compliance; standards and public policy Permitting Development and refinement of code/regulations; land drainage and alteration permitting; construction site stormwater run-off and control; plan review and approval; inspection and enforcement Regulatory Administration Water quality monitoring; inspection and enforcement; pollution prevention Illicit Discharge Program Reporting and tracking; response and enforcement; outfall inventory and mapping; water quality monitoring for illicit discharge, discharge detection and elimination Preventive Maintenance Service line inspections; catch basin cleaning; inventory and conditions survey; leaf program; vegetation management; culvert cleaning and canal reshaping; flood control; water quality features maintenance; catch basin and curb inlet maintenance; pipeline repair Engineering Reviewing and implementing design standards for stormwater facilities Capital Program Project development and construction; inspections and construction management; bid and award; recordkeeping Program Management Stormwater administrative and customer service; public education/outreach; financial planning and rate development; budget development ATTACHMENT 1 Page 5 of 7 31-60 days after the due date, with less than 1% of billed amounts pending collection 61+ days after the due date. Stormwater User Fee Adjustment Considerations - It is important that user fee rate structures provide equity and fairness between customers. Therefore, the basis of the City’s stormwater user fees takes into consideration all stormwater services provided by the City, in addition to the impact of the customer’s property on the public system. Commercial - As discussed in the background section above, a base fee of $1.46 is paid by all commercial developments that benefit from the overall stormwater system owned and operated by the City. In addition to the base fee, an impact fee is collected based upon the impact a property’s stormwater discharge has on the public system. Commercial developments that reduce the impact to the City system are charged a lower impact fee within the City’s current commercial stormwater user fee rate structure. Earlier this year in a letter to Council, Planned Parenthood of Southwest Oregon (PP) inquired about the City’s stormwater rate structure. PP recently received site approval and built a new facility located at 3579 Franklin Blvd, and expressed concern that they were asked to pay monthly stormwater user fees given their recently approved development did not discharge stormwater runoff into the City’s system. As discussed above, all commercial development in the City is assessed a base fee, with an impact fee charged based on the actual impact to the City system. The table below shows the monthly rate the PP development is requested to pay under the current rate structure (base fee only), contrasted to the amount PP would have been asked to pay had they not installed onsite stormwater infiltration systems and discharged their runoff to the City system. Without the onsite green infrastructure for stormwater collection and treatment, PP would have been categorized in the “Heavy” category, with user fees totaling $141.38 monthly or $1,697 a year. With the installed green systems onsite, PP’s bill is $56.35 monthly or $676 a year. For comparison purposes with onsite treatment in this example, the stormwater user fee charges are 60% less than without the onsite green infrastructure, in recognition of the lower stormwater impact. It is also worth noting that at the time of development, System’s Development Charges (SDC’s) are assessed based upon the impact the development has on the City’s stormwater system. The City’s stormwater SDC methodology allows for a reduction in SDC’s based upon a corresponding reduction in impact to the City system. In this example, since the PP site was designed and developed to contain and treat all stormwater onsite, the stormwater SDC’s paid was $0. In contrast, because the PP site includes systems designed to reduce stormwater flows to the City system, the stormwater SDC uncollected by the City was approximately $17,810. Rate Factors Heavy (standard discharge)Light (minimal discharge) Total Impervious (thousand sq ft)50.880 37.446* Base fee per 1000 sq ft $1.466 $1.466 Impact fee per 1000 sq ft $1.284 $0.000 Subtotal 50.880 X $2.750 = $139.92 37.446 X $1.466 = $54.89 Administrative fee $1.456 $1.456 Total Monthly Bill $141.38 $56.35 *13,434 sq ft of porous asphalt not included in calculation Site Specific Example ATTACHMENT 1 Page 6 of 7 In summary: (1) the City’s currently adopted commercial stormwater user fee rate structure allows for charges to be applied based on the impact to the City system in a fair and equitable manner; (2) the City’s currently adopted SDC methodology allows for fair and equitable charges at the time of development based on the impact to the City system for both commercial and residential properties. Option to Change Commercial User Fee Rate Structure and Next Steps - Council may desire to change the commercial stormwater user fee rate structure by reducing the base fee per 1,000 square feet and/or the impact fee per 1,000 square feet component(s) of the rate structure (as displayed on page 1 of this report). Reducing the fee on one component of the rate structure, would require a corresponding increase on the other rate component to maintain revenue adequacy to support current Stormwater programs and service levels. If Council wishes to make rate structure changes and provides such input, staff would return to Council with the outcome of an in-depth fiscal and program analysis for Council action. The analysis would further evaluate: (1) negative revenue impacts; (2) off-setting rate increases and/or rate structure adjustments to maintain revenue adequacy, and/or; (3) stormwater program service reductions and associated expenditure budget reductions to off-set and balance with negative revenue impacts, while maintaining regulatory permit standards. Staff is not proposing adjustments to the commercial rate structure at this time and does not recommend this option. Residential - For residential development however, the rate is flat at $12.62 per month since nearly all stormwater from roofs and driveways runs off into the City’s public stormwater system. With recent interest in green development such as rain gardens, some property owners are choosing to install private onsite treatment systems on their property to keep residential runoff onsite and out of the City system. The focus of stormwater user fee adjustments for onsite treatment that follows is specific to residential stormwater accounts (single family and duplex homes). Proposed Residential Stormwater User Fee Adjustment Program – Rain Garden/Onsite Treatment – For residential properties, rain from roofs and driveways typically goes untreated into city stormwater pipes under the street and into local streams and waterways. Stormwater may carry harmful water pollutants such as gas, grease, oil, pet waste, weed killers and fertilizers, which can be unhealthy for the environment, including aquatic habitat, wildlife and the public. Disposal of stormwater on private property, in a safe and appropriate manner, results in a reduction in stormwater runoff to the City’s stormwater collection system. To support safe and appropriate collection and treatment of stormwater runoff from residential property, the following fee adjustment concept is provided for further discussion with Council. The City of Gresham offers a similar residential stormwater user fee discount program which is a key source of information for the basis of this proposed program. Program objectives include: 1. Supporting safe and appropriate onsite collection and treatment of stormwater runoff on private residential property. 2. Operating and maintaining a system that reduces stormwater runoff from residential properties to the City’s stormwater collection system. Program requirements and proposed residential stormwater monthly user charge adjustments for qualifying residential properties: 1. A 20% reduction in stormwater monthly user charges for properties with at least 75% of property hard surfaces that drain onto the private property, without seepage to the street or ATTACHMENT 1 Page 7 of 7 off-site during large storms 2. A 10% reduction in stormwater monthly user charges for properties with at least 50% of property hard surfaces that drain onto the private property, without seepage to the street or off-site during large storms. 3. Properties with less than 50% of property hard surfaces that drain onto the private property would not be eligible for an adjustment in stormwater monthly user charges. Preliminary assumptions for a typical residential property: 1. Property size: 6,500 – 7,000 square feet 2. Home size: 1,600 square feet 3. Impervious surface: 2,500 – 3,000 square feet, includes home, garage, patio, driveway, etc. Based on preliminary program assumptions when applied to the typical residential property, meeting the proposed program requirements, the associated user fee reductions would be as follows: 1. A 20% reduction in stormwater monthly user fees would require at least 75% (at least 4,875 – 5,250 square feet) of hard surface to drain onto the private property, with a user fee reduction from $12.62 to $10.10 monthly, resulting in a savings of $2.52 monthly or $30.24 annually. 2. A 10% reduction in stormwater monthly user fees would require at least 50% (at least 3,250 – 3,500 square feet) of hard surface to drain onto the private property, with a user fee reduction from $12.62 to $11.36 monthly, resulting in a savings of $1.26 monthly or $15.12 annually. 3. Properties with less than 50% of property hard surfaces that drain onto the private property would not be eligible for an adjustment in stormwater monthly user charges RECOMMENDED ACTION: If, after discussion, Council desires to move forward with either an adjustment to residential and/or commercial stormwater user fees, staff will develop the framework for the adjustment program, including necessary requirements and regulations, and recommend Council consider formal action on the program as part of the annual stormwater user fee rate review in spring 2014.