Funding Municipal DrainageManagement Programs
The Drainage Utility Comes of Age in Texas
ASFPM National ConferenceSan Antonio, Texas
May 2012
George E. Oswald, P.E., D.WRE, CFMRPS Espey, Austin Texas
www.rpsgroup.com
1
| rpsespey.com
Presentation Outline■ Funding Challenges■ What is a Drainage Utility?■ Texas Enabling Legislation■ Implementation Process■ Fee Assignment & Equity Considerations■ Exemptions■ Cost-of Service Analysis■ Public Outreach■ Texas Utilities Overview■ Revenue Estimate and Tips for Your Community■ National Legislative Initiative Needed
2
| rpsespey.com
Municipal Program Funding
■Challenges■Flood Hazard Reduction■Stream Erosion Mitigation■Water Quality Management■NPDES-MS4 Compliance
■Funding Options■General Fund■Special Taxing/Assessment Districts■Federal & State Grant Programs■Impact Fees■Drainage Utility
3
| rpsespey.com
What is a Drainage Utility?---Not a Rain Tax!
■User-Fee, like Water/Wastewater/Solid Waste■Equitable User-Fee Basis: property stormwater
run-off demand on drainage system■ Impervious cover, i.e. rooftops, driveways/walkways, parking
including compacted graveled surfaces
■Guided by State Law, no property value consideration
■User-Fee Collected on City Utility Bill
■Provides Stable Revenue Stream
■$ Managed in protected account
■Supports long-term program implementation
4
| rpsespey.com
Texas Municipal Drainage Utility Systems ActVery Good but not PerfectTexas Local Government Code Chapter 552.C
■Charges Must be: Directly Related to Property Runoff Characteristics, Reasonable, Equitable and Non-Discriminatory
■Charges Apply only to Developed Property■Revenue Can be Used to Support All Drainage
Management Programs – O&M & CIP■Enterprise Funds Management Required■May Issue Revenue Bonds■Revenue Can be Combined with Other Sources■Ordinance Notification/Public Hearing Required
■Utility Declaration, Assets Dedication■Fees, Enterprise Fund, Exemptions, Appeals
5
| rpsespey.com
DRAINAGE UTILITY IMPLEMENTATION PROCESS
6
Public Information Program
Program Needs Analysis • CIP Facilities Plan• System Maintenance
Program Needs Analysis • CIP Facilities Plan• System Maintenance
Rate Development• Land Parcel Assessment• Billing Unit Alternatives
Rate Development• Land Parcel Assessment• Billing Unit Alternatives
Budget AnalysisMulti-year Plan
Budget AnalysisMulti-year Plan
PUBLIC
HEARINGS
PUBLIC
HEARINGS
Ordinance Adoption• Utility • Fee
Ordinance Adoption• Utility • Fee
Billing System Implementation• Parcel Data Verification• Sample Billing Mail-Out• Staff Training
Billing System Implementation• Parcel Data Verification• Sample Billing Mail-Out• Staff Training
Billing System EvaluationBilling System Evaluation
$ Revenue = ResultsRevenueProjections
$/ERU
FundingNeeds
| rpsespey.com
How are User-Fees Assigned?
■Impervious Area■Rooftops, Parking, Driveways, Walkways■Increases Volume & Rate of Runoff
■Equivalent Residential Unit (ERU)■Average Sq Ft for Single-Family Properties, ~3000■Used as Billing Standard
■Rate Structure-Two Major Classes■SF Residential: Single Tier, Multi-Tier■Commercial/MF/Industrial/Institutional/Religious
7
| rpsespey.com
Utility Billing Basis
8
Public Streets, ROW, Drainage Infrastructure not charged, considered part of Drainage System
| rpsespey.com
Example Utility Billing Calculation
9
| rpsespey.com
Land Parcel Data and Billing System■ Appraisal District Records
■ Parcel Size■ Building Footprint■ Parking Area■ Land Use
■ GIS Analysis■ Planimetric Data■ Orthophotography■ Land Parcel Boundary Map■ Commercial Development Record-Plans■ Heads-Up Digitization & Spectral Analysis
■ Utility Billing System■ Match Data to Existing Utility Accounts■ Multiple Meters/Parcel■ Customer Appeals Process
10
| rpsespey.com 11
| rpsespey.com
Example Utility Rate Structure
■ ERU Value – 2,800 sq ft Impervious Area (IA)■ Single-Family: Three Tiered
■ “Small” 0.7 ERU, <2,100 sq ft IA■ “Typical” 1.0 ERU, 2,100-3,200 sq ft IA■ “Large” 1.6 ERU, >3,200 sq ft IA
■Commercial/Industrial/Institutional■ 16 ERU per Acre Impervious Area
12
| rpsespey.com
Customer Equity-A Challenge Worth the Effort ■TX statute does not define customer equity■Many differing fee assignment approaches are
used, there is no standard in Texas■Land parcel impervious area and land area are
dominant■Oddities-water meter size, traffic trip factor, flat rate for
all, % of water bill■Increased equity requires more land data management
13
Equity
Flat Rate/Capped Rate Multi-Tiered Custom Assignment
| rpsespey.com
Exemptions-Confusing? Texas Local Government Code Chapters 552.C and 580
■Statutory (Mandatory)■Undeveloped Land■ Institutions of Higher Education■Property with Private Drainage System (zero discharge)■State Property
■Discretionary (City Policy Decision)■County Property■School District Property■City Property■Religious Organization Property
14
| rpsespey.com
Cost of Service/Financial Analysis
■Enterprise Fund Budget Model
■Multi-Year Analysis■Affordability (Rates)■Phased Implementation- CIP, O&M
■O&M-Staff & Equipment■CIP Bond Debt vs. Pay-as-You-Go
■Reserve Fund■Emergency Repairs/System Replacement
Establishes Initial and Projected Customer Billing Rates
15
$ / ERU = Annual Revenue Needs ($)
Total # Billing Units
| rpsespey.com
Public Outreach-Critical for Success
■Public Meetings■Residential Customers■Commercial Customers■Follow-up with City Council
■ Information on City Web Site■What is a Drainage Utility?■Proposed Drainage Service Improvements■How are Fees Assigned?■How are Billing Errors Resolved?
■Sample Billing Mail-Out ■Resolve Issues before 1st Billing
16
| rpsespey.com
Texas Drainag
e Utilities
17
• 85 Now in Operation
• 14 in Evaluation Phase
| rpsespey.com
Texas Drainage Utilities■Population Served- 500 to 2,100,000 ■Annual Revenue- up to $130, 000,000■Annual Revenue per Capita
■Average $30, Maximum $80■Single-Family Billing Rates for ERU
■Average $4.30/month, Maximum $12.00/month
■Commercial Billing Rates (1-acre parcel @ 90% impervious cover) ■Average $45/month, Maximum $190/month
18
| rpsespey.com 19
| rpsespey.com
Texas Lessons-Approach with Caution!■Law Suits/Threats
■Arlington, Austin, El Paso, Houston, New Braunfels■Exemptions-Less is better, any exemption requires
remaining customers to subsidize (pay more).■ In Texas, Rail Roads are not exempt, will expect special
consideration.■Commercial Rate Caps-Counter to utility equity
principals and state statute but politically attractive, don’t go there.
■Credits-OK if based on avoided cost to utility, do not just grab a number.
20
| rpsespey.com
Utility Annual Revenue Estimate
Annual Revenue Potential
7 X Population X $1/Monthly ERU
ERU=Single-Family Residential Billing Unit
Example: Population 50,000, $3.50/month per ERU Annual Revenue = $1,225,0000
21
| rpsespey.com
Drainage Utility Tips for Your Community
■Public Outreach is Critical for Community Understanding and Acceptance
■Community Affordability is a prime consideration■Customer Equity is a good investment
■ Impervious area basis recommended■Multi-Tiered and/or Custom Site Fee-Assignment■Avoid Commercial Rate caps ■Any “credits” should be based on avoided costs■Exemptions require other customers to subsidize
■Sample Billing Mail Out before Go Live
22
| rpsespey.com
National State-Legislative Initiative Needed!
■User-Fee Funding is Critical for Success of Municipal Drainage/Stormwater Management Programs-the General Fund is exhausted.
■Dillon Rule States (40) best served by enabling legislation
■Non-Dillon Rule States require extreme caution■Recommendation to ASFPM
■Develop Model Legislation■Coordinate with State Municipal Leagues for Adoption
23
| rpsespey.com
Texas Drainage Utility Survey
24
http://www.espeyconsultants.com/drainage_utility_survey_espey_consultants.pdf
| rpsespey.com
Texas Drainage Utility Survey
http://www.espeyconsultants.com/drainage_utility_survey_espey_ consultants.pdf
Google-”Texas Drainage Utilities”25
| rpsespey.com 26
George E. Oswald, P.E., D.WRE, CFM
[email protected] Espey
512-326-5659www.rpsgroup.com
| rpsespey.com
Commercial Monthly Billing Rate Calculation
27
# ERUs = Impervious Area (SF)/Parcel
3,000 SF/ERU
Charge $ = # ERUs
ParcelX $4.00 / ERU
