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

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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

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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

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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

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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

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DRAINAGE UTILITY IMPLEMENTATION PROCESS

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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

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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

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Utility Billing Basis

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Public Streets, ROW, Drainage Infrastructure not charged, considered part of Drainage System

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Example Utility Billing Calculation

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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

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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

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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

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Equity

Flat Rate/Capped Rate Multi-Tiered Custom Assignment

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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

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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

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$ / ERU = Annual Revenue Needs ($)

Total # Billing Units

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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

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Texas Drainag

e Utilities

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• 85 Now in Operation

• 14 in Evaluation Phase

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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

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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.

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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

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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

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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

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Texas Drainage Utility Survey

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http://www.espeyconsultants.com/drainage_utility_survey_espey_consultants.pdf

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Texas Drainage Utility Survey

http://www.espeyconsultants.com/drainage_utility_survey_espey_ consultants.pdf

Google-”Texas Drainage Utilities”25

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George E. Oswald, P.E., D.WRE, CFM

goswald@rpsgroup.comRPS Espey

512-326-5659www.rpsgroup.com

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Commercial Monthly Billing Rate Calculation

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# ERUs = Impervious Area (SF)/Parcel

3,000 SF/ERU

Charge $ = # ERUs

ParcelX $4.00 / ERU