Jul 28, 2014

Council Analyzes Potential Stormwater Utility Fees

Village Council continues stormwater utility discussion.

Council Analyzes Potential Stormwater Utility Fees

The ongoing stormwater utility discussion continued during Tuesday night's meeting, focusing this week on an analysis of the recommended stormwater fee.

The goal of the stormwater fee is to “equitably assess the cost of providing stormwater service to property owners based on their impact to the stormwater system,” said David Hyder, form Municipal & Financial Services Group.

Various rate bases are used to develop stormwater fees, but the industry best practice and most common approach is calculating the impervious area of each property parcel.

Impervious area (any area where water can’t penetrate) is easily measured and verified—and it’s been upheld by the courts when negotiating fees.

“This would be the recommended approach, to use impervious area,” Hyder said.

Most residential properties have around 3,000 square feet of impervious area.

Hyder recommended a tiered ERU (Equivalent Runoff Unit) fee structure, which means there are three categories of fees residential properties will pay based on the amount of impervious area they have.

For example, a residential property with 3,300 square feet of impervious surfaces would be 1 ERU. A 59,000 square foot parking lot would be 18 ERUs.

However, there would be various stormwater fee credits that would reduce the property owner’s fee.

“Credits encourage property owners to proactively manage their stormwater output,” Hyder said.

That said, Hyder pointed out that whatever credits were give to property owners meant a loss of revenue for the village.

A permeable driveway, a rain garden, a detention basin or a green roof would all be examples of stormwater management techniques that would be eligible for credits.

Hyder recommended that property owners could not receive credits for more than 50 percent of the stormwater utility fee.

He also suggested that an application for a credit be submitted—and that fee be somewhere between $100 and $200.

That idea wasn't well received by council members who said they didn’t want to discourage property owners from trying to proactively deal with stormwater.

Working with the current amount of money annually put towards stormwater management ($2.5 million), the tiered system for residential properties would break down to $4.80 a month for properties with the least impervious area, to $9.60 per month for homes with the most impervious area.

However, working with the $2.5 million figure will not bring in enough revenue to replace the system or even maintain it.

To do that would bump the needed annual revenue to approximately $6 million. Working from that base number, the average monthly cost for a residential property would be $14.40 per month.

Non-residential properties would pay a higher base rate.

Also, because this would now be a utility fee and not a tax, tax-exempt properties would no longer be exempt. (If they were included as part of the revenue base, they’d provide nearly 9 percent of the revenue for the stormwater utility.)

Based on the current funding of $2.5 million, and the not the recommended $6 million, the average church would pay $115 per month.

A hospital would pay $752 per month and a university would pay $889 per month.

However, Hyder noted, both of those institutions would likely receive the maximum credit of 50 percent.

Mayor Martin Tully said for the most part it's a “pretty good approach” to maintain equity and divide it among the parcels.

There’s a bigger problem at hand regardless of whether or not the village institutes a stormwater utility, Tully said.

"The utility doesn’t change the fact that we have a gap right now, he said. "And the recommended level of service at $6 million isn’t the 'Cadillac' but just what the village ought to be doing."

Tully went on to say he really only saw two options if closing the gap was the goal: raising taxes or creating a stormwater utility.

Tully pointed out that 47 percent of the impervious area in the village is residential. However, residents were paying for 76 percent of the cost for maintaining the stormwater system (paying through property taxes). 

"If we continue going down the road we’re going, it just means the residents will be carrying even more of the cost burden—and it would be “even more out of whack,” he said.

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