Asset Management and Rate Structure Development for Municipal Stormwater Programs
Many municipalities and utilities in the U.S. have aging water systems. Asset management activities help organize the process of prioritizing maintenance and investments. In California, municipalities face increasing costs to maintain and update stormwater management systems for multiple goals. Municipal Storm Sewer System (MS4) permits require cities to monitor runoff contaminants and undertake programmatic actions and infrastructure development to mitigate pollution. At the same time, the movement to view stormwater “as a resource” looks to capitalize on stormwater system investments to enhance water supply reliability in California’s urban regions. All of these activities cost money.
Municipalities throughout the state are turning to local stormwater fees to pay for these activities and system buildouts. A variety of fee structures have been implemented throughout California to raise funds for stormwater, including simple flat rate fees for parcels, tiered rates based on assessments of average imperviousness of properties in a city that contributes to runoff (an Equivalent Residential Unit, or ERU, for imperviousness), and continuous fees based on parcel-specific assessments of imperviousness.
Devising a revenue structure based on fees or taxes requires utilities to understand management and operations costs. Asset management activities help organize this task. Through asset management, utilities collect data on system components and capital and labor costs to quantify long-term revenue needs. Asset management databases include information such as age, vulnerability, risk and consequence of failure, location, cost, and levels-of-service. Having these in a central repository that is maintained by the utility provides an important data resource to support annual and long-term planning. Costs of stormwater management include program costs to comply with permits, operations, maintenance, and renewal of existing systems, and investments in new infrastructure to meet water quality and supply goals.
Once costs have been estimated, rate and fee structures can be explored to meet some or all of the projected program needs. The potential revenue from fees can be assessed and the impacts on various households, especially low-income households, can be estimated. Rate structure analysis requires cities to collect and analyze data for properties, land use characteristics, income, and average water costs. Combining the estimates of potential revenue with the total projected costs helps identify funding gaps and inform how utilities develop credit and incentive programs.
A variety of asset management tools exist. The USEPA Region 9 Environmental Finance Center at the Office of Water Programs surveyed available resources and developed a toolkit to support asset management by stormwater utilities. As part of working with several municipalities in California on stormwater asset management and rate structure analysis, OWP’s EFC developed Excel workbooks that help support asset management, cost assessments, rate structure analysis, and financial capability analysis. A detailed methodology report helps explain procedures. In this presentation, we review the toolkit and discuss plans for disseminating the work and compiled list of resources.
To make the process engaging and interactive, the speaker will take informal surveys of the room to understand if any audience members have experience in asset management and rate structure analysis, or have been part of developing fees in a municipality. The speaker will illicit experiences to stimulate discussion.
The presentation will support the conference and session themes. Asset management helps municipalities connect on-going activities with long-term planning that supports systems to improve water quality and supply reliability. The “Dollars and Sense” session specifically focuses on innovative activities to assess the viability of stormwater financing activities.
Erik Porse is a systems analyst focusing on water and energy management. His research uses modeling to understand resource sustainability and planning. Erik is currently a research engineer at the Office of Water Programs at California State University, Sacramento, and a Visiting Assistant Researcher at UCLA. He has a PhD in Civil and Environmental Engineering from UC Davis and a Master’s degree in Public Policy. From 2014-17, he was a postdoctoral scholar and Associate Research Director at UCLA's California Center for Sustainable Communities. Before returning to graduate school, he worked as an adjunct professor and leader for Earlham College’s study abroad program in Tanzania, a science policy analyst, a systems engineer for the U.N., and an intelligence analyst for the Naval Criminal Investigative Service.