Before a municipality develops a stormwater fee, future needs must be known. Such needs are best identified through a strategic planning effort that examines both financial needs and organizational structure.
A stormwater master plan is a common method for examining needs and structure. A stormwater master plan inventories existing infrastructure, models flow deficiencies, assesses conditions, and recommends capital projects, operations and maintenance programs. It identifies possible financing options and gets municipal leaders on board.
In addition to the basic master plan, other sources of information include planning documents, which may include annual budgets, the capital improvement plans, general plans, watershed management plans, an infrastructure assessment management plan or system, urban greening plans, green infrastructure plans, “complete streets” plans, cost of service studies, development impact fee studies, or NPDES permit requirements.
Laying the foundation for a stormwater program and associated funding needs can take several years. By itself a stormwater master plan may take up to a year to develop and adopt and require outside expertise. In some cases, this single document would be sufficient for establishing a stormwater utility, as long as it contains evaluations and recommendation for operations and maintenance as well as the NPDES permit requirements. It should also project at least three to five years into the future, with a 10-year projection recommended.
The organizational structure of the new enterprise (utility) is an essential strategic step as well. Some questions to consider are:
- Will the revenue basis be a single aspect (e.g. capital improvements or NPDES compliance) or will it include all stormwater program elements?
- Will it include a fully-loaded cost basis or just direct costs?
- Fully-loaded enterprise may include overhead such as financial/payroll, human resources and legal services provided by the General Fund; engineering and planning; equipment costs and reserve sinking fund; etc.
- Direct costs might only include items such as O&M staff, capital costs and NPDES.
- Keep in mind that just because your municipality might not be able to establish a revenue stream sufficient to fund a fully-loaded enterprise, it may well be worth the exercise to establish a fully-loaded enterprise even if it is subsidized by the General Fund. In fact, some cities have formed the enterprise yet rely 100% on General Fund subsidy. The effort required for forming the enterprise would go a long way toward establishing a stormwater identity and help begin “branding” the enterprise for the public (see Community Engagement).
Some resources on the subject include:
Environmental Finance Center – Creating a Solution (part of the Local Government Financing Manual, Environmental Finance Center, University of Maryland)