What is a Drainage Utility?

Report
Funding Municipal Drainage
Management Programs
The Drainage Utility Comes of Age in Texas
ASFPM National Conference
San Antonio, Texas
May 2012
George E. Oswald, P.E., D.WRE, CFM
RPS Espey, Austin Texas
www.rpsgroup.com
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Presentation Outline
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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
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Flood Hazard Reduction
Stream Erosion Mitigation
Water Quality Management
NPDES-MS4 Compliance
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General Fund
Special Taxing/Assessment Districts
Federal & State Grant Programs
Impact Fees
Drainage Utility
■ Funding Options
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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 Act
Very Good but not Perfect
Texas 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
Program Needs Analysis
•CIP Facilities Plan
•System Maintenance
Funding
Needs
Budget Analysis
Multi-year Plan
Rate Development
•Land Parcel Assessment
•Billing Unit Alternatives
Revenue
Projections
Billing System Evaluation
$/ERU
P
U
B
L
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C
H
E
A
R
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N
G
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Ordinance Adoption
•Utility
•Fee
$ Revenue = Results
Billing System Implementation
•Parcel Data Verification
•Sample Billing Mail-Out
•Staff Training
Public Information Program
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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
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
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Parcel Size
Building Footprint
Parking Area
Land Use
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Planimetric Data
Orthophotography
Land Parcel Boundary Map
Commercial Development Record-Plans
Heads-Up Digitization & Spectral Analysis
■ GIS 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”
■ “Typical”
■ “Large”
0.7 ERU, <2,100 sq ft IA
1.0 ERU, 2,100-3,200 sq ft IA
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
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)
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Undeveloped Land
Institutions of Higher Education
Property with Private Drainage System (zero discharge)
State Property
■ Discretionary (City Policy Decision)
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County Property
School District Property
City Property
Religious Organization Property
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Cost of Service/Financial Analysis
■ Enterprise Fund Budget Model
$ / ERU
=
Annual Revenue Needs ($)
Total # Billing Units
■ 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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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
Drainage
Utilities
• 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
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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
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”
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George E. Oswald, P.E., D.WRE, CFM
[email protected]
RPS Espey
www.rpsgroup.com
512-326-5659
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Commercial Monthly Billing Rate Calculation
# ERUs =
Charge $ =
Impervious Area (SF)/Parcel
3,000 SF/ERU
# ERUs
Parcel
X $4.00 / ERU
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