Abstract
Urban stormwater programs provide mandated and discretionary public services of convenience, security, and environmental enhancement. Due to their increasing complexity and funding needs, they have become more complex to organize and finance. Competing visions for them are common and how communities value these services creates a challenge to measure effectiveness and levy charges. Usually, two organizational models compete, the tax-supported public works model and the fee-based utility model. Taxpayer revolts led to the utility model, which creates new revenue streams and has been widely accepted but not universally. State laws provide the legal structure for stormwater finance, and research showed the utility model to be accepted commonly in the West Coast and Mountain regions, in Florida and along the southern part of the East Coast, as well as in parts of the Central region of the United States. The public works model is prevalent in much of the Northeast, the noncoastal Southeast, and parts of the Central region, where programs vary from state-to-state. Prospects for stormwater programs indicate more experiments with program organization and finance as communities seek to balance responsibilities. The competing views of stormwater program organization and finance s will join larger issues of local government roles in solving social and environmental problems and outcomes will be a bellwether of commitment to sustainable and livable communities.
Keywords
Introduction
This article addresses recent changes in organization and financing of urban stormwater programs and identifies success and failure factors across regions that have experienced different growth patterns and policy environments. These stormwater programs are essential for livable cities, but they can be difficult to organize and finance due to their growing complexity and cost, as well as to public resistance to taxes and fees. The consequences of ineffective organization and financing can be loss of the multiple stormwater program benefits and failure to achieve community sustainability.
Stormwater programs have evolved from single-purpose drainage systems to become multipurpose program responsibilities of local governments. They involve a basket of services rather than a focused utility good, such as water supply or electric power. The services often include storm drainage, water quality, mitigation of land-use impacts, floodplain management, and open space amenities. While these services are related, their disparate nature makes them difficult to explain as a coherent package and cities often find it difficult to develop and finance full-featured programs to support their goals for sustainability and public health and safety. While there are many approaches to organization and finance, two basic models are in evidence and will be discussed later. One is the traditional tax-supported public works model and the other is the fee-based stormwater utility model.
The organization and financing decisions for stormwater programs must consider both discretionary and mandated services. For example, cities can choose the risk level of drainage services but are required to implement water quality programs. Sustainability goals are discretionary, such as in determining the allowable extent of hydrologic impacts from land development. City policymakers seek organizational structures that make sense to them and are affordable through workable financial arrangements. In some places, the financing model has shifted from tax revenues to user charges, while other cities retain traditional tax-supported public works organizational forms.
This article explains the current range of choices in organizational and financing models in the United States and identifies important issues from the emergent period of the utility model. It includes a retrospective explanation of how current services were assembled, a study of local programs to identify organizational patterns across the United States, and conclusions to identify why changes have occurred and basic lessons learned. Questions that are addressed in the article include how the separate services became integrated; what the alternatives for delivering the services are; why the utility financing model was developed and how it works; and what the political and legal challenges to stormwater utilities are. The lessons learned and analysis of the prospects for the future of stormwater services are intended for policy makers and public works managers seeking to organize and finance their evolving stormwater programs.
Emergence of Multipurpose Stormwater Services
The infrastructure for stormwater services has evolved from basic drainage networks to today’s complex multifunctional systems. As modern cities developed, drainage systems were necessary to prevent unpaved streets from becoming seas of mud and to convey the discarded wastes of society away from settlements (Melosi, 2008). Sanitary sewers were added to buildings and hooked into nearby drainage pipes to create combined sewer systems. Urbanization created new separate stormwater systems whose main function was to drain excess water rapidly, without regard for aesthetics or environmental impacts. By the 1960s, interest in what is now called “green systems” had already been initiated as engineers and planners decided that the rigid structural approaches to stormwater should give way to environmentally friendly systems (Jones, 1967). The American Society of Civil Engineers through its Urban Water Resources Research Program issued a number of reports about stormwater in this period and the American Public Works Association (1981) prepared an overview report, which documented the state of the practice as of about 1980.
By the 1980s, advances in wastewater financing were driven by the Clean Water Act, but stormwater finance lagged without a strong federal law to drive it. However, urbanization pressures and the integration of stormwater into the regulatory structure of the Clean Water Act created drivers for experiments in program organization and finance during the 1980s and 1990s. In the same period, the Flood Insurance Act of 1968 initiated local floodplain management programs, which became multipurpose programs themselves because protection of flood-prone lands opens up space for recreation and environmental purposes.
The emergence of stormwater programs in the United States has international parallels, particularly in the United Kingdom, Germany, and Australia. Some British water companies include a drainage charge, and the policy has recently been studied by the water sector regulator, Ofwat (2011). To promote green growth of cities, German court rulings beginning in the 1970s have required equitable rate structures for stormwater services and households are charged according to the stormwater burden of their properties (Buehler, Jungjohann, Keeley, & Mehling, 2011; Keeley, 2007). As an example from Australia, Sydney Water (2011) includes a stormwater charge on its quarterly water services bill.
The merging of urban drainage, floodplain management, and stormwater quality regulatory programs created today’s multipurpose stormwater programs. Their linkage to parks and open space adds a further dimension to the sustainability and livability agendas of local governments. As these programs merged, they brought with them different paradigms for financing. Urban drainage was seen as a general purpose local service to remove excess water from properties and streets, which was appropriate to finance from the general fund. Floodplain management responsibilities were imposed on local governments, and federal grants were available initially to assist in their implementation. Stormwater quality regulations were imposed gradually, and became a mostly unfunded mandate. None of the services neatly fits the definition of a pure public utility type good such as water supply or electric power, which offer essential public services to be measured and rationed by charging schemes (Mushkin, 1972). In that sense, the creation of stormwater utilities can be seen as a move to fit a mixed bag of public utility and public purpose services into a common framework that can be measured and charged to customers. Although this trend is now more than 30 years old in the United States, it still attracts national attention. For example, a 2010 article in USA TODAY reported new fees in several cities and opposition in several others, as if these were new phenomena (Cauchon, 2010).
Stormwater Services and Public Finance
The mixed bag of stormwater services operates as a government-owned water program that is governed by the rules of public finance, and how accounts are handled depends on whether a service is offered by a general government department or a utility. The utility financial model is used for service provision on a cost-recovery enterprise basis. In a government department, funding can be applied to mixed purposes. For example, in a public works department funded by a general tax, stormwater costs are spread across taxpayers without regard to individual benefit. However, in a utility, the services focus on specific missions and should be self-supporting from revenues.
The principles of public and utility finance offer a rational way to charge for stormwater services, but they also unmask inherent difficulties. The theories require that charges be levied on those who benefit from the services (Vaughn, 1983). The fees should be set at the incremental cost of providing the service and not at the average cost. Provisions should ensure access to services for low-income residents where unacceptable burdens result from marginal-cost pricing. As objections to these concepts, some people allege that services bring social benefits that cannot be measured and that tax payments are desirable to redistribute income to those who cannot afford vital services. Another objection is that dedicated user charges inhibit coordination of public services as in the bundling of public and private stormwater benefits.
The knowledge base of stormwater finance started to build in the late 1970s. User charges for water supply utilities were well-established but were only just starting for wastewater and stormwater. For wastewater, a 1973 report by a joint committee of the American Public Works Association (APWA), American Society of Civil Engineers (ASCE), and the Water Pollution Control Federation (WPCF, now the Water Environment Federation or WEF) recommended a split between property taxes and user fees. This early work is now in a Water Environment Federation (2004) Manual of Practice, which focuses more on user charges than on taxes.
During the 1970s, taxpayer revolts sparked by Proposition 13 in California forced some local governments to consider fees instead of taxes for urban services. By the 1980s the convergence of public financial pressures such as this and newly formed multipurpose stormwater programs created favorable conditions for the introduction of stormwater utilities and cities began to implement them.
The shift of wastewater financing from taxes to user charges was a precursor of a later shift in stormwater finance. While both services shifted from taxes toward fees, the user charge concepts are different and the shift in wastewater financing has been more complete. While the shift in stormwater finance lagged wastewater in the 1970s, urbanization and antitax sentiments led to the utility concept, especially in fast-growing areas (Cyre, 1982). The 1980s and 1990s saw examples of stormwater utilities appearing in magazines and conference proceedings. Publication of the magazine Stormwater was initiated in the 1990s, and it is labeled as the Journal for Surface Water Quality Professionals to reflect the emphasis on nonpoint source control. The magazine tracks organizational and finance issues of stormwater programs and regularly publishes updates such as (Kaspersen, 2000; Woolson, 2004).
Beginning in the 1990s a number of surveys and case studies of stormwater utilities have been published (Apogee Research, 1994). Black and Veatch Management Consulting (2010) has published eight national surveys of stormwater utilities. The 2009 survey received information from 70 utilities in 20 states. Some 50% were separate utilities, 30% in public works departments, and 11% were combined with wastewater programs. Western Kentucky University has conducted several stormwater utility surveys, which can be downloaded from their web site (Campbell, 2011). The survey director is making a systematic effort to identify utilities, but the definition of a utility has not been standardized. In the inventory of utilities, a stormwater program is listed as a utility if there is either an identified fee or tax that supports stormwater services. In the 2011 survey, some 1,174 utilities nationwide were included. It was learned that Wisconsin and Washington have joined Florida and Minnesota as states with more than 100 utilities. The analysis points to clustering of utilities, particularly along major highways. Also, while it appears that the number of utilities is increasing, at least two municipalities in the survey had cancelled their utility fee.
An Internet guide to stormwater financing was developed by the Center for Urban Policy and the Environment at Indiana University-Purdue University Indianapolis (2011) with funding from the U.S. Environmental Protection Agency (USEPA). The site includes a manual entitled “Financing Stormwater Management Programs: Choices and Options,” an annotated bibliography about stormwater management, surveys, and other information about stormwater utilities. The literature surveys are current to about 2003, but other information is more current, including most Internet links. Later, USEPA financed a manual prepared by the National Association of Flood and Stormwater Management Agencies (2006), which is a guide to the problems and opportunities of stormwater financing. Findings reported in this guide are discussed next, especially about legal issues confronting stormwater fees (National Association of Flood and Stormwater Management Agencies, 2006; Tucker, 2007).
Legal Issues in Stormwater Finance
The law of drainage serves as one foundation for the legal structure of stormwater finance. The common enemy rule says that you can do anything to protect your property without regard for your neighbor and the pure natural flow rule says that you cannot change anything to affect natural flows. The reasonable use rule is a more practical approach, and it recognizes that development will occur and there is a community obligation to accommodate it, with a test of reasonableness (Goldfarb, 1988). Under the natural flow rule, if a stormwater utility constructed a facility to reduce your liability, this would comprise a benefit to you and form the basis for a stormwater charge.
The legal status of stormwater fees is set by state law and each jurisdiction must determine the best fee structure for itself. The boundaries between user fees, special assessments, and impact fees are not always clear. A special assessment should recover costs of improvements that confer specific and special benefits and impact fees are payments from developers for improvements required by new developments (Tucker, 2007).
By 2007, stormwater fees had been litigated in at least 17 states, and in some cases the final decisions were by the highest courts. The most commonly litigated issue was fee versus tax or is a stormwater service charge a valid user fee or is it an impermissible tax? This issue is often brought by tax exempt organizations such as churches, schools, and government agencies. Legal questions that were litigated and decided in specific states include whether the user has a choice to accept or decline the service; whether the service charge is a user fee, a special assessment, or something else; whether the fee is reasonable and directly related to the cost of providing services; whether properties are burdened by fees and/or receiving proportionate benefits; and whether fees should be confined only to cost of service or they can be applied to system expansion or capital improvements. A special focus has been on stormwater fees imposed on federal facilities because of the federal sovereign immunity against state and local taxes. The Clean Water Act waives sovereign immunity for certain pollution-related service fees, but not for taxes.
A case in Cincinnati tested the federal sovereign immunity question. An agency of the U.S. Department of Health and Human Services refused to pay stormwater fees and the city brought suit in the Federal Court of Claims. The claim was dismissed, but the city appealed through federal District Court. The case was settled in 2007 and the Department of Health and Human Services will pay a negotiated portion of the outstanding stormwater fees. The case creates a precedent to show that the waiver of sovereign immunity in the Clean Water Act indicates that federal facilities should pay stormwater fees.
The distinction between a fee and a tax is often hard to make, and the U.S. Supreme Court has established a three-pronged test for fees as reasonable service charges or taxes: Is the fee or service charge nondiscriminatory; is it a fair approximation of the cost of benefits; and is it structured to produce revenues that will not exceed the total cost of providing benefits (Tucker, 2007).
According to Tucker (2007) and Campbell (2011), stormwater fees have been upheld in the majority of states where they were challenged. The principles are that the overall cost of a program must be reasonably related to the value of the service provided, that funds are not used for general revenue purposes, that fees are structured proportionally to the contribution to stormwater runoff, and that people subject to the fees can choose not to participate if they provide their own systems or offset the volume they contribute to the public stormwater system.
While the majority of court opinions have been favorable, the strong opinions of some courts about fees is evident. For example, an Oregon district judge wrote, Respondent’s storm drainage charge is exactly the kind of “Johnny-come-lately” charge on property the public anticipated and intended to limit. Storm drainage systems are traditional municipal facilities. Like city streets, parks, street lights and street signs, storm drains are viewed as part of the infrastructure benefiting the public generally. Local governments may not avoid the limits of section 11b simply by calling something a “service” and requiring payment of a “fee.” If that were the case, a city could impose a fire or police protection fee on all persons using improved property. These kinds of serpentine maneuvers, if accepted, would eviscerate the constitutional limitation. … (National Association of Flood and Stormwater Management Agencies, 2006, pp. 3-4)
This decision was reversed by the State Supreme Court.
Stormwater Organization and Finance: Examples Across the United States
In addition to different state laws, variation in stormwater program organization and finance is driven by local priorities and political situations. Given the diversity of these variables, a regional focus was selected to present examples of stormwater programs, rather than an in-depth presentation of single case studies.
Use of the case method was considered for analysis of the programs, but while it is often employed to analyze complex situations, it is important to identify its limitations. A review of cases in past reports about stormwater programs showed that their selection mainly provided a focus on new utilities and success stories. While these can provide an experience base for people facing similar situations, a broader approach is needed for a realistic and objective assessment.
Five regions are used to present the examples (Northeast, Southeast, Central, Mountain, and West Coast). The examples are not claimed as archetypes of the practices within the regions, and much variation occurs even within the regions. The discussion begins with the West Coast, which is the region where stormwater utilities originated.
Information used to compile the examples was obtained from web sites, published materials, and personal records and experiences of the writer. In some cases, the reports are descriptive materials about the stormwater program and/or utility rates, and in other cases the municipal budget or comprehensive annual financial report was used.
Although the organizational forms of stormwater programs vary widely and are difficult to classify, two basic models seem dominant. One is the traditional public works model, where drainage maintenance operations are augmented by floodplain information and stormwater quality programs and all expenses are met from general government revenues. At the other extreme is the pure utility model, where drainage, stormwater quality, and floodplain management are combined into an enterprise with user charge funding. Common variants of these include drainage systems maintained by street departments and cases where some services are provided by regional districts. The examples drawn from across the United States illustrate these organizational forms.
Table 1 lists 25 examples of stormwater programs spread evenly across the five regions. The selection of examples is not random or scientific, but is a sample to show the variation in organizational and financing approaches across city sizes, states within regions, and local situations. In the discussion that follows, only essential details are presented to keep the focus on organizational and financial approaches. Details omitted include population, socioeconomic patterns, and other data about urban growth and development. These details would be important in detailed analysis of the individual cases.
List of Stormwater Program Examples by Region.
West Coast
For the most part, West Coast stormwater programs illustrate use of the fee approach, rather than the traditional public works organization. The stormwater organizations include the nation’s first utility (Bellevue, Washington) and many examples of programs that have responded to severe funding limitations. Environmental priorities are high in many of the programs, especially those located near coastal areas. Flood control districts are prominent in California.
The stormwater utility in the City of Bellevue, Washington (2011), might be the first one that was organized in the United States. The program is in the water program area of the Utilities Department and in addition to stormwater and flood services has a focus on clean waters and fisheries. The web site contains an alert against West Nile Virus, which illustrates the link to local drainage. The utility charge structure has been retained after more than 30 years. The City of Portland, Oregon (2011), emphasizes sustainability in its stormwater program, which is within the Department of Environmental Services. The program includes drainage, water quality, floodplain information, and underground injection control. Sewer and stormwater fees are lumped into one bill, which for 2011-2012 is US$56.52 per month for an average residence. This program exemplifies the stormwater and wastewater combination into a department of environmental services.
In California, cities have responded to Proposition 13 to finance some services with fees and off of tax rolls. The City of Sacramento, California (2011) organizes its stormwater program under the Utilities Department, which maintains the drainage system. The city uses levees and drainage systems to protect against the American and Sacramento Rivers and local creeks and streams and works with the Sacramento Area Flood Control Agency to increase flood protection. The City’s Stormwater Quality Improvement Program was established in 1990. Storm drainage fees are a flat rate depending on the size of the house and on size of nonresidential sites. In Fresno, stormwater services are provided by the Fresno Metropolitan Flood Control District (2011), which also serves outlying areas. The District is governed by a board and provides services in flood control, urban drainage, groundwater resource management, and recreation and open space. The original source of major funding was from property taxes, but Proposition 13 cut them severely. For a while the state provided bail out money, but that expired and the District introduced a system of fees, mainly a benefit assessment tax for flood control and related benefits and a local drainage fee for new developments. Property tax assessments are expended for general benefit services such as area-wide flood control, water conservation, master planning, and water pollution controls as well as administration.
The City of San Diego’s (2011a) stormwater program is focused on pollution prevention and watershed management and is part of the Transportation and Storm Water Department. The City collects a small flat storm drain fee as part of the water service bills. As of 2010, it was only US$0.95 per single-family home, but the City is considering a fee increase. The soonest it could be implemented would be 2012 (City of San Diego, 2011b). San Diego has a county flood control district such that the City does not have to assume all responsibility for that program.
Mountain
Programs in the Mountain West reflect the diversity of the region. Salt Lake City (2011) has an integrated flood control, stormwater, and streamwater quality program within the Public Utilities Department. Stormwater is an enterprise fund and fees seem modest at US$4.24 per month for residential properties of one-quarter acre or smaller, based on the 2010 rate ordinance. Fees are based on area of parcel and not on impervious area. In Phoenix stormwater management is split among the Environmental Services Division of the Water Services Department, which handles water quality, and the Street Transportation Department, which handles maintenance of storm drains and floodplain information services. The city collects a very small fee to pay costs of stormwater quality management, but it amounted to only US$1.3 million in 2009-2010. Funds are dispersed across several city departments, which participate in stormwater management. For example, in 2010-2011 the estimate is that the streets transportation department would receive US$2.3 million of a proposed budget of US$4.0 million. These amounts do not cover the cost of drainage system maintenance (City of Phoenix, 2010, 2011). In Albuquerque (2011) maintenance of storm drains is handled within the Department of Municipal Development, which has a Stormwater Management Section. Flood control is by the Albuquerque Metropolitan Arroyo Flood Control Authority, which is funded by a property tax (AMAFCA, 2011). Albuquerque has no stormwater utility fee.
Two Colorado cases are presented, but additional information is presented elsewhere in the article because experiences in the State of Colorado are used to reinforce the rationale for several conclusions in the article.
The City of Fort Collins (2012) organized its stormwater utility during the 1980s. It has changed form and fee structure a few times, but it retains a full-featured stormwater and flood program and is financed as an enterprise. It is the subject of additional analysis, to be presented later. In the City of Pueblo (2011, 2012), the Stormwater Utility is located within the Department of Public Works, and the stormwater fee is based on impervious area of the property and collected by the Board of Water Works. As will be discussed later, while these two communities make it seem that stormwater fees are widespread in Colorado, the state also contains a city that rolled back its program and cancelled the fee.
Central
The vast Central region of the United States extends broadly to include areas that are losing population and rapidly growing areas, such as parts of Texas. The stormwater programs in this region illustrate the difficulty in making generalizations about their organization and finance, but the examples also illustrate reasons for changes and forces that might create further change in the future.
The City of Lincoln, Nebraska (2012a), has a Watershed Management program within the Public Works/Utilities Department. It is a coordinating mechanism for activities that occur elsewhere as well as for its own planning and education programs. For example, street maintenance and operations includes a drainage function that is supported by the general fund. The Watershed Management program is also supported by the general fund. By the same token, the City of Austin, Texas (2011) has a Watershed Protection Department, which was originally called the Drainage Utility. It has all services and is funded mostly by the drainage fee on the utility bill. Not far away, the City of Shreveport, Louisiana (2011) operates drainage within a maintenance Division in the Office of Public Works within the Department of Operational Services. This program is tax-funded, rather than having a stormwater charge. Floodplain management is in the City Engineer’s office, which is separate, and the stormwater quality program is in the Department of Water and Sewerage.
The Louisville, Kentucky area is served by the Metropolitan Sewer District (MSD, 2011). The MSD was created after a 1937 Ohio River flood and sewer system problems that surfaced during the 1940s. The stormwater charges were added to user fees for sanitary sewers to provide an equitable charging scheme and prevent subsidy of storm sewers from wastewater revenues. Louisville, MSD, and Jefferson County created the utility in 1986 and MSD became responsible for the program. Opposition and legal challenges followed, but a 1989 decision by the Kentucky Court of Appeals cleared the way for the utility. MSD now has a rate schedule that is based on a flat rate of US$6.46 per month for a property with one or two residential units. It provides for credits, such as for control or runoff rate or volume and water quality and green infrastructure education. Not far away, the smaller City of Valparaiso, Indiana (2011), which was featured as a case study of stormwater utilities (Apogee Research, 1994), manages a stormwater program out of the utilities department with all services. The rate schedule is based on land use and area but does not include a multiplier for impervious area.
Southeast
In the diverse Southeast, states such as Georgia and Florida have experienced rapid growth, while other states have grown much more slowly. The region is subject to flooding due to high rainfall and hurricane activity, and Florida has been a leader in passing environmental regulations. These differences in population growth, climatic conditions, and environmental priorities are evident in the varying approaches to stormwater management.
In the City of Knoxville, Tennessee (2011) the Stormwater Engineering Division in the Department of Public Works handles all stormwater and flood services. The Division obtains a small amount of revenue from fees, but most funding is provided through a transfer of general government revenues. The approach by the City of Montgomery, Alabama (2011) is similar, in that the stormwater program is located in the Engineering and Environmental Services Department, which is part of the Public Works Department. The stormwater program handles all activities and is funded like a general government expense, mainly from property and sales taxes. The Director of Public Works reported that a state act authorizing the user fee would be needed but is not in place. Campbell (2011) clarified that Birmingham has a utility, but the authority is limited to the state’s only Class I municipality.
As a state that has grown rapidly for decades, Florida has faced many environmental issues. The Florida Stormwater Association (2012) was organized in 1993 as the Florida Association of Stormwater Utilities, and its charter members were Tallahassee, Gainesville, Dade County, Orange County, Hillsborough County, and Orlando. The initial focus was on stormwater utilities but it has expanded its scope to now focus on broader stormwater management issues and it changed its name in 2011. The association estimates that there are 154 local governments in Florida with stormwater utilities that are organized under authority of the Florida Statutes or home rule powers, and some 91 responded to a 2011 survey. It expects the number of stormwater utilities to increase due to the need for funding, public support, and affirmation by the state Supreme Court of the utility approach.
Given the large number of stormwater utilities in Florida, there are many examples to choose from. Sarasota County, for instance, initiated its utility in 1989 and it is named the Stormwater Environmental Utility. It bases is fee on the “Equivalent Stormwater Unit,” which is a measure of the effective impervious area of an average single-family parcel. The monthly charge is then tiered based on the impervious area.
In the Southeast, the stormwater utility model has spread along the Atlantic Coast states from Florida to Virginia, and there are many examples in Georgia, the Carolinas, and Virginia. The City of Griffin, Georgia (2011), which is located about 40 miles south of Atlanta, initiated a stormwater utility in the mid-1990s to address a deteriorating stormwater system, flooding, and lack of drainage in some areas. Griffin was the first community in Georgia to have a stormwater utility, and received national attention for its initiative (Center). The utility was housed in Public Works as a stand-alone service and the initial rate structure was based on the area of structures and rates remain low. A 1,800 sq ft house with a 600 sq ft driveway is presently charged US$53.64 annually, reflecting an annual increase of about 3% to 4% since the utility was established. The stormwater utility in the City of Raleigh, North Carolina (2011) is located in the Public Works Department. Raleigh has experienced rapid growth in recent decades and has fees established as a function of lot size for residences, with impervious area being considered for commercial sites. This model appears similar to the prevalent model in Florida.
Northeast and Mid-Atlantic
The Northeast includes several slow-growing states, but its stormwater programs are influenced by the interface with mid-Atlantic states such as Maryland and Delaware. In Maryland, authorizing legislation is in place for stormwater utilities, and implementation varies among communities (Beadenkopf & Worley, 2008). The City of Rockville (2011) began implementation of their utility fee in 2007. However, in Baltimore (2012) the Department of Public Works operates and maintains the stormwater system and there is no separate stormwater fee.
The use of the stormwater utility model varies among the adjacent states. For example, stormwater utilities are new to Pennsylvania (“Hazen and Sawyer,” 2009), and the Philadelphia Water Department (2011) has introduced a stormwater charge, which pays the cost of collection and treatment of drainage to waterways or the sewer collection system. Trenton, New Jersey has a traditional model without any stormwater fee, and in fact, the State of New Jersey lacks authorizing legislation (Chalofsky, 2011), while the adjacent coastal state of Delaware has stormwater utilities. New York also lacks authorizing legislation. The City of Buffalo (2012) operates a traditional stormwater program without a utility fee. The City has a stormwater program, but flood control is not emphasized as the area is not particularly flood prone. Buffalo participates in the Western New York Stormwater Coalition, which organizes conferences and trade shows. At the 2010 event Walck and Franzetti (2010) presented results of a survey to probe the feasibility of a regional stormwater utility organization. They concluded that such an arrangement would have benefits and could be established in several ways, but it would require special state legislation. In Massachusetts, the City of Chicopee created the state’s first stormwater utility in 1998 (Pioneer Valley Planning Commission, 2011). The program is operated by the Department of Water Pollution Control, and the fees are named “EPA stormwater fees” (City of Chicopee, 2011).
Summary and Conclusions
Stormwater programs are essential to pursue goals of urban livability, security, and environmental sustainability. Their linkages to these goals occurred gradually over the decades as the United States became more affluent and concerned with security and the condition of the environment. While the programs involve bundled services and do not fit a standard model, they are built around a core of urban drainage that expands into stormwater quality and flood control, and links in many cases to open space and recreational programs. The enthusiasm with which local jurisdictions embrace these goals and services determines their approach to organizing their stormwater programs. This is reflected by the spectrum from full-service and fee-supported programs such as those in the Northwest to fragmented programs that accept stormwater quality requirements reluctantly and simply inform citizens that it is a federal mandate without taking local ownership.
The disparate approaches of states and localities to stormwater programs are reflected in a range of program models. In some states the stormwater utility with comprehensive services has been embraced, while other states lack enabling legislation and communities are unable to add fees to help support their programs. The different philosophies illustrate positions on taxation and government fees, views on the role of government in social and environmental problems, and concerns about the equity and fairness of charges relative to who they benefit.
The views of how stormwater programs should be organized and financed are microcosms of the larger picture of government’s role in solving social and environmental problems through innovative public administration. On one hand, the stormwater fee arose in response to a rollback move in tax-supported government programs, but some jurisdictions still see it as a hidden tax and seem to resist government involvement in stormwater other than to maintain a basic drainage system.
The competing visions for stormwater program management are a worldwide phenomenon. As witnessed by the writer, drainage fees were initiated in the United Kingdom during the 1970s, and Germany has become a leader in advancing sustainability goals through single parcel stormwater charges. At the same time, municipal governments in many places are not organized well enough to consider bundled stormwater programs to meet the needs of their citizens.
Given the wide range of values about the disparate goals of stormwater programs, it is a challenge to measure their overall effectiveness and no such attempt is made here. The starting point is, however, to identify the elements of the programs, determine their benefits and their incidence, and then consider how to organize, finance, and evaluate them. A number of lessons are suggested from the experiences of U.S. programs such as those described earlier in the article.
Stormwater program organization
Local governments face a range of choice for organizing their stormwater services and no single model will fit everywhere. The choice will depend on the community’s values and on the status of its utilities and public works services. A narrow range of drainage and water quality services might be easier to finance with user charges than a full-featured program that also includes floodplain management.
Economics of stormwater programs
Conceptually, the bundling of stormwater services illustrates the difficulty in blending and financing private and public goods relating to the management of excess water. Drainage can be a private good when attached to single parcels, but further down the line it becomes a public good that serves large areas. Stormwater quality is a mandated environmental service that is impacted by a mixture of public and private sector facilities. Floodplain management is a mixed public and private good that serves some individual properties but also provides community-wide benefits.
Program finance
How programs are financed depends on their scales of operation, how they are organized, and on the community’s approach to taxation and use of fees. In a state with the enabling legislation and successful utilities in place, it makes sense to adopt stormwater fees if they are politically acceptable. The use of fees has the main advantage that it creates a new revenue stream to relieve the burden on general taxes although community members still pay the charge. It also has the advantage that it assigns charges according to benefit, even if imperfectly. In jurisdictions where fees are not feasible, local leaders must work hard to organize and justify stormwater program elements in any ways that they can.
Rate-setting
Similar to other utility rates, stormwater fees can be set in sophisticated ways to assign charges on the basis of the details of land uses. Following this approach, policy makers can link land use decisions to charges and influence the shape and sustainability of cities. Cities may find it too complex to measure and control stormwater to this level of detail, and they may charge according to lot size or some other readily obtainable metric. The incentive to restrict runoff diminishes if services are bundled because the cause-and-effect mechanisms are not as visible.
Prospects for stormwater programs indicate that more experiments with program organization and finance will be conducted as communities choose organizational and financial models to balance their many responsibilities. The competing views about organizing and financing stormwater programs will be at the center of debates about government’s role in solving local social and environmental problems and outcomes will be a bellwether of commitment to secure, sustainable, and livable communities.
Footnotes
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author received no financial support for the research, authorship, and/or publication of this article.