COUNTY OF ALBEMARLE

 

EXECUTIVE SUMMARY

 

 

AGENDA TITLE:

Stormwater Financing Work Session

 

 

SUBJECT/PROPOSAL/REQUEST:

Consider various options for financing the stormwater program at different levels of service

 

 

STAFF CONTACT(S):

Tucker, Foley, Davis, Kamptner, Graham, Hirschman

 

 

LEGAL REVIEW:   Yes

 

AGENDA DATE:

July 14, 2004

 

ACTION:     X                        INFORMATION:   

 

CONSENT AGENDA:

  ACTION:                              INFORMATION 

 

 

ATTACHMENTS:   No

 

 

REVIEWED BY:

 

 

 

BACKGROUND:

The Board held work sessions on April 7, 2004 and May 5, 2004 concerning the Stormwater Master Plan and funding options for the stormwater program.  Two important concepts from these work sessions were:

1.  The stormwater program consists of existing programs (e.g., plan review, inspections, and maintenance), newly mandated programs (e.g., storm sewer permit), and expected programs (e.g., responding to citizen complaints, new regional facilities).

2.  Current decision-making about the stormwater program involves deciding on a level of service for stormwater management. For instance, how frequently should the County inspect stormwater facilities and conduct preventative maintenance?  How responsive should the County be to citizen complaints?

 

The executive summaries from April 7 and May 5 provide more details on the master plan, funding options, and level of service issues.

 

STRATEGIC PLAN:

Goal 2.2: Protect and/or preserve the County’s natural resources

Goal 2.3: Provide for environmentally sensitive government operations at the local and regional level.

Goal 3.3: Develop and implement policies that address the County’s growth and urbanization while continuing to enhance the factors that contribute to the quality of life in the County.

 

DISCUSSION:

Based on feedback from the Board at the previous work sessions, staff has outlined a “baseline” program as well as two additional options for expanded levels of service.  This report also contains an analysis of funding alternatives and important issues to be considered for each alternative.

 

Baseline Level of Service: Existing & Newly Mandated Programs

This “base” level of service includes programs that the County currently maintains plus new mandates that the County must comply with.  The base program has the following level of service characteristics:

•  The County would continue to review erosion control and stormwater plans for development and provide site inspections based on current staffing.

•  Staff would strive for scheduled inspections for all public and private stormwater facilities on an annual basis, but limited resources will likely result in inspections largely being driven by complaints or known problems. 

•  Routine maintenance would be performed on County-owned facilities.  Funding for repairs and new facilities would be based on availability of funds in the CIP.

•  Citizen complaints would be handled on a case-by-case basis based on the availability of staff.  Some complaints would receive an initial site visit, but adequate resources may not be available to address the problem.

•  Some problems that are left unattended due to a skeleton inspection and maintenance program will not be addressed until they become a more serious problem, which may result in more costly drainage system repairs in the future.

•  Staff would put the main emphasis on compliance with mandated programs.  In most cases, we would identify and pursue the minimum actions necessary to achieve compliance, perhaps through contract with others.

 

Funding Considerations for the Baseline Program

The current funding level for the stormwater program is approximately $750,000 (approximately $500,000 for administrative expenses and $250,000 in the CIP).  Some revenues are brought in through plan review fees ($140,000) and pro-rata share contributions to reimburse for past expenditures (this amount is variable on an annual basis based on the amount of development that occurs within particular drainage basins).  An increase in funding would be needed to fund the newly mandated programs.  The annual cost increase would likely range from $100,000 to $240,000.

 

Option A: Base Program Plus Expanded Customer Service in Development Areas Focusing on Stormwater/Drainage Services

Option A would provide services for existing and mandated programs as well as most expected programs, with a strong focus of providing “urban-type” services to the Development Areas with regard to inspecting, maintaining, and improving the drainage system.  Level of service characteristics would be as follows:

•  The County would provide the plan review and inspection services listed above for the base program.  Inspections of stormwater facilities would be conducted at least annually within the Development Areas.

•  The County would fund projects listed in the Stormwater Master Plan, including construction of regional facilities in the Development Areas, drainage repairs, and stream restorations at a rate of two to three projects per year in the Development Areas.

•  Additional staff and resources would be available to focus more attention on citizen complaints and follow-up to address problems in the drainage system in the Development Areas.

•  Staff would comply with our storm sewer permit mandates in accordance with the approved 5-year plan, and move beyond minimum compliance where opportunities arise to make the program more effective.  One such opportunity would be to enhance our regional partnership for public education and outreach on stormwater issues.

 

Funding Consideration for Option A

Total program costs would be approximately $1.2 million in Year 2 of the program and $1.5 million in Year 5 (based on the assumption of taking on more projects through time), or $450,000 to $750,000 above current funding.  Funding for projects and programs outside the Development Areas would be in addition to these figures, and would be funded on a case-by-case basis at the Board’s discretion using general fund or capital revenues. 

 

Based on our consultant’s analysis, the Development Area program could be funded by a stormwater utility with a rate of $24/year/ERU (equivalent residential unit = 2,000 square feet of impervious cover) in combination with plan review fees and pro-rata share contributions.  This fee includes offsetting the current General Fund cost of stormwater management.  Alternately, revenues for the program could be generated from the General Fund through a dedicated stormwater service district at a rate of approximately $0.01/$100 of assessed value (see discussion below).  The chief difference between the stormwater utility and the service district is that the utility assesses fees based on relative impacts to stormwater (using impervious cover as the measure) while the district would use property values.  The last section of this report contains a fuller treatment of these funding options.

 

Option B: Base Program Plus Expanded Customer Service County-wide for Stormwater/Drainage Services AND Natural Resources Protection

Option B would provide services for existing and mandated programs as well as most expected programs, with a County-wide approach.  This County-wide coverage would allow the program to address “urban-type” services noted with Option A in addition to natural resources protection programs, such as sediment reduction, stream protection, and an expanded easement program.  Level of service characteristics would be as follows:

•  The services described under Option B would be pursued.  Maintenance inspections would be conducted at least annually throughout the County.

•  Projects in the Stormwater Master Plan as well as Rural Area projects would be funded at a rate of three to five per year.  Rural Area projects may include stream habitat, sediment reduction, and riparian restoration efforts, as well as public education on water resources protection.

•  Citizen complaint response and drainage repairs would have more of a County-wide focus.

•  Stream assessment and watershed studies could be extended beyond the Development Areas.

 

Funding Consideration for Option B

Total program costs would be approximately $1.5 million in Year 2 of the program and $2 million in Year 5, or $750,000 to $1.25 million above current funding. 

 

The County-wide program could be funded by a stormwater utility with a rate of $18 to $19/year/ERU in combination with plan review fees and pro-rata share contributions.  This fee includes offsetting the current General Fund cost of stormwater management.  For the stormwater utility option, an agricultural property with one dwelling unit would likely be billed as one ERU (in other words, the agricultural part would be exempt).  As with Option A, revenues could also be generated from the General Fund through a dedicated stormwater service district at a rate of approximately $0.015 to $0.02/$100 of assessed value (see discussion below).

 

 

Funding Alternatives & Issues

Regardless of which program level of service is adopted by the Board, including the baseline level of service, additional revenue will be required.  The funding alternatives presented by staff maintain some existing funding elements and provide options for other elements.   Under each of the program level of service options, permit fees and pro-rata share are proposed to remain as currently used.   However, it is recommended that if a stormwater utility or district is created, that the current general fund cost of stormwater management be shifted to that newly created funding mechanism.  

 

Staff believes three funding options are worth considering.  These are:

 

1.  General fund:  The advantage of expanding the use of the general fund is that it minimizes the administrative burden.  As such, if the Board was interested in pursuing the base level of service, the additional cost above what has been previously funded would be a fraction of a penny on the property tax rate.  That does not appear to justify the administrative cost of the other options.   Conversely, if the Board preferred one of the expanded levels of service options, the additional cost would be a penny or more on the property tax rate and could present a funding challenge.  If an expanded level of service is preferred by the Board, staff recommends considering the two funding options listed below.  

 

2.  Stormwater utility: A stormwater utility has been the most common means of providing a dedicated funding source for stormwater management in Virginia.  The advantage of the stormwater utility is that it provides a dedicated funding source and attempts to relate the stormwater impact to the utility fee for each property.  As such, it is most appropriately used when large sustained expenditures are anticipated.  As proposed by staff, this utility would also shift most of the stormwater management costs that are currently funded with the general fund to the stormwater utility.  This would reduce the general fund demand for stormwater management by approximately $500,000 per year. 

 

There are several issues with a stormwater utility worth discussing.  First, this is a complex program to administer and requires considerable time and money to establish.  For example, to set the initial fees for commercial property, we would need to measure the impact of each property by calculating an equivalent number of ERUs (equivalent residential units).   As such, the administrative cost for this utility would outweigh the benefit for the base level of service.   Second, single family dwellings are typically charged the same rate – one  ERU -- regardless of size. This assumes all houses have roughly the same stormwater impact.  That simplifies the administrative burden, but could be viewed as a regressive fee, as it charges the property owner with a large house the same as the owner with a small house (although the rates are relatively low at $18 to $24 per year).  The utility can create a different fee based on house size, but that significantly increases the administrative burden in managing the utility.  Third, the utility structure would require the Board to annually set the appropriate utility rate.  This is similar to what the ACSA currently does for water and sewer in balancing costs and revenue needs.  Finally, the stormwater utility would likely be billed as a separate line item on the property tax.  This could be a public perception issue somewhat similar to how some view the line items on a phone bill.    

 

3.  Stormwater Service District:  Basically, this program creates a separate dedicated charge for stormwater using the property assessment.  Like the stormwater utility, this creates a dedicated funding source and could allow current program funding to be shifted within the general fund to this stormwater district.   This differs from the utility in that the property charges are based on assessed property value rather than attempting to measure the property’s stormwater impact.   The advantages of this option are that it is much simpler to administer and, by Board policy, could have an automatic adjuster for inflation. For example, if a stormwater rate of $0.02/$100 assessed was established as a dedicated funding source, as property values increased, the funding level of this program would also increase.  This allows the program to have an automatic adjustment for inflation and housing growth that avoids the need for the Board to perform an annual rate change. 

 

There are several issues worth considering.   First, it must be recognized that the district method does not attempt to relate costs to stormwater impacts, but rather uses property values.  That said, this is really no different than what is done with the General Fund.   Second, while the administrative burden would be smaller than the stormwater utility, it would have a larger administrative burden than use of the general fund.  Finally, like the utility, this would likely be billed as a separate line item on the property tax bill and have that same concern with public perception.   

 

RECOMMENDATIONS:

Staff would like to receive input from the Board regarding the level of service you feel is most appropriate for the County’s changing stormwater program.  Staff is preparing an overview of a number of urban area needs, including stormwater, to discuss with the Board in a more comprehensive way at a Board work session in September.  Prioritizing and funding urban infrastructure is also planned for discussion at October’s Strategic Planning retreat.  It is recommended that a final decision on funding the stormwater program be made as a part of this more comprehensive discussion.

 

 

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