10.0 Storm Water Utility

This study evaluated the existing stormwater infrastructure and proposed new stormwater infrastructure to mitigate flood risk. To improve resiliency of the Town to flood disasters, there is an infrastructure solution but that requires a significant capital investment. Grants, joint projects, cost shares, and other large scale funding mechanisms will be useful for making those improvements. But a regular funding source for stormwater improvements is equally valuable. A stormwater fee can offset the routine costs of operation and maintenance of stormwater facilities that may otherwise be overlooked in the regular municipal budgeting process. The fee is as much a reminder for proper care of the existing infrastructure as it is a financial support to critical public facilities.

Stormwater fees can be controversial. A stormwater fee supported by defensible cost projections and allocated on a reasonable and controlled metric can be less controversial than broad based uniform fees. Details of a storm water utility implementation are beyond the scope of this master plan. However, additional information is provided here to start the conversation about implementing a mechanism to fund routine stormwater maintenance and projects.

Stormwater fees exist in many communities along Colorado's front range, some have been around for decades and others are more recently adopted.

10.1 What is a Stormwater Utility

The basic concept of a stormwater utility is to charge property owners for the amount of impervious area on their property in return for providing construction and maintenance of a stormwater system. Impervious area consists of manmade surfaces, which prevent the infiltration of rainfall and snowmelt into the ground, and include; buildings, driveways, parking lots, patios, commercial and industrial roads, private roads, and other "hard" surfaces. It can be estimated that runoff from these impervious surfaces increases 2 to 3 times from what the runoff was when the parcel was undeveloped. In addition, the water quality of the stormwater is worse than it was when the parcel was undeveloped.

Most stormwater utilities therefore have a fee based on the amount of impervious area on each parcel. This type of fee, if developed correctly, has been upheld in the courts of Colorado as a legal fee. Under the Tax Payers Bill of Rights (TABOR), a utility is termed an enterprise and is allowed if its meets the TABOR definition of an enterprise. Under this definition, an enterprise is a government owned business (similar to a water or sewer utility), which derives 90% or more of its revenue from non-governmental sources.

10.2 Stormwater Utility Fee Study Outline

Phase A - Feasibility Study. A data collection and litmus test for feasibility of the stormwater fee. This introduces the concept and builds the project team of consultants, staff, legal representatives, and engineers. This study results in a budget level estimate of fees that could be generated from several alternative mechanisms. (i.e. impervious area, rooftop area, lot size, etc.) The billing options are usually a key driving factor in the decision for how the fee is implemented. A town with existing billing systems for water and sewer may be able to easily add on a stormwater fee to the existing invoicing and collections systems. However, depending on billing systems or operational constraints, a separate invoice may need to be developed with its own schedule. These initial research results will then be compared to adjacent communities and discussed amongst the project team to determine a preferred approach. It is at this point the scope of the fee will be identified and limitations on how the funds can be spent will be drafted. This work should take between 3 and 4 months and not require any legislative action.

Phase B – Preliminary Plan. The initial preferences are formalized into a preliminary plan that can be presented to staff, councils, and the general public for review and comment. A municipal and public process can revise and adjust the fees, structure, and invoicing to fit the needs of the administration and general public. This preliminary plan will provide a more accurate estimate of impervious area or other metrics selected to quantify the fee across various properties. A selection of a rate structure and any classifications of properties (i.e. private, public, non-profit, etc.) can be made at this stage. Billing options will be finalized. And inherent to the more defined rate structure will be a discussion on potential credits to the fee (i.e. installation of rain barrels saves 10% of the fee per year, etc.). An implementation cost for new software, systems, adjustment of existing systems, or migration of existing processes can be estimated. This work could take as long as 6 months and may require public hearings or other administrative processes to document the public process.

Phase C – Implementation. This process finalizes the preliminary plan and results in the delivery of the first stormwater fee invoices to the community. Consequently, additional public outreach is necessary. Rate classes are finalized for single family, multi family, commercial, public, non-profit and other criteria. A financial outlook projecting revenues and expenditures should be developed to support the final adoption of the fee. Public works staff and consultants can be utilized to prioritize stormwater utility routine tasks, annual procedures, emergency operation allowances, and qualified special projects. A budget for routine tasks may involve a monthly allocation for 12 hours of vac truck time for stormwater inlet cleaning. An annual procedure may be an inventory of outfall conditions town-wide. Emergency operation allowances can be an agreement that specifies how much of the annual stormwater fee budget is reserved for emergency repairs and operations. A list of qualifications for special projects that can use the stormwater fee can be developed to provide guidance for staff and consultants to use when calls on the stormwater fee are made for repair, rehabilitation or improvement of stormwater infrastructure. Before presentation of the fee to the legislative process, a trial run of the billing, time keeping, and tracking systems should be run. In some cases, this can be a staged implementation where the fee is instituted for public facilities at a trial rate of $1 per parcel. When those systems are functional, the whole project can be presented to council for adoption.

10.3 Use of Funds

There can be specific study of how the funds are used. How the funds are transferred within the Town's accounting system is important and includes how the Town staff records their expenses related to stormwater. The funds from a stormwater utility should be used primarily for projects benefitting existing development because the existing property owners pay the fees. New developers are expected to pay their share of major drainage projects serving new development, because they are responsible for the excess stormwater their development creates. New developments are responsible for the minor drainage infrastructure within their development such as street drainage systems, and minor system pipes and channels conveying water to the major drainage facilities.

10.4 Range of Nearby Stormwater Utility Fees

The existing stormwater utilities in nearby communities can provide a rough estimate for what a fee may be in Lyons. The range is from less than $1 to more than $11. Berthoud has a fee of approximately $2.50 per single family residential unit. Greeley, a much larger community, has a fee of just over $5 per single family unit. Loveland has a fee over $11 and has been in existence since the early 1980s. In general, the average around the front range of Colorado is about $5 per single family residential unit. However, the average can be misleading as the variables for how the fee is paid, used, and allocated changes for every community, land use, and sometimes by year.