Understanding stormwater utility fees
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September 03, 2013
Understanding stormwater utility fees

Municipal stormwater management is a big challenge, and funding stormwater controls is at the top of the challenge list. The costs of constructing, operating, and maintaining a municipal separate storm sewer system (MS4); complying with regulatory requirements; and dealing with flooding concerns and population growth are high, and many communities have turned to stormwater utilities to ease the financial burden.

Although over 1,000 stormwater utilities have been established in almost 40 states since the 1980s and are considered very promising to build and maintain local stormwater management programs, their operation still remains a mystery to many property owners, especially the systems concerning how fees are assessed.

What is a stormwater utility?

A stormwater utility operates much like a sewer or water utility, and collects fees related to the control and treatment of stormwater that can be used to fund a municipal stormwater management program. They are established by ordinance or bylaw, most often by local government.

How are fees calculated?

There are three basic methods that stormwater utilities generally use to calculate service fees.

  1. Equivalent Residential Unit (ERU). The ERU method, which is also known as the Equivalent Service Unit (ESU) method, is the most popular billing technique. It bills an amount proportional to the amount of impervious area on a parcel of land without regard to the parcel’s total area, basing it on the effect of a typical single-family residential (SFR) home’s impervious area footprint. A stormwater utility reviews a representative sample of SFR parcels to determine the impervious area of a typical SFR parcel, which is one ERU. In most cases, most SFRs are billed a flat rate for one ERU. In some cases, several tiers of SFR rates are established.
  2. Intensity of Development (ID). This system is based on the percentage of impervious area relative to an entire parcel’s size. All parcels within a stormwater utility’s regulation are charged a fee, including vacant and undeveloped lots. For developed sites, fees are based on their intensity of development, defined as the percentage of impervious area of the parcel. Vacant and undeveloped areas are charged a lower fee.
  3. Equivalent Hydraulic Area (EHA). Using this billing method, parcels are billed on the basis of the stormwater generated by their pervious and impervious areas, charging impervious area a much higher rate than the pervious area.

Advantages and disadvantages

Each billing method has advantages and disadvantages. The ERU method is easy to understand and because it is limited to the impervious area, requires the least amount of time to determine. However, this method may also appear to be more inequitable than other methods because fees are collected from a smaller area base.

The ID method is considered more equitable, but because the ID categories are broad, and the parcels are not billed in direct proportion to their relative discharges, it is more difficult to explain. The ID method may also be more difficult to implement because both pervious and impervious areas require review.

Lastly, the EHA method may also be considered more equitable because it accounts for flow from the pervious portion of parcels, and may be fairer than the ID method because it bills on the basis of individual measurements. Howevre, the EHA method is more time intensive and may be more difficult to explain.

Outlook

Whatever billing method selected, we can expect the growth of stormwater utilities to continue. They provide a dedicated funding source and sustainable revenue on the local level at a time when state and federal funding is difficult to obtain.

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