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
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Implementation Process
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Fee Assignment & Equity Considerations
■
Exemptions
■
Cost-of Service Analysis
■
Public Outreach
■
Texas Utilities Overview
■
Revenue Estimate and Tips for Your Community
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National Legislative Initiative Needed
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Challenges
■
Flood Hazard Reduction
■
Stream Erosion Mitigation
■
Water Quality Management
■
NPDES-MS4 Compliance
■
Funding Options
■
General Fund
■
Special Taxing/Assessment Districts
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Federal & State Grant Programs
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Impact Fees
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Drainage Utility
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What is a Drainage Utility?---Not a Rain Tax!
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User-Fee, like Water/Wastewater/Solid Waste
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Equitable User-Fee Basis: property stormwater run-off demand on drainage system
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Impervious cover, i.e. rooftops, driveways/walkways, parking including compacted graveled surfaces
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Guided by State Law, no property value consideration
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User-Fee Collected on City Utility Bill
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Provides Stable Revenue Stream
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$ Managed in protected account
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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
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Charges Must be:
Directly Related to Property Runoff Characteristics,
Reasonable, Equitable and Non-Discriminatory
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Charges Apply only to Developed Property
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Revenue Can be Used to Support All Drainage
Management Programs – O&M & CIP
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Enterprise Funds Management Required
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May Issue Revenue Bonds
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Revenue Can be Combined with Other Sources
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Ordinance Notification/Public Hearing Required
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Utility Declaration, Assets Dedication
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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
$/ERU
Rate Development
• Land Parcel Assessment
•
Billing Unit Alternatives
Revenue
Projections
Billing System Evaluation
H
E
A
R
I
N
G
S
P
U
B
L
I
C
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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Impervious Area
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Rooftops, Parking, Driveways, Walkways
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Increases Volume & Rate of Runoff
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Equivalent Residential Unit (ERU)
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Average Sq Ft for Single-Family Properties, ~3000
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Used as Billing Standard
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Rate Structure-Two Major Classes
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SF Residential: Single Tier, Multi-Tier
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Commercial/MF/Industrial/Institutional/Religious
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Public Streets, ROW, Drainage Infrastructure not charged, considered part of Drainage System
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Example Utility Billing Calculation
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Appraisal District Records
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Parcel Size
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Building Footprint
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Parking Area
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Land Use
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GIS Analysis
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Planimetric Data
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Orthophotography
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Land Parcel Boundary Map
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Commercial Development Record-Plans
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Heads-Up Digitization & Spectral Analysis
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Utility Billing System
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Match Data to Existing Utility Accounts
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Multiple Meters/Parcel
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Customer Appeals Process
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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
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Commercial/Industrial/Institutional
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16 ERU per Acre Impervious Area
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Customer Equity-A Challenge Worth the Effort
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TX statute does not define customer equity
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Many differing fee assignment approaches are used, there is no standard in Texas
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Land parcel impervious area and land area are dominant
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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
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Statutory (Mandatory)
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Undeveloped Land
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Institutions of Higher Education
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Property with Private Drainage System (zero discharge)
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State Property
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Discretionary (City Policy Decision)
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County Property
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School District Property
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City Property
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Religious Organization Property
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■
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
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Reserve Fund
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Emergency Repairs/System Replacement
Establishes Initial and Projected Customer Billing Rates
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Public Outreach-Critical for Success
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Public Meetings
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Residential Customers
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Commercial Customers
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Follow-up with City Council
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Information on City Web Site
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What is a Drainage Utility?
■
Proposed Drainage Service Improvements
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How are Fees Assigned?
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How are Billing Errors Resolved?
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Sample Billing Mail-Out
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Resolve Issues before 1 st Billing
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• 85 Now in
Operation
• 14 in
Evaluation
Phase
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Population Served- 500 to 2,100,000
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Annual Revenue- up to $130, 000,000
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Annual Revenue per Capita
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Average $30 , Maximum $80
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Single-Family Billing Rates for ERU
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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!
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Law Suits /Threats
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Arlington, Austin , El Paso , Houston, New Braunfels
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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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Annual Revenue Potential
X
X
ERU=Single-Family Residential Billing Unit
Example: Population 50,000, $3.50/month per ERU
Annual Revenue = $1,225,0000
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Public Outreach is Critical for Community
Understanding and Acceptance
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Community Affordability is a prime consideration
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Customer Equity is a good investment
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Impervious area basis recommended
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Multi-Tiered and/or Custom Site Fee-Assignment
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Avoid Commercial Rate caps
■ Any “credits” should be based on avoided costs
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Exemptions require other customers to subsidize
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Sample Billing Mail Out before Go Live
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National State-Legislative Initiative Needed!
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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
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Non-Dillon Rule States require extreme caution
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Recommendation to ASFPM
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Develop Model Legislation
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Coordinate with State Municipal Leagues for Adoption
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http://www.espeyconsultants.com/drainage_utility_survey_espey_consultants.pdf
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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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