Search for the Elusive 35%: A Sponsor Dilemma

1. Search for the Elusive 35%:A Sponsor Dilemma 11th National Watershed Conference May 17-20, 2009 Wichita, Kansas James W. Featherston, Agricultural Economist USDA-NRCS Temple, Texas

2. Rehabilitation Program • The Small Watershed Rehabilitation Amendments of 2000 (Section 313, Public Law 106-472) provides the authority for rehabilitation. It amends PL 83-566 "Watershed Protection and Flood Prevention Act" to add authority for rehabilitation

3. Authority Provides: • Technical assistance in planning • Technical assistance in application • Federal cost share - 65% • Sponsors cost share - 35%(part of cost share can be in-kind)

4. Hazard Classification - Texas(as of 2008) • 248 dams originally designed as low or significant, reclassified as high hazard • 10 dams have been rehabilitated • 238 remaining • Total Cost - $334 million • Sponsors Cost - $116 million

5. Issues and Concerns • Public safety and health • Failing components of dam • Sediment storage - 50 yr. minimum • Urban development below or near dams • Upgrades to current safety and performance criteria • Increasing costs for upgrades

6. How Do You Eat an Elephant?

7. Answer: One Bite at a Time! What do Elephants have to do with Aging Dams?

8. Answer: Appetite and Cost! When dining on elephant au jus, one must consider their: • Appetite for elephant (white or dark meat ?) • Ability to pay the bill

9. Appetite Appetite is based on memories: • Because of other entrees on the menu, people haven’t had elephant in a long time and they’ve forgotten how it tastes. • Because of dams located upstream doing their job over the years, people haven’t been affected by major floods in a long time and they’ve forgotten how frequent floods used to occur. Result? Public apathy (“Why fix something that isn’t broke?”)

10. Cost Insufficient Funds: • Because of increasing costs of processing elephant meat into a dining delicacy, people can’t afford it anymore and simply ignore it. • Because of increasing costs of upgrading aging dams to current criteria to ensure a continuation of protection for people and property downstream, sponsors can’t afford rehabilitating the dams on their own. Result? Costs keep going up while dams keep aging.

11. “The Dilemma”(Or How Can Sponsors Come Up With Their 35%?) Several ways: • Tax Bonds combined with Development Fees • Utilize Local Tax Base • County Government • Water Control and Improvement District • Alternate Source of Funds Two Things to Remember: There are other means to address the 35%. And, what works for one may not work for another.

12. Tax Bonds Combined With Development Fees City of McKinney • County seat of Collin County (adjacent to Dallas County) • Unprecedented growth during last 20 years • 18 dams within City limits or ETJ • First Rehab project in Texas (East Fork Above Lavon Site 3C) • Although other Sponsors are involved, City provides 100% of Sponsor’s share (35% of Rehab project cost)

13. Tax Bonds Combined With Development Fees Voter-approved tax bonds and developers’ fees fund the Sponsor’s share of the Rehab project. Example: • Estimated Rehab cost is $800,000 • Total drainage area above dam – 1,000 acres • Estimated Rehab cost per acre is $800 • Developer’s share is 50% of affected acreage • If 50 acres is developed above dam, developer’s share is $800/acre x 50 acres x 50% = $20,000 • Balance of sponsor’s share is provided by issuance of bonds

15. Tax Bonds Combined With Development Fees Pros: • Cost is spread over many beneficiaries of project • Additional tax levied is minimal per capita • Local tax burden of rehabilitation is reduced • Frees up local taxes for other uses • Promotes pride of property ownership • Allows Sponsor more input into land development Cons: • Option only available where Sponsor has control or jurisdiction of drainage area of dam • Fees must be paid before developer can begin construction • Lack of developable land could hinder fee assessment

16. Utilize Local Tax Base:County Government Bexar County and San Antonio River Authority (SARA) • San Antonio is County seat of Bexar County (south central Texas) • SARA formed in 1937 by Texas legislature • SARA operates and maintains 27 dams in Bexar County • Three dams have been rehabilitated (Martinez Creek Watershed Sites 4, 5, and 6A) • Although not an official watershed sponsor, Bexar County provides bulk of Sponsor’s share; SARA provides remainder (primarily in-kind services and landrights)

17. Utilize Local Tax Base:County Government Pros: • Support of county government allows greater publicity of project • Sponsor’s (SARA) direct cost is reduced • Dependable source of funding (Bexar County) • In-kind services reduce cash outlay of project Cons: • Non-beneficiaries are assessed cost of project • Negative majority vote by commissioners court could delay or cancel project

19. Utilize Local Tax Base:Water Control and Improvement District Bell County Water Control and Improvement District (WCID) No. 6 • WCID – a political subdivision of the state of Texas • WCID is a taxing entity (properties located within WCID) • Bell County WCID No. 6 operates and maintains 13 dams (Nolan Creek Watershed) in Bell County • In 2007 Site 15 was rehabilitated; sponsor share was $400,000 (cash and in-kind services)

20. Utilize Local Tax Base: Water Control and Improvement District Pros: • Cost is spread over many beneficiaries, thus minimizing per capita cost • Dependable source of funding Cons: • Non-beneficiaries (ones not located downstream) are assessed cost of project • Due to small size of WCID, tax increases could be realized to cover sponsor cost of project

22. Alternate Source of Funding Potential Sources: • State Government • Consumer Organizations • Producer Organizations • Non-Profit Organizations

23. Alternate Source of Funding:Example – State Government Pros: • Alternate source becomes a stakeholder, potentially providing more media exposure • Usually dependable source of funding • Legislation could direct funding specifically for Rehab Cons: • State government must have representative willing to sponsor legislation • If limited funds, two possible outcomes: • Projects are ranked, resulting in only a few getting funded • Funds are distributed to all sponsors with rehab needs, resulting in insufficient funds per project • Funding could dry up quickly, especially during a down economy

24. What is proactive prevention? Most dams built it rural areas (low hazard) As population increases, urban area encroaches Sponsors have options to discourage downstream development, thus keeping dams classified as low hazard Proactive Prevention:“Nip it in the Bud!”

25. Proactive Prevention:“Nip it in the Bud!” Navarro Soil and Water Conservation District No. 514 • Due to proximity to Dallas, Navarro County has experienced rapid growth in recent years • Since 1954, total of 111 flood control structures built in Navarro County • To date, only 2 have been reclassified as high hazard How does Navarro SWCD No. 514 keep people from living downstream of dams?

26. Proactive Prevention:“Nip it in the Bud!” • Excellent relations between SWCD and County • County judge and commissioners attend at least one SWCD meeting annually • SWCD employee meets with newly elected commissioners and explains purpose of watershed projects and local sponsors • Tours are sponsored by SWCD for county officials • SWCD and County have contracted with an A&E firm to perform breach flood plain mapping • County has agreed not to issue 911 address if new building would be located within breach area of a dam

27. Conclusion 238 dams in Texas need to be upgraded. Estimated Sponsors’ Cost - $116 million Funding is often elusive. Task is daunting. So is eating an elephant.

28. But, it can be done!