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Re-tooling Ann Arbor’s Storm Water Utility to Address Changing Legal Precedents

Re-tooling Ann Arbor’s Storm Water Utility to Address Changing Legal Precedents . Molly Wade, City of Ann Arbor, MI John Aldrich, CDM. MWEA Annual Conference June 23, 2009. Agenda . Project Objectives Public Engagement Process Revenue Requirements and Cost of Service Options

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Re-tooling Ann Arbor’s Storm Water Utility to Address Changing Legal Precedents

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  1. Re-tooling Ann Arbor’s Storm Water Utility to Address Changing Legal Precedents Molly Wade, City of Ann Arbor, MI John Aldrich, CDM MWEA Annual Conference June 23, 2009

  2. Agenda • Project Objectives • Public Engagement Process • Revenue Requirements and Cost of Service Options • Equitable Stormwater Rate Structure • Utility Billing Database • Revenue Scenarios and Rate Analysis • Credit Provisions and Adjustments • Implementation Strategy

  3. Ann Arbor’s Storm Water Utility • Formed in early 1980’s • Historically simple rate structure • $3.7 million revenue • Expanding service needs • Asset management • Capital improvements • NPDES permitting • Evolving legal requirements • Improved technologies for defining imperviousness

  4. Project Mission Improve the existing stormwater utility to address emerging City stormwater needs while meeting rate design requirements: • The fees must serve a regulatory purpose (rather than a revenue-raising purpose) • The fees must be proportionate to the necessary cost of service • Property owners must be able to refuse or limit their use of the service.

  5. Home Owners Tenants / Landlords Understand values/ interests of stakeholders Industrial Commercial Retail Institutional Schools Churches Stormwater Citizen Advisory Task Force Members Represent Community Interest

  6. Role of the Storm Water Citizens Advisory Task Force • Relay information about stormwater needs • Provide advice on stormwater utility implementation issues: • Level of service goals • Policies • User Fee • Participate in Public Engagement program • Report to City Council

  7. Level of Service Principles Developed by Storm Water Citizens Advisory Task Force • Protect public health, safety, and welfare • Protect ecological health • Conduct comprehensive planning to determine priorities • Encourage shared responsibility • Offer incentives to guide desired behaviors • Educate stormwater system users • Provide an understandable, equitable rate structure

  8. Elements of an Effective Storm Water Management Program

  9. Level of Service Options Encompass the Full Range of the Public Expectations

  10. Level of Service Options Encompass the Full Range of the Public Expectations

  11. Estimated Allocation of Revenue under LOS Options

  12. Level of Service Options Encompass the Full Range of the Public Expectations

  13. Rate Study Fundamentals • Revenue Requirement Projections • How Much Money is Needed? • Cost of Service Analysis • From Whom Should the Money be Collected? • Design of Recommended Rates • How Should Stormwater Services be Priced?

  14. Runoff Area Administration Operation & Maint. System Planning CIP – System Renewal Specific Regulation CIP -- New Service Customer Public Ed Billing Illustration of Functional Cost Allocation 2005/06 Costs: $206,000 $218,000 $3,304,000

  15. Level of Effort Accuracy Rate Model Options • Impervious Area Measurements • Non-SF Residential Properties • All Properties • Level-of-Service / Geography Base • Runoff Coefficient / Intensity of Development Factor • Tiered Flat Fee • Flat Fee • All properties • All SF residential properties

  16. Level of Effort Accuracy The City’s current rate model is proportionate to the runoff generated by each property. Existing Rate Model • Impervious Area Measurements • Non-SF Residential Properties • All Properties • Level-of-Service / Geography Base • Runoff Coefficient / Intensity of Development Factor • Tiered Flat Fee • Flat Fee • All properties • All SF residential properties

  17. Impervious area used as the basis for anequitablerate model and cash flow analysis. Impervious Area Measurements Non-SF Residential Properties All Properties Level-of-Service / Geography Base Runoff Coefficient / Intensity of Development Factor Tiered Flat Fee Flat Fee All properties All SF residential properties Level of Effort Accuracy Proposed Rate Model

  18. Automated Impervious Area Using Remote Sensing Classification • Use new 6-inch resolution orthoimagery to yield 2-foot resolution imperviousness map grid • All pavement and other travel ways • All buildings, including decks and roof overhangs • Use Ann Arbor GIS data as classification benchmark • Data Quality Assurance • Manual digitization • Field verification • Iterative geo-statistical analysis

  19. Commercial and Multi-Family: Property-Specific Impervious Area Measurement Runoff contribution is typically larger than single / double family residential Fees per parcel are generally larger Inaccuracies are amplified Relatively few parcels require detailed validation Paved Area Building Area

  20. Statistical Evaluation of Residential Properties Defines Categories

  21. Online impervious area lookup

  22. Updating Impervious Area Imagery Present goal is to update every two to three years New construction during interim: Residential: Classify as Tier 2 Commercial: Required to provide impervious area during planning process Share costs with other City units Share costs with U of M

  23. Ann Arbor’s Proposed Rate Model with Existing Revenue Requirements Proposed “Revenue-Neutral” Fees: Rates for ALL Residential and Non-Residential Properties $5.92 / quarter / customer PLUS $251.44 / quarter / impervious acre Non-stormwater: $0.27 / quarter / 1000 gal. Reductions for on-time payment Credits recognize on-site stormwater management Advantages: Cost recovery proportionate to runoff volume Four residential tiers increase equity and distribution Credit system recognizes stormwater management Allows customers to control use of stormwater service Automates impervious area updates Disadvantages: More complex than existing system Additional costs for future updates

  24. Comparison of Rate Increases to Reach LOS B

  25. Proposed Quarterly Credits for Single and Two-Family Residential Properties

  26. Proposed Quarterly Credits for Average Commercial and non-Single and 2-Family Residential Properties

  27. Right-of-Way Credit Provisions • Credits for Public Rights of Way • Streets generate stormwater • Streets receive stormwater services • Streets perform conveyance, storage, WQ, and education functions for the stormwater system • Stormwater utility liable for cost of easements in streets. • Credits available exceed stormwater costs for Streets

  28. Adjustment Provisions Recognize Customer Actions • Adjustments: • Impervious area interpretations • Non-contributing areas • Direct discharge to Huron River • Discharges directly outside City limits • Retention of all stormwater • About twice 100-year event volume plus freeboard

  29. Implementation Plan For Stormwater Rates Stormwater Citizen Advisory Task Force On-line access to parcel-specific imperviousness Internet-based credit applications Media Communications (press, TV, radio, web) Outreach through RiverSafe Home program, presentations WaterMatters and WasteWatcher articles

  30. Rate Design Requirements for Stormwater Service Fees Are regulatory activities the primary purpose of the funds (protect public health, safety, welfare, meet regulatory obligations)? All envisioned services are regulatory Are the services provided proportional to the fees charged? Address through cost allocation Address through rate structure options Can customers control their use of the system and fees charged? Link to runoff generation Address through credit and adjustment provisions

  31. Questions and Answers

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