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Maryland Bay Restoration Fund Flush Fee Update

Maryland Bay Restoration Fund. Background:Bay Restoration Fund (BRF) was created under SB 320 during 2004 legislative session, which provides a dedicated source of revenue for nutrient (Nitrogen

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Maryland Bay Restoration Fund Flush Fee Update

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    1. Maryland Bay Restoration Fund (Flush Fee) Update Presentation to the Maryland GFOA By Jag Khuman, Director Maryland Water Quality Financing Administration Maryland Department of Environment April 20, 2007

    3. Maryland Bay Restoration Fund BRF Fee A fixed $2.50/month ($30/yr) fee per household collected with water/sewer bills - effective 1/1/05 (commercial & industrial users pay based on 250 gallons/day flow = 1 EDU) A $30/yr fee per user of an onsite sewage disposal (septic) system or holding tanks to be collected by the County - effective 10/1/05 (60% to MDE; 40% to MDA)

    4. Maryland Bay Restoration Fund For BRF Fee billing and revenue collection Local governments/billing authorities - up to 5% of the fee deposited to the State Comptrollers Office (Cumulative claims thru 3/31/07 show 1.08% of fee deposits) State Comptrollers Office - up to 0.5% total fee deposits For wastewater & septic fund program implementation MDE - Up to 1.5% of Wastewater Fund MDE - Up to 8% of MDE share of Septic Fund For cover crop program implementation MDA Statute Silent Local claims current quarter 0.6% Comp ~0.26% Local claims current quarter 0.6% Comp ~0.26%

    5. Maryland Bay Restoration Fund Exempted from Paying Fee (by Statute) County, Municipal Corporation, Bi-County or Multi-County Agency under Article 28 or 29 of the Code, Housing Authority under Article 44A of the Code, School Board, Community College, or any other Unit of the County or Municipal Corporation (Federal & State Government not exempt) MOU with Fed DoD Arguments Neither party concedes on the issue of Fee vs. Tax DoD to upgrade their WWTPs for est. $22M (~10 facilities)MOU with Fed DoD Arguments Neither party concedes on the issue of Fee vs. Tax DoD to upgrade their WWTPs for est. $22M (~10 facilities)

    6. Maryland Bay Restoration Fund Financial Hardship Exemption The law allows, subject to approval by the Maryland Department of the Environment, the billing authority to establish a program to exempt certain residential dwellings that demonstrate substantial financial hardship (As of March 2007, 24 billing authorities have approved financial hardship exemption programs) Energy Assistance Program - where the applicant meets at least two of the following conditions: Receiving energy assistance subsidy; Receiving public assistance - supplemental security income (SSI) or food stamps; Receiving veterans or social security disability benefits; Meeting the income criteria (See www.dhr.state.md.us/meap/income.htm). Total accounts ~236 billing authorities Energy Assistance Program - where the applicant meets at least two of the following conditions: Receiving energy assistance subsidy; Receiving public assistance - supplemental security income (SSI) or food stamps; Receiving veterans or social security disability benefits; Meeting the income criteria (See www.dhr.state.md.us/meap/income.htm). Total accounts ~236 billing authorities

    7. Maryland Bay Restoration Fund Cover Crop MDA has targeted 240,000 acres for FY 07 planting season Cover Crop MDA has targeted 240,000 acres for FY 07 planting season

    8. Maryland Bay Restoration Fund Bay Restoration Advisory Committee recommendation to County Governments on fee billing options: A. Bill the septic fee along with property tax (starting July 05 with fee prorated for 3 quarters) or B. Develop separate septic fee billing system (starting 10/1/05) (Most Counties opted for option A; 3 did not start fee billing until July 06 - FY 07) Direct Billing Lots of calls Major undertaking for counties to determine septic owners Direct Billing Lots of calls Major undertaking for counties to determine septic owners

    9. Maryland Bay Restoration Fund With priority given to onsite sewage disposal systems (septic systems) in the critical areas, provide grants or loans of up to 100% for the: a. cost to upgrade septic systems with the best available technology for nitrogen removal, b. cost difference between a conventional system and a system that uses best available technology for nitrogen removal, or c. cost of repairing/replacing a failing septic system with best available technology for nitrogen removal or another wastewater treatment system (added during 2006 legislative session and applicable only to low- income owners) 10 BAT technologies approved Item C- Expect Regulation for implementation 10 BAT technologies approved Item C- Expect Regulation for implementation

    10. Maryland Bay Restoration Fund RFP sent to all county health departments Only 9 counties have applied for funding (first round) Expect another RFP later this year RFP sent to all county health departments Only 9 counties have applied for funding (first round) Expect another RFP later this year

    11. Maryland Bay Restoration Fund

    12. Maryland Bay Restoration Fund Grant Process: ENR MDE meeting with owners of 66 WWTPs to discuss schedule and sign ENR agreement for planning, design, construction grants awards all year. Sewer grants: via annual solicitation. Letter goes out to all local govts in Jan annually to complete a pre-application. Projects are ranked on States priority rating system and determination made re: funding Priority: SSO/CSO, leaking pipes I/I Grant Process: ENR MDE meeting with owners of 66 WWTPs to discuss schedule and sign ENR agreement for planning, design, construction grants awards all year. Sewer grants: via annual solicitation. Letter goes out to all local govts in Jan annually to complete a pre-application. Projects are ranked on States priority rating system and determination made re: funding Priority: SSO/CSO, leaking pipes I/I

    13. Maryland Bay Restoration Fund Grants to WWTP owners of up to 100% of eligible cost of planning, design and construction of ENR upgrade (e.g., nitrogen reduction from 8mg/l to 3mg/l) for flows up to the approved design capacity. Grant of up to $5M/yr for existing sewer system rehabilitation (FYs 2005 - 2009). Grant to WWTP owners of up to 10% of annual BRF wastewater fee revenue to off-set additional ENR operations and maintenance costs (Starting FY 2010; Est. $6M/yr). BRF can fund only the incremental capital cost of BNR to ENR upgrade - Discuss BNR (18 mg/l to 8) MDE has a 50/50 cost share program ENR (8 mg/l to 3) ENR Technology NH3 oxic zome to nitrates and anoxic zone to nitrogen gas (inert) Approved design capacity: as of 4/2003 approved or planned per W/S plan Basis for nutrient reduction strategy BRF can fund only the incremental capital cost of BNR to ENR upgrade - Discuss BNR (18 mg/l to 8) MDE has a 50/50 cost share program ENR (8 mg/l to 3) ENR Technology NH3 oxic zome to nitrates and anoxic zone to nitrogen gas (inert) Approved design capacity: as of 4/2003 approved or planned per W/S plan Basis for nutrient reduction strategy

    14. Maryland Bay Restoration Fund First upgrade the 66 major WWTPs discharging to the Chesapeake Bay with ENR technologies. These 66 major facilities treat 95% of the total Maryland sewage flow and will reduce nitrogen by an additional 7.5M lbs/yr and phosphorus by 0.26M lbs/yr. Next upgrade additional WWTPs based on ENR cost effectiveness, water quality benefit, readiness to proceed, and availability of funding.

    15. Chesapeake Bay Watershed Covers 64,000 sq miles; 6 states & DC; home to 15M people; 5 Major RiversCovers 64,000 sq miles; 6 states & DC; home to 15M people; 5 Major Rivers

    16. Allocations accepted by each state 2000 Chesapeake Bay AgreementAllocations accepted by each state 2000 Chesapeake Bay Agreement

    17. Another 20M lbs per year nitrogen and 1.1M lbs/yr phosphorus reduction needed for MD to meet goal BRF WWTPs ENR will reduce 7.5M lbs (total need 20M lbs/yr) nitrogen (~37%) and 0.26M lbs (total need 1.1M lbs/yr) phosphorus (~24%) 6% of total N comes from Septic systems. Green Fund (Driveway fee) 2007 Session was another attempt to provide for a dedicated revenue source of revenue for Non-point source (Urban, agricultural) pollution prevention. Another 20M lbs per year nitrogen and 1.1M lbs/yr phosphorus reduction needed for MD to meet goal BRF WWTPs ENR will reduce 7.5M lbs (total need 20M lbs/yr) nitrogen (~37%) and 0.26M lbs (total need 1.1M lbs/yr) phosphorus (~24%) 6% of total N comes from Septic systems. Green Fund (Driveway fee) 2007 Session was another attempt to provide for a dedicated revenue source of revenue for Non-point source (Urban, agricultural) pollution prevention.

    18. All counties except Garrett All counties except Garrett

    19. Maryland Bay Restoration Fund Regional City, County and portions for Anne Arundel & Howard Regional City, County and portions for Anne Arundel & Howard

    20. Maryland Bay Restoration Fund

    21. Maryland Bay Restoration Fund

    22. Maryland Bay Restoration Fund

    23. Maryland Bay Restoration Fund Current Cost est. > $1B At time of legislation: $740M was the low end estimate 66 plants include 3 big facilities Back River (180 mgd), Patapsco (73 mgd), Blue Plains (Md share 170 mgd) Big 3 account for $50% of the costs [$503M/$1,014M] Blue Plains Issues EPA to put N-limits; federal consent decree amendment (60 days)Current Cost est. > $1B At time of legislation: $740M was the low end estimate 66 plants include 3 big facilities Back River (180 mgd), Patapsco (73 mgd), Blue Plains (Md share 170 mgd) Big 3 account for $50% of the costs [$503M/$1,014M] Blue Plains Issues EPA to put N-limits; federal consent decree amendment (60 days)

    24. Maryland Bay Restoration Fund Completed (2): Celenese & Hurlock Under Const (11): BRF Grants (9) - Kent Island, Crisfield, Salisbury, Easton, Talbot R-2, Chestertown, Indian Head, Elkton, Brunswick. Funded privately (2) - APG (DoD) & Swan Point Good Start: projects that had not done BNR prior to 1/05, the design was modified to do BNR & ENR at the same time. Late BNR starters are actually benefiting from doing ENR first. Completed (2): Celenese & Hurlock Under Const (11): BRF Grants (9) - Kent Island, Crisfield, Salisbury, Easton, Talbot R-2, Chestertown, Indian Head, Elkton, Brunswick. Funded privately (2) - APG (DoD) & Swan Point Good Start: projects that had not done BNR prior to 1/05, the design was modified to do BNR & ENR at the same time. Late BNR starters are actually benefiting from doing ENR first.

    25. Maryland Bay Restoration Fund Grant awards projected 2012 grant award $69M a low number primarily due to fund capacity if no change in fee Cumulative awards ~$791M thru 2012 Grant awards projected 2012 grant award $69M a low number primarily due to fund capacity if no change in fee Cumulative awards ~$791M thru 2012

    26. Maryland Bay Restoration Fund WW fund is expecting $60M/yr fee revenue. Additional funding via Revenue bonds ~$550M are expected to be issued FY 08 2012 Max Term: 15 years History Term, GO/Constitutional limitation WW fund is expecting $60M/yr fee revenue. Additional funding via Revenue bonds ~$550M are expected to be issued FY 08 2012 Max Term: 15 years History Term, GO/Constitutional limitation

    27. Maryland Bay Restoration Fund Start all construction by 2011 Normal construction time 24 months Big 3 36+ months Start all construction by 2011 Normal construction time 24 months Big 3 36+ months

    28. Maryland Bay Restoration Fund Fund can meet grant demand thru FY 2011 Total demand $1B+; Fund Capacity < $0.8BM; 2012+ deficit of $200M+ expected Options: Reduce grant %; Increase fee; Delay project funding Best interest local govts to move to ENR quickly Fund can meet grant demand thru FY 2011 Total demand $1B+; Fund Capacity < $0.8BM; 2012+ deficit of $200M+ expected Options: Reduce grant %; Increase fee; Delay project funding Best interest local govts to move to ENR quickly

    29. Maryland Bay Restoration Fund 18 members representing the state agencies, legislature, local governments, and environmental and business organizations (Provide an annual report each January 1) Key Responsibilities: Perform an analysis of the cost of nutrient removal Identify additional sources of funding for the fund Make recommendations to improve effectiveness of fund Make recommendations on the appropriate fee to be assessed in FY 2008 and beyond Meets every 2 months; most recent meeting 4/18/07 Annual Progress report On MDE web site FY 2012+ Deficit to be addressed What if Scenarios being presented Meets every 2 months; most recent meeting 4/18/07 Annual Progress report On MDE web site FY 2012+ Deficit to be addressed What if Scenarios being presented

    30. Maryland Bay Restoration Fund Last 3 years PPI (21%) > CPI (11%) Steel, concrete, energy prices have risen significantly 11 construction projects funded w/BRF grants show an aggregate 45% increase over original estimate (2003) Last 3 years PPI (21%) > CPI (11%) Steel, concrete, energy prices have risen significantly 11 construction projects funded w/BRF grants show an aggregate 45% increase over original estimate (2003)

    31. Maryland Bay Restoration Fund BRF Not the only MDE financing program MDE WWTP grant Programs BNR, SRF loans & ENR combined $ MDE funds may be in >25% of total annual WWTP upgrade market share Expect Inflationary pressure Demand vs. supply; performance bonding capacity, contractors not hungry In addition School construction in MD No engineer or contractor left behind BRF Not the only MDE financing program MDE WWTP grant Programs BNR, SRF loans & ENR combined $ MDE funds may be in >25% of total annual WWTP upgrade market share Expect Inflationary pressure Demand vs. supply; performance bonding capacity, contractors not hungry In addition School construction in MD No engineer or contractor left behind

    32. Maryland Bay Restoration Fund Local Government Finance & Budget Officials Dont expect 100% in ENR grants from BRF Expect higher construction bids than estimated Apply timely for MDE financial assistance

    33. Maryland Department of the Environment Bay Restoration Fund For additional information visit MDE website at: www.mde.state.md.us or call 410-537-3119

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