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Idaho Cities Stormwater & Drainage Funding

Posted By Johanna M. Bell, Tuesday, September 12, 2017

Stormwater and drainage systems consist of stormwater pipes, curbs, gutters, drainage ditches, detention ponds, and stormwater treatment facilities.  Unlike wastewater, most stormwater is not treated to remove pollutants before flowing into local streams, lakes, and wetlands; resulting in pollution of the waterways. To eliminate non-stormwater and pollutant discharge, the Clean Water Act requires both private and public sectors that discharge stormwater from industrial facilities or construction sites into the receiving waters of the United States to obtain a National Pollutant Discharge Elimination System permit ("NPDES permit").  Cities designated as owning or operating Municipal Separate Storm Sewer Systems (MS4s) are also subject to federal permit requirements.   MS4 NPDES permits require the designated cities to undertake comprehensive management of its stormwater system to reduce pollutant loads.

Stormwater infrastructure associated with streets is often constructed to convey stormwater runoff from both public streets and private developed property.  While the practice for private developments to retain, treat, and dispose of stormwater on site is very common, Idaho city inventories show that between 30 and 40 percent of the runoff conveyed by stormwater facilities is associated with both streets and privately developed property.  This situation underscores that managing stormwater effectively involves cooperative efforts from both the private and public sectors.

During the spring of 2017 AIC investigated how Idaho cities are grappling with these and other emerging stormwater, drainage or floodway management and compliance issues. Results show that:

  • Idaho cities with populations over 5,000 residents have consistently adopted stormwater, drainage, or flood management policies or ordinances;
  • only one (1) out of the two hundred (200) Idaho cities has established an enterprise fund utility for drainage management services;
  • funding sources for most Idaho cities for both city-owned and city-regulated drainage management rely heavily on general funds and utility fees paid for waste/reclaimed water;
  • as the city population increases, more Idaho cities also recover some city-regulated costs through developer permit fees; and,
  • the two ‘most challenging’ issues facing Idaho cities for stormwater/drainage management include insufficient funding and aging or inadequate infrastructure.

Responses from the various Idaho cities reflect how there are different funding options for either city-owned or city-regulated drainage management.  In the example for Coeur d’Alene, the stormwater program exists in large part to meet federal, state, and local regulations, most prominent among them being NPDES permitting requirements.  

The following provides a brief list of some funding options currently used by Idaho cities to fund drainage services.  These funding options are not ranked in any specific order, and AIC wishes to emphasize that an Idaho city’s individual situations may preclude the use of one or more of these funding options.

Drainage Services Utility

Drainage service charges can provide a dependable, predictable, and equitable funding source.   Best practices in the development of these utilities include the use of impervious surface area, geographic location, and on-site mitigation to determine chargeable area and rates to be charged; coupled with a process for appeals to establish adjustments or exemptions to the amount of chargeable area.  City-owned facilities receiving stormwater services also pay for these services as though they are provided by a third party.  Drainage services provided either on behalf of, or that benefit the city’s streets, require careful analysis and tracking in order to ensure the value of the various services are appropriately offset.

Waste/Reclaimed Water Services Utility

As in the case of drainage service charges, a waste/reclaimed water service utility can provide dependable, predictable, legally defensible, and equitable funding.  Many of the same considerations recommended for a drainage service utility apply to a waste/reclaimed water service utility.  By viewing these various services holistically, cities can take advantage of natural efficiencies that comes from managing multiple Clean Water Act programs within one utility.  The stormwater program may also indirectly benefit the waste/reclaimed water program by helping to meet total maximum daily load (TMDL) restrictions on receiving water bodies.  The most significant issue with this funding source is the weakness of the nexus between stormwater management and the most commonly used bases for charging wastewater rates, which include water usage and wastewater effluent strength in some cases.

Street Fund

Use of Street Fund money can be justified because many stormwater facilities are located inside the street right-of-way.  As a result, this source is sometimes used by Idaho cities to fund a portion of stormwater management.  However, the street fund is subject to many competing street maintenance demands, and may not be a reliable source for ongoing funding.   

General Fund

Use of General Fund money is usually unrestricted, and thus is frequently used by Idaho cities to fund stormwater management.  However, the general fund is subject to many competing demands, and may not be a reliable source for ongoing funding.   

Permit Application and Review Fees

New development and significant re-development building permit requirements protect cities’ right-of-way and transportation networks.  Erosion control permits also ensure that private development activities do not cause harm to adjacent private or public properties.  A number of Idaho cities currently charge a nominal fee for these applications and compliance reviews in order to offset the cost of equitable local regulation.   

Special Assessments or Special Fees

These are most commonly structured as local improvement districts (LIDs).  These funding mechanisms assess individual properties that benefit from or are served by a specific capital improvement for a share of the cost of that facility. Typically, benefit must be demonstrated by an increase in assessed valuation due to the improvement. Special Fees or direct charges may be used to recover the direct costs for services performed for a customer or class of customers not generally related to the overall service charge.

Impact Fees

Like utility connection charges, impact fees are one-time charges imposed as conditions of development, and are designed to recover an equitable share of the cost of capital investment incurred by the Utility.  The cost basis for an impact fee, authorized in Title 67, Chapter 82 of the Idaho Code, and available for “Storm water collection, retention, detention, treatment and disposal facilities, flood control facilities, and bank and shore protection and enhancement improvements”, may include a share of planned future facilities required to support growth. It is crucial that impact fees be the product of a clear calculation basis derived from official asset accounting and capital improvement plans and that they adhere to statutory limitations and legal precedents.  Revenues from such charges are available for capital purposes only and are not able to fund ongoing program operations.

Debt and Special Grants & Loans

Traditional debt, special grants, or subsidized loans are available only for capital project funding – not ongoing operations.  In addition, loans require a reliable funding source to meet debt repayment needs.

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