Comprehensive stormwater programs include all aspects of operating systems and planning for the future. Activities such as operations, maintenance, planning, engineering, regulatory compliance and other administrative tasks, as well as capital improvement programing, must all be incorporated into a program. These are ongoing functions that, with planning, occur at a steady and predictable pace, and require ongoing and predictable (i.e., sustainable) funding. This section focuses on the challenges and opportunities for sustainable funding for stormwater programs. For information on projects and other one-time or limited funding resources, refer to the Project Funding section.
Stormwater management services are an important component of modern cities, similar to water or sewer system utilities. Stormwater utility operations include services to property owners (collecting, conveying, and managing stormwater runoff from properties) and the infrastructure and management systems to deliver those services. A utility approach also implies identifiable costs and corresponding revenues (user fees), which can be restricted to those services and costs to create a self-supporting fiscal enterprise.
A primary barrier in developing a stormwater utility approach (more commonly known as an “enterprise fund” in California) is the required voter approval for local fees and taxes in California pursuant to Proposition 218. A secondary barrier in developing a stormwater utility with dedicated funding (not just in California, but across the nation) is the historic view of stormwater management as a secondary function – often managed as part of the road system – for which no dedicated funding source has been needed – usually subservient to the streets and roads under which the pipes lie. Together, these two barriers mean that sustainable utility programs for stormwater take planning to meet challenges.
Driven by regulations and recognized needs, municipalities are increasingly viewing stormwater management as a primary function. Regulatory requirements for municipal separate storm sewer systems – or “MS4s” – have especially driven this shift.
Creative municipalities are developing solutions to these barriers as part of establishing sustainable programs and revenue streams. Funding sources are varied, and successful stormwater utilities become skilled at piecing together funding sources strategically, capitalizing on the advantages of each type. An overview of California stormwater funding can be found as part of a recent funding options report prepared for the Town of Moraga.
Many resources exist to identify funding. For instance, funding opportunities were presented through a series of presentations in April 2017 during an all-day forum hosted by the Environmental Protection Agency (EPA) in Oakland, CA.
This section provides a cumulative list of resources that stormwater managers in California can use to build sustainable programs and funding streams. Many of the strategies for overcoming funding barriers are discussed in more detail on the following pages:
Stormwater Utility Fees
Realignment of Services
Local Development Impact Fees
Special Taxes
Stormwater fees successfully implemented under Proposition 218 procedures become restricted fees, which must be kept separate from other municipal revenues and can only be used for stormwater services. Stormwater utility fees can be set up as an enterprise fund, which is a self-contained financial structure for an enterprise that charges fees for goods or services delivered to the public. Examples are garbage services or other utilities such as water, sewer, or electric. Many municipalities throughout California and across the nation are considering creating stormwater utilities as a way to fund stormwater activities. Here are the steps for creating a stormwater utility (which includes a voter-approved fee).
Understanding the details of Proposition 218 is important for crafting effective local government programs. Proposition 218 stipulates that property-related fees require voter approval, unless they are for water, sewer, or trash collection services. As a result, some municipalities may consider paying for qualifying stormwater activities under those service funds, realigning costs or revenues to pay for the specific relevant activities. For example, the cost of NPDES-required trash capture activities (capital costs of devices and the efforts to keep them maintained) can be paid from a municipality’s trash fees. It is worth noting, however, that the trash fees would need to be increased accordingly, which can also be politically challenging for a governing board.
Other examples of realignment potential:
Excerpts from CASQA White Paper #1
Expanding Your Reach, Using Other Local Fees and Revenues
A development impact fee is a monetary exaction other than a tax or special assessment, which is charged by a local governmental agency to an applicant in connection with approval of a development project. The fee offsets some or all the cost of public facilities related to the development project.
These fees are commonly referred to as “AB 1600 requirements.” A development impact fee, by its definition, is voluntary and must be reasonably related to the cost of the service provided by the local agency. If a development impact fee does not relate to the impact created by development or exceeds the reasonable cost of providing the public service, then the fee may be declared a special tax subject to voter approval.
Stormwater quality is one potential impact of new development, which can be tied to a fee. Most new development is already subject to NPDES permit requirements for permanent controls, which mitigate many of the direct stormwater pollution impacts for a particular site. It may be difficult to demonstrate additional impacts requiring further stormwater improvements such as green infrastructure, but some municipalities have successfully implemented a stormwater impact fee to jointly support NPDES and green infrastructure needs.
League of Cities Impact Fee Summary
Moraga Stormwater Impact Fee Ordinance
Chico Stormwater Impact Fee Ordinance
Special taxes are decided by registered voters and require a two-thirds majority for approval. There are several types of special taxes, but parcel taxes on individual properties are the most common for stormwater services. Parcel taxes are levied against real property and can be flat fees, or aligned with acreage, building size, impervious surface cover, or land uses. Unlike fees, enacted taxes do not need a direct connection between the amount of the tax and the service received. As such, tax mechanisms can exempt certain types of property (e.g., public property) or owners (e.g., seniors or low income), which can be popular with voters.
Examples of parcel taxes that have been successfully implemented for stormwater services are in the cities of Culver City, Los Angeles, Santa Cruz, and Santa Monica:
Culver City Parcel Tax Experience (web page no longer exists)
Three cities with Stormwater Parcel Taxes (excerpt from Moraga Funding Options)
Other types of special taxes include sales, business license, vehicle license, utility users, and transit occupancy taxes. These types can be implemented as a general (not special) tax, requiring only a simple 50% majority for passage. But to qualify as a general tax, the tax must be pledged only for an agency’s general fund with no strings attached. Without providing a dedicated funding stream, stormwater services may compete with other general funded services such as police, fire, and parks. Although a general tax requires only a simple majority, voters tend to show better support for special taxes where the purpose of the tax is explicitly identified.
