Forming a Stormwater Utility (Part 2 of 2)Jan 24, 2019
Previously I explained what a stormwater utility is and why a town might want to form one. Now, I will explain the process a town must take to form a utility. I also include some information about already formed utilities in New England.
Forming a Stormwater Utility
In 2008, the New Hampshire legislature authorized stormwater utilities and created the process for forming them. See RSA 149-I. The first step a municipality must take to establish a stormwater utility is to obtain a majority vote of the legislative body of that municipality. Multiple towns can even collaborate to form a single utility, so long as all towns’ legislative bodies authorize the utility.
Once the utility is authorized, the utility has to decide the criteria for assessing the stormwater impact fee. Under the law, the criteria must be based on total impervious area, calculated lot runoff, total lot area, or some other land use classification developed for the assessment of the stormwater feed. Most utilities use a property’s impervious area. Impervious area includes all parking lots, roofs, or other areas that prevent the rainwater from infiltrating into the ground.
Then, based on those criteria, the municipality will quantify the assessment criteria for an equivalent residential unit, or ERU. The ERU is the basis for assessing the utility fees. Single-family residences would be charged for one ERU, but commercial, government, and non-profit properties would be subject to fee structures based on the proportional property-specific criteria above a single ERU. For example if a town calculated an ERU to be 1,000 square feet of impervious cover, a commercial property with 2,000 square feet of impervious cover would be charged the value of two ERUs. The municipality would then set the cost per billing period (typically monthly or quarterly) based on the budgeted costs. Nationally and in New England, a utility has an average monthly cost per ERU of under $5.00.
Finally, the stormwater utility must also offer credits or fee abatements for those property owners that implement stormwater best management practices. The utility sets the design standards for determining the magnitude of those credits based on the benefits to either on-site impacts to water quality or peak runoff storage. As a result, just like a lower water bill promotes economic incentives for water conservation, the stormwater utility can also promote stormwater best management practices. Large commercial or industrial properties, particularly, can use this incentive to simultaneously reduce their costs under a utility and benefit the environment.
Stormwater Utilities in New Hampshire and New England
Currently, no towns or cities in New Hampshire have implemented a stormwater utility. Shortly after the legislation passed, a number of large cities, including Manchester, Dover, Nashua, and Portsmouth, completed feasibility studies using grant money from the New Hampshire Department of Environmental Services (DES). The final reports for those studies are available on the DES website. But none of these cities have implemented a stormwater utility.
That’s not to say that stormwater utilities are not practical in New England. There are examples in each of our neighboring states: Massachusetts, Vermont, and Maine. According to a 2016 survey of U.S. stormwater utilities by Western Kentucky University, 15 New England communities had implemented a stormwater utility (Massachusetts: 7, Maine: 5, Vermont: 3). Other towns have been considering implementing one as well, and earlier this year, New London became the first utility in Connecticut, which will be implemented starting on January 1, 2019. These different utilities have annual revenues that range from $400,000 in Reading, MA to $4.6 million in Fall River, MA.
A stormwater utility is a dedicated funding source that can be adapted to fit a municipality’s stormwater needs. As towns are implementing new measures to comply with the new MS4 permits, this is a good time to consider how to pay for those measures and whether a stormwater utility is a viable option in your town. Or, for private companies in towns that are considering a utility, it is important to understand how stormwater measures can reduce the stormwater impact fees a company pays under the utility.
About the Author: Nat Morse