Sustainable Storm Water Funding Task Force — Portland, ME
Date: 2011-10-18

AGENDA
 Sustainable Storm Water Funding Task Force
 October 18, 2011
 City Hall, Room 209, 12:00 PM – 2:00 PM

1. Introductions of Task Force members and meeting attendees.

2. Review and approval of the SSWFTF minutes from September 20, 2011.

3. Review of Rate Structure Recommendations
 a. Portland should use an impervious area rate methodology and charge on the basis of
 impervious area only.
 b. Portland should use a simplified charge for single family residential properties consisting
 of two to three tiers.

4. Review of Exemption Recommendations.
 a. Portland should exempt roads from the stormwater fee.
 b. Portland should not exempt public property from the stormwater fee.

5. Continued Discussion of Credits
 a. Portland should tie credits to existing design standards.
 b. Portland should cap credits at somewhere between 25%-50%.

6. Discussion of Allocating Combined Sewer Costs to the Stormwater Fee.
 a. What percentage of the combined sewer costs should be allocated to the stormwater
 fee?

7. Discussion of public outreach plan.

8. Discussion of the Date for Next Meeting: The next meeting is scheduled for November 15, 2011 or
 December 20, 2011.

9. Adjourn
 MINUTES
 Sustainable Storm Water Funding Task Force
 September 20, 2011
 City Hall, Room 209, 12:00 PM – 2:00 PM

1. Introductions of Task Force members and meeting attendees.

All members were present except for Ron Miller, Peter Gellerson, David E. Robinson, and John Cannell.
Tom Brigham came instead of Bill Bennett. Cathy Ramsdell came instead of Joe Payne. Staff present
included: Katherine Early, Mike Bobinsky, Doug Roncarati. Zach Henderson, Rich Niles, and Andy Reese,
Robin Sanders, and one person from the Cumberland County Soil and Water Conservation District also in
attendance.

2. Review and approval of the SSWFTF minutes from August 16, 2011.

Vernoneau made a motion to accept the minutes and Dillon seconded that motion. Acceptance of the
minutes passed unanimously.

3. Review of roadmap.

The group reviewed the roadmap (work plan) of what was discussed during the August meeting and
what would be discussed during this meeting. There were no comments on the road map. Andy Reese
of AMEC Environment & Infrastructure reiterated the preliminary policy recommendations that were
developed during the August meeting.

4. Review of Rate Methodology: How should the stormwater user fee be measured?
 a. Charge on the basis of impervious area only.
 b. Charge on the basis of impervious area plus total gross area.
 c. Charge on the basis of intensity of development.

As a preliminary recommendation the Task Force believes Portland should use an impervious area rate
methodology as the basis for its charge.

5. Review of Rate Structure: How should Portland charge single family residential properties?
 a. Flat rate for all residential properties.
 b. Several tiers (2-3) or more.
 c. Individually measured charges.

As a preliminary recommendation the Task Force believes Portland should use a simplified charge for
single family residential charges consisting of two or three tiers of charges if an updated housing stock
analysis warrants more than two tiers.

6. Review of Exemptions:
 a. Should Portland charge for roads?

As a preliminary recommendation the Task Force believes Portland should not charge itself for its roads
or, if further study warrants it, charge a greatly reduced fee for roadway surfaces.
 b. Should Portland charge for public property?

The group began with the discussion of policy considerations for charging Public Buildings that was not
addressed at the August meeting. Reese provided some brief statistics for Portland’s public buildings to
facilitate the discussion of whether to charge for public buildings and the associated revenue impacts.
The City’s buildings comprise 7.2% of the total impervious area, which accounts for $288,000 of the total
revenue under a stormwater utility. Reese explained that most cities do charge for public buildings and
those that do not charge must account for the revenue across the rate base, thereby increasing the fee.
Reese noted that if the City did not charge for buildings, it may be difficult to justify charging for state
and federally-owned buildings, resulting in additional lost revenue of the same rough order of
magnitude and possibly legal challenges from other building land use-types.

During discussion it was noted that the City already pays for stormwater per building or property
through their water/sewer bill and it makes sense to charge a stormwater fee for buildings and pay for
the fee through tax revenue. It was also noted that the stormwater costs are increasing significantly and
it is difficult to raise additional revenue through taxes. One member noted that not charging for public
buildings would be more consistent with the preliminary policy that was developed to not charge for
roads. Another noted that if you charged for public buildings then they could potentially reduce their
fee through credits. It was noted that the rate payers would pay roughly 14% more if the City decided
not to charge for public buildings (City, state, federal combined) and they were in favor of charging for
public buildings. A task force member noted that roads and buildings are different: everyone benefits
from roads so it makes sense to share that cost across the rate payers; not every benefits the same from
public buildings. A task force member noted that if buildings were not charged, then there was less
incentive to reduce their stormwater impact.

Votes were tallied as:
Option 1 (Charge) – 11 votes
Option 2 (Reduced Property Charge) – 0 votes
Option 3 (No Property Charge) – 0 votes
Option 4 (No Vote) – 0 votes

Preliminary Policy Recommendation: Portland should charge a stormwater fee for public buildings and
property.

7. Presentation and Discussion of Credits
 a. What private actions and investments should qualify for a credit?

Reese presented an overview of stormwater credits and explained how they are a legal “requirement”
for a user-fee system in the sense that they help to legally distinguish a tax from a fee. Reese also noted
that credits are earned and they are not an exemption or incentive; rather they are a reduction in fee
due to an ongoing private investment for a public good (i.e., reduced stormwater impact or reduced
stormwater management cost to the City). Reese presented the downsides of credits and noted that
they typically do not have a significant impact on revenue (~5%). Reese also emphasized the value of
developing credits that are simple to understand and easy to administer.

Reese explained that credits to reduce the impact from impervious areas are most often tied to design
criteria that can be reviewed and approved in the normal process of development. Examples of credit-
worthy activities might include: green roofs, on-site detention for peak flows and volume, LID practices
and BMPs to attenuate pollutants. Although the City has six stormwater design standards any of which
may be applied to an individual property, those eligible for credits could be simplified to three major
categories: basic and general, advanced and flood control. These each reflect significant investment
related to development impacts and state and local design standards.

Reese asked the group what types of credits they thought made sense and should be considered to
recognize better stormwater management at individual properties. A member asked about whether it
made sense to have enhanced credits for CSO areas since it helps address a larger problem. Others
noted that it may be challenging to differentiate between the benefit of better stormwater
management in CSO areas; additionally, the CSO objectives are driven by a different program. A
member asked whether a credit should be considered for non-CSO areas and Reese replied that it would
be more appropriate to address this in the fee structure since it is strictly associated with location and
not a private investment or action.

The group began discussing the applicability of Chapter 500 and projects that already meet this criteria
and whether they should get a credit for what they already meet or only for some measure beyond this
criteria. Members noted that the City should message the value of credits with respect to actual
stormwater impact and if sites were meeting Chapter 500, they should get some credit since they have
less impact than others. A member asked about how detailed the credits should be and how to address
older (legacy) properties. Reese noted that older properties could be addressed using a sliding scale of
credits (e.g., %) tied to design standards. A member asked about the cost for managing the credit
system, noting that cost would increase with the complexity and number of options for credits.
Members that were familiar with the Long Creek project noted that the credits for non-structural BMPs
were initially cumbersome to establish but were relatively streamlined thereafter to maintain the
system. As a follow-up to this thought, a member noted that the Long Creek program is a subwatershed
scale and a much greater effort would be required for the City.

A member asked about the impact to credits as design standards change. Reese noted that the credits
can be grandfathered or adjusted over time. A member emphasized that the credits should be
simplified and City staff noted that the administrative costs need to be considered, as well as an audit
policy to address the burden for continued compliance (i.e., inspection). Some members noted that it
would be difficult to administer a credit program for rain barrels (for example) at residential properties
and the credit would likely be relatively small.

The following policy recommendation was developed and supported by the majority of the group: The
group did not identify another kind of impact reduction credit. Portland should match credits
(associated with impervious area impact reduction) to local design criteria and Chapter 500 and develop
a program for administration of the credit system that is simple for property owners and the City. Staff
would come back with a credit proposal at the next meeting.

Reese providing examples of credits that reduce the City’s cost for stormwater management such as:
education on water quality; maintenance of larger areas and NPDES permit compliance. The City would
recognize a credit for private investment in such activities that directly mitigate costs that the City would
normally bear. Reese noted that a credit for stormwater education made the most sense since it was
the easiest to recognize and build upon existing programs in schools, for example. Reese explained that
the maintenance of larger areas could entail cleaning of public parking lots or catch basins that are
adjacent to a private facility. Reese also noted that credits for non-structural practices are not very
common.
A member agreed that a credit for stormwater education was a good idea. A member asked about the
actual number of properties that would potentially be eligible for a credit for “maintenance of larger
areas.” The airport and USM properties were discussed as the most likely properties for such a credit
and it made sense to consider credits for these properties. NPDES permitted facilities were discussed
and one member noted that these facilities already have to meet stricter stormwater requirements to
reduce pollution. However, one could argue that these facilities have a greater actual or potential
pollutant exposure and such controls are necessary to normalize the impact. A member was concerned
about the ability of the City to verify compliance with NPDES requirements and another member noted
that a credit for these facilities may encourage better compliance.

It was noted by staff that they already worked through local non-profits and governmental agencies to
provide education in many schools and that the program seemed to work well – though a shift could be
made to more school involvement.

Credits for residential activities were discussed and City staff provided the example of the residential
pilot program in the Capisic Brook watershed for “green” lawn care. Residents get trash bags for
participation in the program. Members noted that the credit(s) for residential activities needs to be
simple and it may be necessary to poll residents to gauge the types of activities that they are most
interested in participating to receive a credit. Most members felt that a one-time activity should be
recognized as an incentive and it was too difficult to administer a credit for residential activities on an
ongoing basis.

Portland might consider offering credits for stormwater education if it makes sense from the
perspective of the current education program and it was generally agreed that Portland should offer
minimal or no credit to flat-rated residential properties but rather focus on one-time incentives for
activities that support the City’s stormwater program objectives.

 b. How much of the stormwater program should be available for crediting?

Reese asked the group to consider how generous credits should be or how much of the stormwater fee
should properties be able to reduce. Although you want to encourage good behavior and private
investment in better stormwater management, most communities cap the amount of credit a property
can receive for the following reasons:
 • Some costs are fixed (e.g. billing) and would not be reduced no matter the level of credit-worthy
 structures;
 • Some costs are unrelated to impacts of new development (e.g. education) and would not be
 reduced no matter the level of credit-worthy structures;
 • Everybody shares the benefit of roads and if someone gets 100% credit their share of the
 benefit is spread to others; and
 • No matter the level of treatment no property can make itself totally impact-free and thus some
 cost accrues to developed property.

The group took a quick poll was taken. Most members spoke that the credits should not be too
generous, limiting the amount of a credit between 0% and 25%. However, as the discussion continued
and members considered what would be a more effective credit program. One member noted that the
impact to CSOs is directly tied to impervious area and the credit should be very generous (60-70%) since
it accomplishes two program objectives. However, other members cautioned that the generosity of
credits should be considered based on an evaluation of properties that would be eligible for credits and
the allocation of CSO costs to stormwater costs under a user-fee system. This would help the group
better understand the nexus between costs to the CSO program and stormwater fee reduction, thereby
allowing properties to evaluate their return on investment. A member noted that they have property in
the Long Creek watershed and they evaluated the credit that was offered for reduction of stormwater
impacts and it was much cheaper to simply pay the fee than to invest in BMP retrofits.
Overall, many members felt that the credit would have to be greater than 25% to get attention and
incentivize property owners to participate. The group was not able to fine tune the % cap without
further consideration of revenue impacts; however, voting was tallied:

 • 0-25% Cap – 2 votes
 • 25-50% Cap – 10 votes
 • No Vote – 2 votes

Preliminary Recommendation: Based on balancing consideration of equity, impact of credits, and actual
ability to reduce impacts Portland should cap credits somewhere between 25% and 50%, the final value
to be determined during detailed rate study.

8. Discussion of public outreach plan.

This item was not discussed.

9. Confirm Date for Next Meeting: The next meeting is currently scheduled for October 18, 2011

10. Adjourn
Credits and Combined Sewer Allocation
 The purpose of this handout is to summarize the recommendations of the Task Force
 on the stormwater rate structure, provide further information to assist the Task Force
 in decision making on the fiscal impact of credits on the stormwater rate, and provide
 background information to assist the Task Force in decision making on allocating
 Combined Sewer Costs to the stormwater rate.



Summary of Rate Structure Recommendations
The Task force has been looking into various aspects of the stormwater rate structure and has made comment
and recommendations including the following key inputs:
 • Portland should use an impervious area rate methodology as the basis for its charge.
 • Portland should use a simplified charge for single family residential properties consisting of two or three
 tiers.



Summary of Exemptions Recommendations

The Task force has been looking into aspects of exemptions to the stormwater fee and has made comment and
recommendations including the following key inputs:
 • Portland should not charge itself for its roads
 • Portland should charge a stormwater fee for public buildings and property.



Summary of Credit Program

The Task force has been looking into aspects of the stormwater credit program and has made preliminary
comment and preliminary recommendations including the following key inputs:
 • Portland should offer credits tied to the design standards for new and redeveloped site design.
 • Where should Portland cap allowable credits (somewhere between 25% and 50%)?


Credit Tied to the Design Standards
Should Portland tie its credits to the design standards for new and redevelopment site design and how should that
credit program be designed?
As requested by the Task Force at the September meeting, staff and the consultant refined the option to offer
credits based on meeting Portland’s stormwater design standards including the City of Portland Stormwater

October 18th, 2011 1
Management Standards and Stormwater Ordinance. As is recommended, projects that meet the General
Standard Section and the Flooding Standard Section of the Stormwater Management Standard without exception
or waiver and meet the conditions of the Stormwater Ordinance may receive a credit after demonstrating
meeting the conditions through development review and application for a credit on a regular basis. A two tier
credit is recommended as listed below with the General Standard and requirements of the ordinance forming Tier
One and the Flooding Standard forming Tier Two.
 • Tier One – Quality Standard (General Standard and Ordinance)
 • Tier Two – Quantity Standard (Flooding Standard and Ordinance)


Fiscal Impact
At what level should Portland cap credits?
In assessing the fiscal impact of offering credits based on Portland’s design standard and ordinance, some
assumptions had to be made. Based on a list of projects that have been permitted for stormwater improvements
over the past eight years, there are assumed to be 16 projects that might be eligible for an immediate credit if
those projects were to apply for a credit. The maximum potential fiscal impact of these 16 projects is
$116,000/annually under the assumption that 100% of combined sewer costs are allocated to the stormwater fee,
credits are capped at 100% (i.e. the stormwater fee is completely credited back to the property), and the projects
qualify for both tiers of credits. Under a scenario where 50% of combined sewer costs are allocated to the
stormwater fee, credits are capped at 50%, and the projects qualify for both Tiers of credits, the fiscal impact
would be $34,000. To further reduce the fiscal impact estimate, it is unlikely that all projects would be eligible for
both tiers of credits.
There are an additional 44 projects that might undertake making site improvements to get a credit; however,
additional site improvements would be necessary. The potential impact might be, under the same scenarios
above, $124,000 or $36,000, respectively.
It is a reasonable assumption that this list of projects represents those properties that might undertake
stormwater improvements because they are part way to getting the credit. And that undertaking improvements
might make them eligible for a credit and those properties might then apply for a credit. Or it could be reasonably
be assumed that the list of 60 projects is a representative list of Portland properties that might undertake
stormwater improvements and might apply for a credit. Either way, the bottom line is the fiscal impact of credits
tied to meeting design standards under combined sewer allocation and credit cap scenario on these 60 properties
is relatively minor.


Return on Investment
Estimates were made of the cost to treat one impervious acre to the required quality/quantity standard. Average
costs are in the order of $100,000 plus a small maintenance cost annually. Thus, a property that is treating one
acre of impervious area (rooftop and parking) would spend on the order to $100,000 to do so. Assuming that
100% of combined sewer costs are allocated to the stormwater fee and a 100% credit is offered, the 60 projects
reference above, if those properties were to have invested in stormwater improvements eligible for credits would
have an average 12 year simple payback on their investment. At lower allocations, (50% CSO to stormwater fee
and 50% credit cap) the simple payback of approximately 40 years.


October 18th, 2011 2
Combined Sewer Cost Allocation
How much of the Combined Sewer Costs should be allocated to stormwater?
One decision that must be made is how much, if any, CSO cost to allocate to stormwater, or put another way – to
charge it on an impervious basis instead of a water use basis.
In current rate-making practice there is no set way of doing this allocation. In fact, the vast majority of
municipalities do not allocate any CSO cost to stormwater – but this is based on (1) the fact that they have not
begun to face high CSO costs, (2) the wastewater organization does not have or control a stormwater utility, or (3)
it was felt to be far easier just to call it a sewer cost rather than attempt to charge a stormwater (or impervious)
fee above national stormwater fee norms.
Thinking on the subject can sway from one extreme (“your stormwater is in my wastewater pipe and you need to
pay”) to another (“your wastewater is in my stormwater pipe and is causing pollution – you need to pay”). For
example – the size of a conveyance pipe or the cost of building a storage tunnel is partially a stormwater cost and
partially a wastewater cost. The existence of and amount of wastewater in the system caused the problem in the
first place. But the amount of stormwater runoff is probably a larger driver for the actual size of the system once it
is admitted a system needs to be constructed to handle wastewater in stormwater runoff. In the end it might be
a 50:50 proposition.
Also in the mix is potential stormwater program cost increases not considered in this analysis due to mandated
watershed planning.
A brief analysis was done on the change of individual parcel’s combined sewer and stormwater fees beginning
with the sewer rate for 2011 ($7.87 per hundred cubic feet of water) and seeing what the transition to an
allocation of CSO cost to a new stormwater fee ($6.41 per 2,500 square feet of impervious area with no CSO
allocation) of zero through 100% allocation (the combined fee – storm and CSO could be better called a “wet
weather” fee). In this analysis by every metric an allocation of about 50% of the CSO cost to stormwater spread
the pain of a rate increase most evenly between comparatively large water users and large impervious area
owners.
All these considerations probably mean a middle ground based on some technical reasoning and practical
assessment balancing such things as: cost causation concepts, affordability, program components, etc.




October 18th, 2011 3
 DRAFT
 Five Year Average Annualized Costs (FY 2013 - FY2018)

 Capital PWD
 Operations Construction Debt Total
 Renewal Backlog Assessment
 Combined Sewer $ 3,212,855 $ 1,568,865 $ 395,200 $ 8,910,398 $ 5,625,240 CSO $ 19,712,559
 Sewer $ 1,546,036 $ 1,249,863 $ 65,157 $ 4,287,711 $ 1,988,748 Existing Debt $ 9,137,514
 Storm Water $ 1,835,572 $ 2,063,581 $ 117,476 $ 4,016,629
 Total $ 6,594,463 $ 4,882,309 $ 577,833 $ 13,198,109 $ 7,613,988 $ 32,866,702

 Notes:
 ‐ Operations ‐ 68% of sewer and combined sewer operating costs allocated to combined sewer based on total
 miles of sewer and combined sewer pipe.
 ‐ Operations ‐ 1.5% inflation rate applied
 ‐ Capital Renewal ‐ 1.5% inflation rate applied
 ‐ Backlog ‐ 30 year construction schedule @ 5.5% interest rate over 20 yr terms
 ‐ PWD Assessment ‐ 68% of Portland Water District costs allocated to combined sewer based on total miles of
 sewer and combined sewer pipe.




Sustainable Storm Water Funding Task Force Working Document 1 of 3 October 18, 2011
 DRAFT Rate Options Calculator


 Annual Rates based on Combined Sewer Allocation to Storm Water
 Sewer Only
 Units 0% 25% 50% 75% 100%
 Tiered Impervious Sewer Rate $/HCF/yr 12.54 $ 11.00 $ 9.12 $ 7.24 $ 5.37 $ 3.49
 Rates Tiered Rate $/ERU/yr $ 70.70 $ 157.44 $ 244.18 $ 330.92 $ 417.66

 Notes:
 ‐ units below in square feet unless otherwise noted.
 ‐ Roadways not included in fee calculations.
 ‐ Parcels of property less then 400 square feet no included in parcel count.
 ‐ Equivalent Residential Unit (ERU) equals 2,500 square feet.

 420,630,805 Gross Area (Parcels) 109,992,020 Impervious Area (Parcels) 2,621,930 total sewer volume (HCF)
 89,547,257 Gross Area (Roads) 55,048,171 Impervious Area (Roads) 27,842 parcels of property
 510,178,062 Gross Area (Total) 165,085,613 Impervious Area (Total) 56,814 ERUs




Sustainable Storm Water Funding Task Force Working Document 2 of 3 October 18, 2011
 DRAFT "Dow Jones" Rate Implications


 Total Sewer and Stormwater Cost
 Water Impervious Sewer Fee 0% CSO to 25% CSO to 50% CSO to 75% CSO to 100% CSO to
 Type
 (HCF/yr) Area (sf) Only Storm Water Storm Water Storm Water Storm Water Storm Water
 Airport 6,312 2,135,000 $ 79,123 $ 129,829 $ 192,043 $ 254,256 $ 316,517 $ 378,683
 Roadways ‐ 68,643 $ ‐ $ 1,980 $ 4,408 $ 6,837 $ 9,266 $ 11,695
 Apartments 12,828 37,806 $ 160,803 $ 142,282 $ 119,559 $ 96,836 $ 74,209 $ 51,389
 Auto dealer 1,536 211,130 $ 19,254 $ 22,910 $ 27,396 $ 31,882 $ 36,380 $ 40,854
 Industrial factory 110,376 379,094 $ 1,383,597 $ 1,225,254 $ 1,030,978 $ 836,702 $ 643,255 $ 448,149
 Industrial shop 120 584 $ 1,504 $ 1,391 $ 1,252 $ 1,113 $ 976 $ 836
 Industrial warehouse 156 55,007 $ 1,956 $ 3,343 $ 5,044 $ 6,746 $ 8,449 $ 10,150
 Residential 60 2,456 $ 752 $ 731 $ 705 $ 679 $ 653 $ 627
 Residential 108 5,412 $ 1,354 $ 1,400 $ 1,458 $ 1,515 $ 1,573 $ 1,629
 Residential 156 2,414 $ 1,956 $ 1,787 $ 1,581 $ 1,374 $ 1,169 $ 961
 Small business 420 5,106 $ 5,265 $ 4,834 $ 4,304 $ 3,775 $ 3,249 $ 2,717
 Charity 312 108,716 $ 3,911 $ 6,544 $ 9,774 $ 13,004 $ 16,237 $ 19,465
 City Services 192 72,882 $ 2,407 $ 4,234 $ 6,475 $ 8,716 $ 10,959 $ 13,199
 Condominium 2,124 138,689 $ 26,625 $ 27,330 $ 28,196 $ 29,061 $ 29,942 $ 30,791
 Fast food restaurant 1,092 46,162 $ 13,689 $ 13,359 $ 12,955 $ 12,550 $ 12,154 $ 11,741
 Government 828 25,141 $ 10,379 $ 9,888 $ 9,286 $ 8,684 $ 8,088 $ 7,480
 Healthcare facility 63,480 214,784 $ 795,741 $ 704,574 $ 592,718 $ 480,862 $ 369,483 $ 257,149
 Hotel 14,232 46,486 $ 178,403 $ 157,943 $ 132,841 $ 107,739 $ 82,744 $ 57,535
 Light manufacturing 84 52,739 $ 1,053 $ 2,480 $ 4,230 $ 5,980 $ 7,732 $ 9,481
 Office building 12,228 289,315 $ 153,282 $ 142,750 $ 129,829 $ 116,907 $ 104,078 $ 91,064
 Parking lot ‐ 136,614 $ ‐ $ 3,888 $ 8,659 $ 13,430 $ 18,201 $ 22,972
 Religious 228 59,512 $ 2,858 $ 4,206 $ 5,859 $ 7,512 $ 9,167 $ 10,819
 Restaurant 324 17,333 $ 4,061 $ 4,060 $ 4,058 $ 4,056 $ 4,057 $ 4,053
 School 1,452 170,404 $ 18,201 $ 20,855 $ 24,111 $ 27,367 $ 30,634 $ 33,879
 Shopping center 480 245,587 $ 6,017 $ 12,281 $ 19,966 $ 27,651 $ 35,340 $ 43,022
 Transit 708 116,383 $ 8,875 $ 11,113 $ 13,859 $ 16,605 $ 19,357 $ 22,098
 Undeveloped ‐ 43,728 $ ‐ $ 1,273 $ 2,834 $ 4,395 $ 5,957 $ 7,518
 University 5,532 268,896 $ 69,345 $ 68,506 $ 67,476 $ 66,446 $ 65,458 $ 64,387
 Utility 684 279,033 $ 8,574 $ 15,444 $ 23,874 $ 32,303 $ 40,738 $ 49,162
 Vacant ‐ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
 Vacant industrial ‐ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐




Sustainable Storm Water Funding Task Force Working Document 3 of 3 October 18, 2011
Sustainable Stormwater Funding
Task Force
  October 17th, 2011
Presentation
 1. Review Past Recommendations
 2. Credits Summary
 3. Allocation of CSO Costs
 4. Public Outreach
 5. Schedule
Presentation
 1. Review Past Recommendations
 2. Credits Summary
 3. Allocation of CSO Costs
 4. Public Outreach
 5. Schedule
Basic Rate Methodology

Preliminary Policy Recommendation #1:
Portland should use an impervious area rate
methodology as the basis for its charge.


Preliminary Policy Recommendation #2:
Private efforts and investments to reduce the
impacts of development on parcels such as
disconnection of impervious area should be
recognized and rewarded.
Residential Charges & Roads
Preliminary Policy Recommendation #3:
Portland should use a simplified charge for single family
residential charges consisting of two or three tiers of
charges if the housing stock analysis warrants more than
two tiers.

Preliminary Policy Recommendation #4:
Portland should not charge itself for its roads or, if
further study warrants it, charge a greatly reduced fee for
roadway surfaces.
Public Buildings
Preliminary Policy Recommendation #5:
Portland should charge a stormwater fee for public
buildings and property.
Presentation
 1. Review Past Recommendations
 2. Credits Summary
 3. Allocation of CSO Costs
 4. Public Outreach
 5. Schedule
Credits
Preliminary Policy Recommendation #6: Portland should match
credits to design criteria and develop a program for administration of
the credit system that is simple for property owners and the City.

Preliminary Policy Recommendation #7: Portland should offer
credits for stormwater education and stormwater activities that
reduce the City’s maintenance burden if they make sense given
current programs.

Preliminary Policy Recommendation #8: Portland should offer one-
time incentives rather than credits to residential properties for
activities that support the City’s stormwater program objectives.

Preliminary Policy Recommendation #9: Portland should cap credits
somewhere between 25% and 50%, pending further evaluation of
revenue impacts for properties that may qualify.
How should the recommended
credit program be designed?
• There are six Credit  Criteria Cost
  categories of Two kinds of activities:
  stormwater • Water Quality
  standards: basic,
 – All but flooding
  general,
 – 50-75% of available
  phosphorus,
  flooding, urban • Flooding
  impaired stream, – Quantity
  and other – 25- 50% of available
Proposing: Two Credits
• Flooding • Water Quality
  – Up to 50% of available – Up to 75% of available
 credit credit
  – Partial credit for legacy – Matches General WQ
 systems criteria
  – Must apply and have – Basic, Phosphorous
 system meeting and Urban Impaired
 criteria (past or are non-structural or
 present) rarely used
  – No credit if waived – Some flexibility
 with consideration for – No credit if waived
 coastal
 Questions?
Fiscal Impact and Capping
• City Side • Developer Side
• Current 16 parcels – BMP cost ≈ $100,000/acre
 from Long Creek data
 – Worst case: no cap, 100%
 though some costs go
 allocation: $116,000
 much higher and Long
 – Mid Case: 50% cap, 50% Creek is NOT downtown
 allocation: $34,000 Portland
• Potential 44 parcels • ROI, NPV, BE Analyses
 – Worst case: no cap, 100%
 allocation: $124,000
 – Mid Case: 50% cap, 50%
 allocation: $36,000


 Hold that thought till allocation
Presentation
 1. Review Past Recommendations
 2. Credits Summary
 3. Allocation of CSO Costs
 4. Public Outreach
 5. Schedule
This is complex
We are looking for your gut feel
We will balance:
• Science and rate making
• Political and affordability realities
• Impacts on property types
• Parcel Analysis
• The “shock and awe” of sudden change
• Return on investment
• Loser distributions
How much CSO Cost is “Stormwater”
• No standard • Cost drivers include:
  analysis yet – you pipe construction and
 maintenance,
  are breaking ground
 wastewater treatment,
• Wide flexibility storage tunnel
  – “Your sewage is in my • In the end we balance
 stormwater pipe” science, affordability,
  – “Your stormwater is in rate structure details
 my sewage pipe” and the impacts of
 change
Different Parcels Impacted Differently

 The more we allocate to stormwater the greater
 the fiscal impact to parcels with large paved lots
 and low water use and vice-versa.
 Gut Check




Monthly Fee

 Existing Charge




 Allocation
Parcel Analysis




• 13,800 parcels
• Various measures of change
Developer Investment
Negative Financial Impact on Rate Payers


 O% allocation means a lot more negative financial effects
 50% allocation means many fewer but larger financial effect
Comparison 0% and 50%
0% CSO Allocation 50% CSO Allocation
• Less shock from new • Less average impact on
  fee the totality of the
• Keeps fee within ratepayers
  national norms • Reflects the reality of a
• Is the way 99% of cities wet weather cost
  do it now causation
• Everyone has a • Allows for higher
  negative financial credits and thus a
  impact. higher ROI
 • 200 negatively impacted
 properties and a lot of
 positively impacted
 properties.
This is too hard to make a purely
logical decision so…poll your halves
Policy Question: What does your
integrated brain tell you?

 25% Allocation 50% Allocation

 2 3
0% Allocation
 75% Allocation
 1 4

 5
 Other or no vote
Should we help those most impacted?
If so, how?
 • Capping the change per year
 – i.e. <10% change/yr
 • Extending the change for some years
 – i.e. 5 year phase in
 • Providing special incentives for credit
 construction
 – i.e. Grants to construct retrofit BMPs for
 credits
Presentation
 1. Review Past Recommendations
 2. Credits Summary
 3. Allocation of CSO Costs
 4. Public Outreach
 5. Schedule
Presentation
 1. Review Past Recommendations
 2. Credits Summary
 3. Allocation of CSO Costs
 4. Public Outreach
 5. Schedule

MINUTES
 Sustainable Storm Water Funding Task Force
 October 18, 2011
 City Hall, Room 209, 12:00 PM – 2:00 PM

1. Introductions of Task Force members and meeting attendees.

All members were present except for Ron Miller, David E. Robinson, Dennis Martin, and John Cannell.
Staff present included: Doug Roncarati. Zach Henderson, Andy Reese, and Corey Sensis were also in
attendance.

2. Review and approval of the SSWFTF minutes from September 20, 2011.

Gellerson motion, Veroneau seconded, all in favor of accepting the minutes.

3. Review Task Force Tentative Policy Recommendations

Reese provided an update of the tentative policy recommendations of the Task Force to date.
 a. Portland should use an impervious area rate methodology and charge on the basis of
 impervious area only.
 b. Private efforts and investments to reduce the impact of development on parcels such as
 the planned and engineered use of disconnection of impervious area should be
 recognized and rewarded.
 c. Portland should use a simplified charge for single family residential properties consisting
 of two to three tiers.
 d. Portland should exempt roads from the stormwater fee and should allocate those costs
 across the rate base on the same basis as the rate methodology employed in
 development of individual changes.
 e. Portland should not exempt public property from the stormwater fee.
 f. Portland should tie credits to existing design standards and develop a credit program
 that is simple for property owners and the City.
 g. Portland should offer credits for stormwater education if it makes sense from the
 perspective of the current education program.
 h. Portland should offer minimal or no credits to flat‐rate residential properties, but rather
 focus on one‐time incentives for activities that support the City’s stormwater program
 objectives.
 i. Portland should cap credits at somewhere between 25%‐50% based on balancing
 considerations of equity, impact of credits, and actual ability to reduce impacts.

4. Continued Discussion of Credits

Reese reviewed recommended credit types and the overall structure. He summarized a two part credit
methodology one for water quality and one for flood control. He stressed the overall concept that would
relate criteria to program cost to credit types and amounts.

Houseal stated that as with all the recommendations it is fair to revisit anyone of the recommendations.
The Credit recommendation would be highly dependent on the outcome of the cost allocation from
combined sewer to stormwater and the Task Force may want to revisit the credit allocation again after
discussing the combined sewer allocation question.

A Task Force member asked about the potential process for application. Houseal responded that the
proposed process would be development review to meet the standard and permits issued upon
completion. Application and receipt of credit based on demonstrated receipt of applicable permits. No
credit would be issued for waiver or exemptions from the standard.
Houseal described the potential impact of the credit approach on revenue reviewing potential credit
applicants based on known sites with credit‐qualifying structures and site that might qualify with
additional site improvements. The following facts were given:
  Potentially 16 parcels currently qualifying for a credit: Worst case: no cap, 100% allocation:
 $116,000 annual credit value. Mid Case: 50% cap, 50% allocation: $34,000 annual credit value
  Additional 44 parcels that might qualify for a credit with additional site improvements. The cost
 of these improvements are unknown: Worst case: no cap, 100% allocation: $124,000 annual
 credit value. Mid Case: 50% cap, 50% allocation: $36,000 annual credit value.

Connolly asked about the impact on cost of tiering the credits. Houseal responded that the analysis that
was done was not able to determine which projects would get which credits, therefore it was assumed
the most costly credit effects (i.e. the worst case scenario and the Mid Case scenario. With a tiered
credit, the impact would be lesser still then either scenario.

Dillon asked if the costs represented in the analysis were city costs or builder costs. Reese responded
that the costs were the city costs.

Brooks stated that she was still only comfortable with the 0%‐25% credit amount.

With a growth rate of 2‐6 projects per year it is not anticipated that credit‐based revenue loss will be a
significant issue, though it was noted that all rate payers make up the difference in revenue given away
by credits. It was stressed that the City did not incur an immediate program cost reduction because
someone built a BMP or pond but that the City was investing in a better future over time.

Dillon asked if those required to construct BMPs or ponds should get a credit at all. Reese stated that
one theme in all the policy decisions was that similarly situated properties should be treated in a
consistent manner. No matter the reason a structure is built it should be treated the same way.
However this does not prohibit creating a separate standard for voluntary retrofit that was easier to
attain to encourage beneficiary stormwater detention or treatment.

A review of the incentive of a developer was done with Reese stating that BMPs cost in the range of
$100,000 per treated impervious acre. A spreadsheet model for the estimation of return on investment
was demonstrated showing that the credit capping and allocation decisions together determined the
break‐even cost for construction of BMPs on a site. The higher the fee the more credits mattered, and
the closer to a positive ROI a developer could come.

Gellerson asked if existing properties could be given a further incentive to reduce. Suslovic responded
that it was important to distinguish between credits and incentives and there was a need to balance
both with revenue loss. Suslovic stressed the importance of an incentive program.

5. Discussion of Allocating Combined Sewer Costs to the Stormwater Fee.
Reese presented the various aspects to consider when making a decision about allocation of CSO costs
to stormwater fee. The following seven topics were discussed: science and rate making, political and
affordability realities, impacts on property types, parcel analysis, the “shock and awe” of sudden change,
return on investment, distributions of costs between those that would be most negatively affected.

In current rate‐making practice there is no set way of doing this allocation. In fact, the vast majority of
municipalities do not allocate any CSO cost to stormwater – but this is based on the facts that they have
not begun to face high CSO costs, the wastewater organization does not have or control a stormwater
utility, or it was felt to be far easier just to call it a sewer cost rather than attempt to charge a
stormwater fee above national stormwater fee norms.

Thinking on the subject can sway from one extreme (“your stormwater is in my wastewater pipe and
you need to pay”) to another (“your wastewater is in my stormwater pipe and is causing pollution – you
need to pay.”). Also in the mix is potential stormwater program cost increases due to mandated
watershed planning. Reese stated that all these considerations probably mean a middle ground based
on some technical reasoning and practical assessment.

Some key points made include:
  Allocation creates “winners and losers” in the sense that a large allocation of CSO cost to
 stormwater would cause parcels with large impervious areas but little water use to have a
 higher fee, and vice versa.

  The existing sewer fee charge is $8.11 per HCF thus placing it in the middle of the range it would
 end up at if allocation varied from 0% (around $11) to 100% (around $3.50). Thus an allocation
 of over 50% to stormwater would actually reduce the current sewer rate. Does the City really
 want to decrease people’s sewer rates?

  Also, the stormwater program’s future costs for watershed planning and restoration are
 currently unknown and not figured into this analysis. But they may be large. In addition, growing
 stormwater infrastructure maintenance costs and anticipated future regulatory requirements
 could also increase the cost of the program. So a shift to stormwater fee allocation would
 reduce the perceived “headroom” for further increases in the future.

  The stormwater rate curve (see figure) is relatively steep so it reacts more to an allocation, and
 it starts at ZERO – that is, any stormwater fee is new, not an adjustment. Counterbalancing this
 is the fact that while a residence would typically have one ERU it might have a number of HCF
 charges – so an allocation to sewer, while relatively flat would have more units per month.

  An analysis of 13,800 parcels for which both sewer and impervious area data was available
 showed that a 50% allocation would impact properties the least in terms of the numbers of
 winners and losers and average change from current sewer bill. For zero percent allocation
 every parcel would experience a higher fee, though the average change would be less. For 50%
 allocation far fewer parcels would experience an increase but there would be more with a
 higher increase – that is, the burden of increased costs would fall on fewer parcels.

  There are ways to reduce the impact on a few of those properties most effected through
 capping the annual increase, extending the ramp up in their fees, or targeting incentives and
 credits. All of these methods simply spread the program costs to others in the interim. It might
 be, since analysis concentrated on five year averages that the program ramp up and the fee
 ramp up would match to some extent.

As discussed by the Task Force, reasons for a lower allocation to stormwater included: the ability to
write off water use as a business expense and the ability to better control that use, and thus the fee, a
lower fee might be easier to pass, a lower stormwater fee compares better to national norms, it can be
argued that the overflow problem is a wastewater problem.

As discussed by the Task Force, reasons for a higher allocation to stormwater included: the value of the
higher fee in break even and return‐on‐investment analysis to better incentivize the use of green
infrastructure, the overflow problem could be argued to be a stormwater problem, fewer would face a
higher total cost and the ability to reduce the impact on the fewer most affected is attractive, we might
not go through all the trouble for a small stormwater allocation – not worth the pain of a new fee, the
concept that we start to get “winners” is attractive.

The average of the voting was 36.2% allocation to stormwater and the voting tally is:
12.5% ‐ 2 votes
25% ‐ 2 votes
37.5% ‐ 2 votes
50% ‐ 3 votes
60% ‐ 1 vote

It was agreed to reconsider the overall set of recommendations at the next meeting.

6. Discussion of public outreach plan.

The public outreach plan would be prepared by the December 7 for the Task Force to digest.

7. Discussion of the Date for Next Meeting.

The next meeting is scheduled for November 15, 2011. It was discussed that there would be no
December meeting, but reconvene in January to digest the public outreach plan based on some initial
public comment, but if a December meeting was needed the Task Force would meet then.

8. Adjourn