HomeMy WebLinkAbout8.d. Storm Water Utility UpdateCITY OF ROSEMOUNT
EXECUTIVE SUMMARY FOR ACTION
CITY COUNCIL MEETING DATE: APRIL 2, 1991
AGENDA ITEM: STORMWATER UTILITY UPDATE
AGENDA SECTION:
AMINISTRATOR'S REPORT
PREPARED BY: STEPHAN JILK, CITY ADMINISTRATOR
AGENDA
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ATTACHMENTS: MEMO,
APPRC'(VED BY:
DRAFT 3 OF STORMWATER UTILITY
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This item is on the agenda for review and discusion to update you on the
progress of the work being done on establishing the Stormwater Utility.
RECOMMENDED ACTION:
None at this time.
COUNCIL ACTION:
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P.O. BOX 510
2875 -145TH ST W.
ROSEMOUNT. MINNESOTA 55068
612-423-4411
TO: Mayor Napper
Council Members Klassen, Oxborough, Willcox, Wippermann
f9
FROM: Stephan Jilk, City Administrator,"
DATE: March 29, 1991
RE: Stormwater Utility Update
Attached please find the Third Draft of the proposed Stormwater Utility
for the City of Rosemount.
This draft was presented to and was discussed by the Utilities commission
at a special meeting they held on March 25, 1991.
The direction given to staff following this meeting was to draft the
preliminary operating budget, the first 5 year CIB (Capital Improvement
Budget) and information relative to how the funding and expenditures would
actually work if implemented. That is, an example that the Commission
could review showing just how projects and operation and maintenance would
effect the rates and how they were used to determine the proposed rates.
I will expand on the draft as presented, for your information.
I would also suggest that by your first meeting in May this document should
be presented in its final proposed form to you.
Following a discussion and consideration by you the next step will be a
public information process including a public meeting and a public hearing.
We would hope to adopt the plan no later than mid-June.
Rosemount Public Works Department
Financing Stormwater Projects
Using a Surface Water Management Utility
Preliminary Report
March 25, 1991
Rosemount Public Works Department
Financing Stormwater Projects
Using a Surface Water Management Utility
Preliminary Report
March 25, 1991
Barr
Engineefing Company
7803 Glenroy Road
Bloomington, MN 55439
(612) 830-0555
Table of Contents
Section1: Summary ............................................. 1
Section 2: Introduction ........................................... 3
What Is a Surface Water Management Utility? ........................ 3
How Will the Utility Benefit the Community? ........................ 4
The Financing Dilemma ........................................ 4
Selecting the Best Funding Option ............................... 7
Section 3: Fee Basis .............................................. 8
Philosophy.................................................. 8
Just In Time (JIT) Management .................................. 9
Determining the Portion of the Surface Water Management Fee
Directly Related to the Degree of Service ....... 12
Determining the Portion of the Surface Water Utility Fee
Directly Related to Stormwater Runoff Volumes and Rates ............... 12
Section 4: Capital Improvements Budget (CIB) and Cost Recovery .......... 15
5-YearCIB............................................... 16
Typical Charges ............................................ 16
Cost Comparison ............................................ 17
Credits................................................... 17
Exemptions............................................... 18
Section 5: Administration ...................................... 19
Section 6: Model Ordinance ...................................... 20
Section 7: Rosemount's Surface Water Management Utility Policy .......... 24
Policy Statement ............................................ 24
Fee Basis for Each Parcel ...................................... 27
Adjustment of Fees .......................................... 28
Section 8: Public Information and Education Program ................... 30
References.................................................... 31
2319125/FS WP.RPT/KL.H
Section 1: Summary
Paying for stormwater drainage projects has become more complex in recent years.
Additionally, the costs for operations and maintenance, water quality management, and wetland
protection continue to rise.
Special assessments against benefitted properties have traditionally financed most of the
necessary improvements, but those assessments are being challenged in court more often. For
example, benefits are difficult to demonstrate for properties on high ground, and assessment
hearings can create irreconcilable differences between neighbors. Conventional methods of
financing surface water improvements through City general funds are also becoming less feasible
(Krempel, 1988). Consequently, many communities lack the proper funding to undertake water -
related projects.
In response, many communities are now paying for stormwater projects with user or utility
charges similar to those that finance sanitary sewer and water main programs (Jouseau, 1983).
This utility approach is gaining recognition as the most equitable way to finance stormwater
projects (Honchell, 1986).
This report is intended to provide guidance to Rosemount City representatives and citizens
for understanding and implementing a surface water management utility. The report defines what
a utility is, how it benefits the City, and how it is implemented.
Why Consider a Utility? (Kremael, 1988)
A. Fairness
Charges are based on how much the property contributes to the problem.
B. Dependability
A utility produces consistent funding and is more easily projectable.
Page I
C. Dedicated Funds
These funds can be used only to finance projects related to surface water
management.
D. Unrestricted Use of Funds
Funds can be used for any type of administrative, planning, engineering,
maintenance, construction or other uses associated with drainage system operation,
water quality, and wetland protection.
E. Legal Defensibility
Special assessment projects are being challenged more often in courts; for example,
benefits are difficult to demonstrate for high ground properties that drain
downstream. The surface water utility limits legal challenges by not having to
consider the market value increase of property. By implementing the utility, the
need for public assessment hearings and lengthy assessment proceedings can be
avoided for many projects.
F. Tax Levy Reduction
Because municipalities are no longer funding these activities with tax -supported
general funds, tax levies can be reduced or applied elsewhere.
G. Simplicity and Flexibility
Forming a surface water utility is not difficult. Typical activities are securing City
approval, developing a charge system, explaining the system to the public, and
adding an extra line on utility bills. In addition, the fee system is adaptable to local
situations.
H. Financing of Replacement Facilities
Stormwater drainage facilities deteriorate over a relatively long period of time (25-
100 years). Therefore, most cities have not considered or planned for replacing
facilities when they do deteriorate. Storm sewer facilities are also replaced during
redevelopment. Presently all over the metropolitan area, storm sewer systems are
being replaced in older parts of town where less affluent and elderly people often
live, and storm sewer assessments can be devastating for the residents and businesses
in those areas. Through a utility, a city can plan and budget for system replacements
while the residents and businesses can budget for the small quarterly payments.
Page 2
Section 2: Introduction
What Is a Surface Water Management Utility?
The utility is based on the premise "users pay' (Honchell, 1986). The "utility fee" or "user
charge" is like sanitary sewer and water utilities operated by communities. A utility fee is a
service charge used to finance the City's drainage system and projects and related expenses to
control or improve water quantity and water quality. It is also used to fund the operations and
maintenance activities associated with surface water.
A quarterly fee is typically charged against all contributing parcels within the City. The
fee is based on how much water the parcel of land contributes to the stormwater drainage system
and/or the level of service provided to that parcel.
For example, where land is undeveloped, much of the rain soaks into the ground or drains
to small depressions. Where development is prevalent, impervious surfaces like rooftops,
driveways, and parking lots prevent rainfall from soaking in, and the rain runs off into street
gutters, ditches, sewers, ponds, and lakes. This increased runoff impacts (1) the sizing of storm
drainage facilities, and (2) the quality of water downstream. Therefore, developed property
should pay more for the storm drainage system and water quality improvement projects.
The user charge is not associated in any way with property value or property taxes. All
properties are subject to the utility charges, including tax-exempt parcels and City -owned lands.
Operation and maintenance of storm drainage facilities requires more and more tax money.
A surface water utility provides the means to handle increasing costs by having the users of the
drainage facilities pay. This consistent and dependable revenue source helps manage the storm
drainage system without increasing property taxes or using controversial assessments.
Page 3
How Will the Utility Benefit the Community?
The utility provides a dedicated fund for surface water management activities, including
planning, inventories, capital expenditures, personnel, equipment, and utility administration.
The utility provides a continuous source of revenue for surface water management without
competing with the general fund. In fact, with the utility in place, the tax levy that supports the
general fund can be reduced or applied elsewhere. Also, as described on the previous page, the
overall cost of individual projects is significantly reduced because (1) extensive and expensive
assessment rolls do not have to be prepared, and (2) the number and potential for legal challenges
are significantly reduced. The benefits of a surface water utility include:
• Reduced costs
• Flood control
• Drainage system maintenance
• Better surface water quality
• Enhanced recreational opportunities
• Wetland protection
• Erosion and sediment control
• Community education
The Financing Dilemma
Paying for stormwater management projects has become more complex in recent years.
In the past, special assessments against benefitted properties financed most of the necessary
improvements. However, with recent legislation, the financial options have broadened
considerably. The question is, which method best suits the needs of Rosemount?
There are several funding sources besides a surface water management utility (or user
charge). Described next are these major funding sources:
1. Ad Valorem Taxes
2. Special Assessments
3. Building Permits, Land Development Fees, and Land Exaction
4. User Charges
5. Grants
6. Cost Sharing
Page 4
1. Ad Valorem Taxes
a. General Taxes
General taxation is the most common revenue source used to finance government
services, including minor maintenance for drainage and water quality facilities.
Using property tax has the effect of spreading the cost over the entire tax base of the
community.
The State legislature has made this avenue very difficult with the levy limit
requirements. Therefore, to fund projects that exceed general tax limits, a bond
referendum would have to be passed. This process can be very time-consuming and
expensive.
b. Special Tax District (M.S. 473.875 to 473.883)
The tax district is similar to the administrative structure under general taxation
except that all or part of the community may be placed in the tax district. The
principle is to better correlate improvement costs to benefitted or contributing
properties.
2. Special Assessment (M.S. 429)
Special assessments are used to finance special services ranging from sidewalk maintenance
to construction of capital improvements. The assessments are levied against properties benefitting
from the special services. The philosophy of this method is that the benefitted properties pay in
relation to benefits received. In this case, the benefit is the increase in the market value of the
properties.
The disadvantage of this method is that it is difficult to determine and defend benefit.
3. Building Permits, Land Development Fees, and Land Exaction
As land is developed or built upon, stormwater runoff and pollution loading increase.
Administrative and capital costs can be recovered at the time of building permit issuance or land
development approval. A city can require dedication of land for ponding or drainage purposes.
The land, however, must be part of the parcel being developed
The disadvantage of this method is cash flow. Expenses are incurred up -front while
revenue comes in based on development rate.
Page 5
4. User Charges (M.S. 444.075)
User charges, such as those developed through a surface water utility fee, are a mechanism
by which a city can generate funds through billings similar to water and sewer billings. The
principle of this method is to charge for services rendered to properties generating runoff, as well
as for services to properties protected from the effects of runoff, without considering an increase
in market value of the property.
5. Grants
State grants are available for surface water management and non -point source pollution.
It is generally not good financial practice to rely on grants for a service program. This source
of revenue is not dependable and requires constant speculation as to its availability. Grants are
useful but should be used only to supplement a planned local revenue source.
a. Minnesota Pollution Control Auncy (MPCA)
Previously, the MPCA had federal matching funds for preserving and protecting
lakes and for enhancing their public use and enjoyment, under the Federal Clean
Lakes Program. MPCA is optimistic that funding will continue to be available.
Currently, MPCA is involved in the State Clean Water Partnership (CWP) Program.
The CWP provides matching funds for lake improvement projects and non -point
source pollution reduction. There is a great deal of competition for the available
CWP dollars.
b. Minnesota Department of Natural Resources (MDNR)
The MDNR has available funding through its Flood Hazard Mitigation Grant
Assistance Program. The program provides financial support for planning and
implementing structural and non-structural flood damage reduction measures. The
program includes matching funds through either a general fund or a bonded fund.
C. Minnesota State Board of Water and Soil Resources
This board has limited matching funds available for erosion control projects. Most
often these monies are administered through the county Soil and Water Conservation
District.
Page 6
6. Cost Sharing
Certain studies and projects, from time to time, benefit or are consistent with other
government agency needs, such as drainage improvements between two municipalities. A project
might also benefit the county in which it lies, and may also be consistent with state or federal
needs. A project that might not be possible for one municipality to undertake may be possible
by "cost sharing" with other affected government bodies. Cost sharing reduces the amount of
funds the City has to raise for the project, but the City still has to use one of the five other
funding sources to finance its portion.
Selecting the Best Funding Option
In evaluating funding options, we should consider the following criteria:
Fairness 0 Simplicity
Dependability 0 Burden
Legal Defensibility 9 Flexibility
The surface water management utility or user charge method is preferred because it meets
these criteria:
1. Fees are assessed against properties based on the properties' contribution of runoff
and/or the degree of service provided.
2. The utility represents a steady and reliable source of revenue.
3. The utility significantly reduces the potential for legal challenges to assessments, as
was frequently the case when special assessments were levied against properties.
The utility also eliminates the need to demonstrate benefit or fair market increase for
properties within a project area.
4. The simplicity of the utility makes this financing method attractive, and gaining
approval and public support is much easier. Adding an additional charge to existing
utility billings is a simple process (Honchell, 1986). The quarterly charge is an
approach that generally meets with more public acceptance than a one-time charge,
mainly because it is easier for individuals to finance and plan for.
5. Last, the utility is flexible, making it easier to finance and administer projects.
Page 7
Section 3: Fee Basis
Philosophy
The general philosophy behind the surface water utility program is simple -- contributors
and users pay (Jouseau, 1983). To develop a fee basis that is fair to all properties, the City must
determine which properties pay what amounts. Therefore, the utility fee for a particular parcel
should be based on that parcel's contribution to the drainage system needs and the degree of
drainage -related services the City must provide.
There are many items that must be considered when analyzing the costs associated with
the City's drainage system needs and the drainage -related services the City must provide. These
items can generally be grouped under two main categories: (1) construction -related costs, and
(2) system operations and maintenance costs. The following is a list of items to be considered
when determining costs associated with these two categories:
1. Construction -Related Costs
• Development of comprehensive plans
• Preparation of plans and specifications
• Public information meetings and hearings
• Project financing
• Physical construction
- water quality projects
- water quality projects
• Special state or federal requirements
• Administration
Legal
Page 8
2. Operations and Maintenance Costs
• Staff requirements
• Equipment and supplies needed
• Types and amount of facility repairs
• Type and amount of system maintenance
Just In Time (JIT) Management
The City of Rosemount is quite different from most other cities in the metropolitan area
that have created or are considering a surface water utility to finance system needs.
First, Rosemount does not have a large population base from which to draw fees. Second,
it is largely undeveloped; creating a surface water utility is less difficult for cities that are
approaching development saturation and have virtually all of their storm drainage facilities in-
place. Third, projections for Rosemount's rate of growth vary drastically. Some project the City
to have mild steady growth, while others project very rapid growth. These three factors
combined with the numerous cost items to be considered (outlined above) make creating a
surface water utility a complex task.
The rate at which the City will ultimately grow depends on many factors, including:
1. U.S. and global economic conditions
2. Job and population demographics
3. Proximity to regional developments (e.g., airports, freeways, major shopping centers)
4. Taxes and fees
The planning problems the City faces with this highly uncertain growth climate are exactly
those faced by virtually every business today. When placed in this situation, the most successful
management technique most businesses have adopted is called "JUST IN TIlVIE" (JIT)
management.
In essence JIT management for a manufacturer says, "Provide the supplies and resources
to manufacturing just in time for them to be used by manufacturing to meet the market demand."
If these supplies and resources are provided too far in advance of the need and the economic
climatic changes to dry up the market demand, a company can be caught holding too much
inventory with significant financial repercussions. Similar financial repercussions can also be felt
by companies if supplies and resources are not supplied fast enough. Therefore, JIT management
is essential for business.
Page 9
JIT management is equally essential for the City of Rosemount. If the City constructs
projects in an undeveloped area before developments are proposed, it might not construct the
facilities in the appropriate location, and it might spend funds unwisely. Also, if the City does
not have funds available when needed, the costs to fund facilities can be significantly higher.
JIT management is the appropriate management technique to be used.
In fact, the City is instituting JIT management by creating two funding programs for its
drainage system needs and the drainage -related services it must provide. These two funding
programs are for its core facilities. They are:
1. Connection Charge Program
2. Surface Water Utility Program
The following is a description of how the two programs will work together to provide the
funds the City will need by incorporating JIT management.
1. Connection Charge Program
By developing its comprehensive stormwater management plan, the City generally knows
what facilities will be needed in the future. However, the City does not know when it will need
to provide these facilities. Also, to determine what facilities the City will need, the City had to
prepare an anticipated ultimate development. For planning purposes, the City makes an educated
guess about its drainage needs, but it does not know for certain the precise size, location and cost
of its facilities.
It is not until a development is proposed and the City has sufficient assurances that it will
be developed in a specific fashion, that the City knows where and when to construct a component
of its core facilities. Therefore, to obtain the majority of the necessary funds for constructing
core facilities when funds are needed, the City has established a one-time connection charge for
each parcel within a development. This charge is intended to cover the construction and
engineering associated with each development.
However, a problem arises here. The City must construct the core facilities for a
development as part of that development's initial site grading. A connection charge is not
instituted until construction on an individual parcel begins. Therefore, the funds generated from
"connection charges" are always somewhat after -the -fact. It may also take several years for all
the parcels within a development to be developed. The City has a problem --it must fund and
build a project for which connection charges will not provide the pay-off until all the parcels are
developed. This is how the second program ("the surface water utility') comes into play. It
provides the means to initially finance a project. The connection charges are then used to pay
back the surface water utility fund.
Page 10
2. Surface Water Utility Program
As described above, the surface water utility fund is a means to finance construction
projects until funds from connection charges can be generated to pay the project bills. This is
only one of the many ways the City will use the revenues generated by a surface water utility.
These are seven possible uses:
1. Finance construction projects (which will ultimately be paid by connection charges)
2. Fund the development of the City's Comprehensive Stormwater Management Plan
3. Fund water quality improvement projects
4. Fund facility replacement projects when facilities deteriorate or when the City
redevelops
5. Fund legal and easement costs
6. Cover costs of administering the fund
7. Fund system operations and maintenance
A cost or "budget" can be estimated for each of these seven possible fund uses. When
grouped and totaled, the sum of these individual budgets is often called a "Capital Improvements
Budget" or CIB. For planning purposes, a long-range CIB is usually prepared. A 5 -year
planning period is commonly used, and a 5 -year CIB is prepared for that period. Once a 5 -year
CIB is prepared, fees to be charged to provide the CM funds can be determined.
The "seven possible uses" that comprise the 5 -year CIB are separated based on two
determining factors: (1) degree of service, and (2) runoff volume and rate. Some of the possible
uses are directly related to the quantity and rate of stormwater runoff, while others are related
to other factors and issues.
As stated at the beginning of this section, the general philosophy behind the surface water
utility program is simple --contributors and users pay. Therefore, if moneys in the utility fund
are to be used for projects where stormwater runoff quantities and rates are directly related to the
project costs, the portion of the utility fee that generates funds for that project should be related
to the contributing runoff quantities and rates.
Similarly, where factors other than runoff quantities and rates dictate how items in the CIB
are developed, contributors should pay for those items to their level of contribution. An example
is determining what portion of the "Operations and Maintenance' (O&M) portion of the 5 -year
013 should be paid by agricultural land. O&M work in those areas historically involves
occasional periodic cleaning of culverts and removal of ditch sediment. O&M work in other
areas might involve street sweeping, pumping water from basins when levels become too high,
and removing basin sediments. If the O&M costs were spread over the City based on
proportional runoff rates and volumes, owners of agricultural land would pay a disproportionately
high rate to the level of service in return. In this case, the "degree of service" should dictate the
fee rate and not the amount of stormwater runoff.
Page 11
All of the possible uses listed above are directly related to runoff volumes except for
number 7, which is directly related to "degree of service." Therefore, to prepare a utility fee that
combines the budgets for the seven uses, the uses must first be grouped by determining factor:
either (1) degree of service or (2) runoff volume and rate. A "partial utility fee" for each of these
two categories can then be determined for each parcel within the City. The two partial utility
fees can then be added to determine the "utility fee" for each parcel. The next two subsections
explain how to determine fees in this manner.
Determining the Portion of the Surface Water Utility Fee
Directly Related to Degree of Service
This is relatively simple. First, the budget is estimated. This budget is then proportioned
by the land use based on the portion of the budget anticipated to serve that land use. This is
called the "degree of service" for each land use. The partial utility fee for each land use is then
determined by dividing the "degree of service" by the total number of acres within the land use.
Determining the Portion of the Surface Water Utility Fee
Directly Related to Stormwater Runoff Volumes and Rates
Determining this portion of the fee is more complex so the remainder of this section is
devoted to this issue. There are many factors that must be considered to determine contribution,
such as:
1. The amount of rainfall
2. The area of hard or impervious surfaces (e.g., buildings and pavement)
3. The area of pervious surfaces (e.g., grass, gardens, fields, bare ground)
4. The slope of the land
For example, an area developed as single-family residential generally has less runoff than
an industrial area of equal size. Therefore, an industrial area contributes more runoff and
requires more system capacity than a single-family residential area of equal size.
Rosemount's Drainage Plan calls for the drainage systems to be designed for the 100 -year
storm. This means the combination of storm sewers, streets, overland drainageways, and
stormwater detention ponds work together to provide 100 -year capacities. Rosemount's storm
Page 12
sewers are designed to pass the 10 -year storm, so flows in excess of that storm are controlled by
stormwater detention basins.
By far, the largest cost in the storm drainage system is the construction and maintenance
of storm sewers. The cost of the basins is generally secondary to the cost of storm sewers since
the basins are usually planned where there are lakes, ponds, and other natural depressions. Often
there is virtually no cost for basin construction. Also, land or easement costs for many of the
basins are not high because these areas are often dedicated for ponding by developers to meet
density, green space, or parkland requirements.
Because most system costs are a result of a 10 -year storm design, the utility fee for a
parcel should therefore be based on its 10 -year storm event runoff. For the Rosemount area, the
critical 10 -year storm is a 2.1 -inch rainfall in a 1 -hour period (U.S. Department of Commerce,
1961).
Not all of the 2.1 -inch rainfall runs off the land and drains to the storm sewers. Some of
the rainfall is intercepted by trees, plants, buildings, etc. Some is pooled in minor depressions,
some infiltrates into the ground, some evaporates, and some is used by plants for growth.
Besides the amount of rainfall, the amount of precipitation that actually runs off the land is
directly related to these four parameters:
1. The Area of Impervious Surfaces
This is the area covered by streets, sidewalks, parking lots, buildings, and other impervious
surfaces. The greater the impervious area the more runoff. For example, there is usually
more runoff from an industrial area than from a single-family residential area of the same
size.
2. The Area of Pervious Surfaces
Pervious surfaces are lands that allow water to infiltrate into the ground. These include
bare ground, grassed yards, croplands, boulevard areas, parklands, ballfields, and
greenspace areas. Because of rainfall infiltration, there is less surface runoff from pervious
land than from impervious land
3. The Infiltration Rate of Pervious Surfaces
Pervious surfaces vary in how quickly they allow rain to infiltrate. For example, sandy
soils have a much higher infiltration rate than silty or clayey soils. (The shallow or surface
soils in the Rosemount area tend to be very sandy.)
Page 13
4. The Slope of the Land
Water flow velocities are higher on steep slopes than flat slopes. Therefore, rain falling
on steep slopes will result in higher rates and volumes of runoff than on flatter slopes of
a same size area.
The City's Drainage Plan was prepared using the Barr Engineering Co. Watershed Model,
which considers the effects of each of these parameters for each type of land use. The following
chart presents a comparison of 10 -year runoff amounts for various land uses in Rosemount.
Land Use
Description
Runoff
Volume
(inches)
Ratio**
RR
Rural Residential
0.83
0.86
RL, R-1, R-2
Single -Family Residential
0.97
1.00
R-3, R-4
Apartments
1.20
1.24
C-1, C-2, C-3, C-4
Commercial
1.50
1.55
IP, IG
Industrial
1.64
1.69
AG
Agricultural (Zoned)
0.53
0.55
U
Undeveloped
0.53
0.55
P
Churches, Schools, Hospitals,
Government Buildings
1.20
1.24
PK*
Parks, Golf Courses, Cemeteries
0.67
0.69
PL*
Parking Lots
1.64
1.69
* Not presently a zoning designation.
** The ratios in the column are the ratio of the runoff for a land use divided by the
runoff for the single-family land use; e.g., Rural Residential = .83/.97 = .86.
Given the philosophy that "contributors pay," it is then logical that utility fees for
properties should be based on how much these properties affect the system sizing. Therefore,
this portion of the fee that is directly related to runoff volumes and rates should be a function
of the land use and the amount of drainage area within that land use. The ratios shown in the
chart provide a relative weighting for land uses affecting system design in Rosemount. Again,
this is based on the design storm, a 2.1 -inch, 10 -year frequency, 1 -hour duration, rainfall event.
Page 14
Section 4: Capital Improvements Budget (C1B)
and Cost Recovery
As discussed in Section 3, a 5 -year budget is determined for each of seven uses slated to
be funded by the surface water utility fund. These budgets are then grouped according to one
of two determining factors: (1) degree of service or (2) stormwater runoff volume and rate. For
fund administration purposes, these seven uses are further subdivided and three accounts created.
The following is a detailed listing of costs to be funded by the three accounts.
Stormwater Runoff Volume and Rate Items
Account #1: Construction
• Finance projects to be constructed before connection charge funds are available;
revenues from connection charges are deposited in this account
Account #2: Contingency
• Fund portions of projects not paid back by connection charges, such as easements,
legal costs, and finance costs
• Fund water quality projects
• Fund projects to replace drainage facilities as they deteriorate
Degree of Service Items
Account #3: Operations and Maintenance (O&M)
• Fund maintenance and repair of facilities
• Pay for street sweeping
• Pay O&M personnel
• Pay for equipment and supplies
The utility will not eliminate contributions from new developments. All new plats will
continue to pay for or provide their own stormwater management features. New development
will also continue to pay connection charges.
Page 15
5 -Year CIB
The following table is the estimated 5 -year CIB broken down by account:
Account #1: Construction $ 632,500
Account #2: Contingency 1,512,600
Account #3: Operations and Maintenance 772,500
TOTAL $2,917,600
Typical Charges
To determine typical charges for different properties, the estimated expenditures for the 5 -
year CIB are apportioned according to (1) the percentage of total runoff and/or (2) the degree of
service attributed to that property type. This table shows the calculated charge per acre per
quarter to recover the 5 -year CIB above. This rate applies for the years 1991 and 1992.
Land Use Description Charge
RR
Rural Residential
RL, R-1, R-2
Single -Family Residential
R-3, R-4
Apartments
C-1, C-2, C-3, C-4
Commercial
IP, IG
Industrial
P
Churches, Schools, Hospitals,
Government Buildings
PK
Parks, Golf Courses, Cemeteries
PL
Parking Lots
AG
Agricultural (Zoned)
U
Undeveloped
$4.48*Y—
$ 16.90
$ 20.96
$ 26.20
$ 28.57
$ 20.96
$ 11.66
$ 28.57
$ 0.50*
$ 0.50*
* This land use pays only for contributing portion of Account #3 (Operations and
Maintenance) of the 5 -year CIB. See "exemptions and fixed rates" discussion on the first
page of Section 7 of this document.
Page 16
Cost Comparison
Several metropolitan communities have established surface water utility rates. The
following table compares proposed Rosemount quarterly rates with other community rates.
`This rate is per residential lot per quarter
"This rate is per acre per quarter
When comparing rates with other communities, it is important to recognize that the actual
rates are dependent on the required quarterly revenue, the established City policy regarding which
property should pay what amount, and the philosophy used for the basis of rate setting.
Therefore, rates should be established that are acceptable and will result in the appropriate level
of funding.
Credits
Credits may be applied for to reduce the utility fee for individual parcels. Credits are
available:
1. Where runoff is retained on a single parcel
2. When an individual has inadequate income to pay the fee
Page 17
Single -Family
Residential!
Commercial"
Industrial"
Rosemount
5.63
26.20
28.57
Richfield
4.35
108.75
108.75
Eagan
4.56
21.84
21.84
Roseville
4.38
66.30
66.30
Apple Valley
' &' 5
65.50
65.50
`This rate is per residential lot per quarter
"This rate is per acre per quarter
When comparing rates with other communities, it is important to recognize that the actual
rates are dependent on the required quarterly revenue, the established City policy regarding which
property should pay what amount, and the philosophy used for the basis of rate setting.
Therefore, rates should be established that are acceptable and will result in the appropriate level
of funding.
Credits
Credits may be applied for to reduce the utility fee for individual parcels. Credits are
available:
1. Where runoff is retained on a single parcel
2. When an individual has inadequate income to pay the fee
Page 17
3. Where a qualified conservation program (agricultural) is implemented
4. Over the area of a parcel occupied by a "wet pond"
A "wet pond" is defined as a pond or inundation area that can store standing water below
the elevation of the outlet pipe or where the water would overflow when there is no outlet pipe.
Wet ponds have been documented as a benefit to surface water and groundwater systems because
they serve as sediment and nutrient traps. Where a "wet pond" is established, the utility fee
credit should be applied only to the area occupied by the "wet pond."
There should be no credit given for a "dry pond." A "dry pond" is defined as a pond or
inundation area that cannot store standing water below the elevation of the outlet pipe or where
the water would overflow when there is no outlet pipe. The utility fee for the area occupied by
dry ponds should be the same as for undeveloped property.
All credits should be evaluated by a staff committee and the City Council will hear all
appeals of utility charges. Procedures for receiving credits and appealing charges should be
established by City policy.
Exemptions
These are lands that should be exempt from utility fees:
1. Areas occupied by City, County, and State street and highway rights-of-way
2. Non -income producing City -owned parcels
3. Lakes
4. Landlocked basins
A landlocked basin is a basin that is (1) designated as such in the City's Stormwater
Management Plan or (2) determined to be "landlocked" by a majority vote of the City Council.
Page 18
Section 5: Administration
Administering the surface water management utility will require these phases:
Phase 1: Draft of a final ordinance to provide the legal basis of implementation of
the utility.
Phase 2: Establishment of the individual property charges based on acreage, land
use, and the rate as established by ordinance.
Phase 3: Modification of the current billing procedure.
Phase 4: Creation of an account into which utility funds would be paid, and from
which revenues can be made available for City -approved expenditures.
Phase 5: Identification of the administration process of the surface water
management utility, including:
a. Identification of the administrator.
b. Establishment of a surface water utility capital improvements
program (CIP) and a surface water utility capital improvements
budget (CIB) for which recovery of costs are obtained through the
utility. The CIP may include both water quantity and water quality
projects.
C. Establishment of the process for changing rates on parcels based on
land use changes.
d. Creation of the initial billing roll.
A major effort in administering the utility will be to expand the billing process to include
properties that do not currently receive City water and sewer service.
Implementation of the utility should closely follow the ordinance and adoption of City
policy regarding the utility. The utility would take effect in , 1991, with fees
payable as part of the first utility billing cycle.
Page 19
Section 6: Model Ordinance
(Surface Water Utility Ordinance)
00. Surface Water Management Utility
00.010. General Operation. The City surface water system shall be operated as a public
utility (hereinafter called the surface water management utility), pursuant to Minnesota Statute
Section 444.075, from which revenues will be derived subject to the provisions of this Chapter
and Minnesota Statutes.
00.0020. Definitions.
Utility Factor. The utility factor is defined as the ratio of runoff volume (in inches) for a
particular land use, to the runoff volume (in inches) for an RL, R-1, or R-2 residential lot. This
runoff volume is based on 2.1 -inch, 10 -year frequency, 1 -hour duration rainfall and the Barr
Engineering Co. Watershed Model.
Credit Rate. The credit rate is defined as the percent reduction of the utility fee rate for
properties receiving fee rate credits.
Surface Water Management Fee. The surface water management fee is defined as the quarterly
charge developed for each parcel of land. It will be billed quarterly at the same time sewer and
water fees are billed.
Surface Water Utility Capital Improvements Program (CIP). The CIP is defined as a 5 -year
program that (1) identifies construction projects to be performed along with their corresponding
costs, (2) estimates the funds to be designated for the Contingency Account, and (3) estimates
costs associated with operations and maintenance activities. The 5 -year Capital Improvements
Budget (CIB) is established based on the 5 -year CIP.
Ouarterlv Surface Water Utility Revenue. This revenue is the total funds estimated to be
received quarterly for funding the Capital Improvements Program (CIP). The quarterly surface
water utility revenue resulting from surface water management fees shall be established for a
period of time as set by City policy and shall be no less than 3 years and no more than 5 years.
Page 20
00.0030. Determining the Portion of the Surface Water Management Fees Directly Related
to Stormwater Runoff Volumes and Rates. The following table lists the utility factors for
various land uses to be used for the portion of the utility fee that is directly related to stormwater
runoff volumes and rates:
Classification
Land Use
Utility
Factor
1
Rural Residential (21/2 -acre lots)
0.86
2
Single -Family Residential (1/3 -acre
lots)
1.00
3
Mixed Low- and Medium -Density
Residential
1.24
4
Apartments, Institutions (schools,
churches, government buildings,
hospitals)
1.24
5
Business/Commercial
1.55
6
Industrial
1.69
7
Agricultural
0.55
8
Undeveloped
0.55
9
Parks, Cemeteries, Golf Courses,
Arboretum
0.69
10
Parking Lots
1.69
The portion of the utility fee that is directly related to stormwater runoff volumes and rates
shall be determined by the following steps:
Step 1. Prepare a 5 -year Capital Improvements Budget (CIB) for Account #1
(Construction) and Account #2 (Contingency). Add the two account totals
and then divide this CIB by 20 to determine a quarterly CIB.
Step 2. Determine the total amount of land within each of the above ten land use
categories that qualify fora user charge as applied to Accounts #1 and #2.
Step 3. Determine the total amount of land receiving "credit" or "exempt" status.
Page 21
Step 4. Convert the total amount (x) of land in each land use into an equivalent
(hypothetical) amount of single-family land. This is done by multiplying
the total area of a particular land use by the corresponding utility factor
shown in the above table. Convert the total amount (y) of credited land
into an equivalent (hypothetical) amount of single-family land. This is
done by multiplying the total area of each type of credit by the credit
factor for that corresponding credit. Add x + y to determine the total
equivalent single-family land (z) within the City.
Step 5. Determine the unit fee for single-family land. This is done by dividing the
quarterly CIB (Step 1) by "z" (Step 4).
Step 6. Determine the unit fee for all other land use categories and credited land
by multiplying the single-family unit fee (Step 5) by the corresponding
"utility factor" and the "credit facto" where applicable.
00.0040. Determining the Portion of the Surface Water Management Fees Directly Related
to Degree of Service. The following steps shall be used to determine the portion of the utility
fee that is related to "degree of service":
Step 1. Prepare a 5 -Year CIB for Account #3 (Operations and Maintenance).
Then divide this CIB by 20 to determine a quarterly CIB.
Step 2. Determine what amount of this CM should be apportioned to each land
use based on an anticipated level of service.
Step 3. Determine the total area within each land use less any exempt land.
Step 4. For each land use, divide the apportioned amount of the CIB (Step 2) by
the total area within that type of land use (Step 3). This then is the unit
fee for each land use.
Step 5. Multiply the unit fee by the total parcel area that corresponds to that unit
fee. Then multiply that number by the credit factor to be applied to that
parcel (where applicable).
00.0050. Credits. The City Council may adopt policies, by resolution, for adjustment of the
surface water management fees. Information to justify a fee adjustment must be supplied by the
property owner. Such adjustments of fees shall not be retroactive. Credits will be reviewed
annually by a staff committee.
Page 22
00.0060. Exemptions. The following land uses are exempt from the surface water management
fee:
(a) City, County, and State road and highway rights-of-way
(these are covered in the land use fees)
(b) Lakes
(c) Landlocked basins
(d) Non -income producing City -owned facilities
00.0070. Payment of Fee. The surface water management fee shall be invoiced every three
months on or about the _ day of the month. The fee shall be due and payable on or before
the _ day of the month in which the statement is mailed. Any prepayment or overpayment of
charges shall be retained by the City and applied against subsequent fees.
00.0080. Appeal of Fee. If a property owner or person responsible for paying the surface water
management fee believes that a particular assigned fee is incorrect, such a person may request
that the fee be recomputed. Appeals will be heard by City Council once a year in accordance
with the schedule established for credit applications, in established City policy.
00.0090. Penalty for Late Payment. Each billing for surface water management fees not paid
when due shall incur a penalty charge of ten percent of the amount past due.
00.0100. Certification of Past Due Fees on Taxes. If any two consecutive quarters of surface
water management fees have not been paid when due, then a penalty as set forth in Section
00.0090 shall be added to the amount due. Any such past due fees may then be certified to the
County Auditor for collection with real estate taxes on the -following year pursuant to Minnesota
Statutes Section 444.075, Subdivision 3. In addition, the City shall also have the right to bring
a civil action or to take other legal remedies to collect unpaid fees.
Page 23
Section 7: Rosemount's Surface Water
Management Utility Policy
Policy Statement
All properties within the City of Rosemount shall contribute to the Surface Water
Management Utility in an amount proportional to the runoff contributed by each particular parcel
except where the properties (1) are exempt lands, (2) have City -established fixed rates, (3) are
credit lands, or (4) have received a City -approved fee reduction. These exceptions are described
next.
1. Exemptions and Fixed Rates
(a) Agricultural and Undeveloped Land -- Agricultural (tilled) and undeveloped
(non -platted) land will be charged a fixed rate of $0.50 per acre per quarter. The
rationale used for determining this rate is as follows:
The 5 -year CIB is comprised of three accounts: (1) Construction, (2) Contingency,
and (3) Operations and Maintenance. Of these three accounts, the only one that
involves costs associated with and planned for agricultural and undeveloped land is
"Operations and Maintenance." That account includes items such as costs for
periodic cleaning of culverts and removal of sediments from ditches. This type of
work has historically been the extent of stormwater-related services the City has
provided for agricultural and undeveloped land. The City intends to continue
providing these services to those areas. The City does not plan to construct new
storm sewer systems or provide other services to those areas until they re rezoned
or replatted. Because such storm sewer systems and other services will be directly
related to how the areas are developed in the future and not on how these lands are
used today, the City feels these lands should not have to pay for these storm sewer
systems and services until they are redeveloped or replatted. Therefore, the fixed
rate for agricultural and undeveloped land was computed by estimating the
percentage of the "Operations and Maintenance" work supplies and equipment
planned for those areas.
Page 24
(b) Rural Residential Land -- Rural residential land will be charged at a fixed rate of
$4.48 per acre per quarter. Like agricultural and undeveloped land, this rate was
computed by estimating the percentage of the "Operations and Maintenance" work
supplies and equipment planned for those areas. This rate does not consider any
contribution to "Contingency" or "Construction" accounts of the 5 -year CIB, as those
items comprising those two accounts are not planned to serve rural residential
properties until construction is necessary. Should storm sewer construction become
necessary, parcels contributing runoff to the project area or parcels that are directly
benefitted by the construction will be charged at a rate equal to 0.86 times the rate
established for single-family residential (RL, R-1, or R-2).
(c) City, County, and State Street and Highway Rights -of -Way -- These public rights-of-
way shall be exempt from all charges.
(d) Lakes -- Lakes listed by the Minnesota Department of Natural Resources as Natural
Environment Waters, Recreational Development Waters, or General Development
Waters shall be exempt from all surface water utility charges.
(e) Landlocked Basins -- The portions of parcels occupied by (1) basins identified in the
City's Stormwater Management Plan as being landlocked or (2) basins defined to be
landlocked by a majority vote of the City Council shall be exempt from all surface
water utility charges.
(f) Non -income Producing City -owned Properties -- City -owned properties that do not
income produce shall be exempt from all charges. These properties may include
City Hall, service garages, and nature parks. However, City -owned properties where
user fees are charged, such as softball fields, shall not be exempt (see Credits and
Fee Reductions section).
2. Credits and Fee Reductions
Surface water management fees may be adjusted under the conditions stated below. It
shall be the responsibility of the property owner to provide justification for the fee
adjustment. Credits must be applied for by October 31 of the year preceding the year in
which the credit is to be considered. Credits will not be retroactive.
(a) Stormwater Retention -- If it can be demonstrated that an individual parcel retains
all or a portion of the rainfall that it receives, the surface water management fee will
be reduced by a percentage equal to that percent of the parcel that produces no
external runoff.
Page 25
(b) Low Income -- The surface water management fee will be waived for any property
owner with income at or below the established minimum income of $ for
the year prior to issuance of any charges. This credit can be applied for at any time
during the year. However, once issued, the credit must `'be applied for each year.
The credit will not be retroactive.
(c) Agricultural Land with Established Conservation Program -- A 50 percent fee
reduction will be granted to the owner of agricultural lands if the land owner has a
conservation program filed with the United States Department of Agriculture Soil
Conservation Service (SCS), or County Soil and Water Conservation District
(CSWCD). This 50 percent reduction shall apply only to the portion of property
where the conservation program is implemented. Other areas on the same tract that
do not have an established conservation program will not be considered for a fee
reduction. To qualify for the credit, implementation of conservation programs must
be verified by the SCS or CSWCD.
The 50 percent credit must be applied for by October 31 of the year preceding the
year in which the credit is to be considered. Credits will not be retroactive.
(d) Water Quality Treatment Facilities -- A 20 percent fee reduction will be issued over
the area designated as a stormwater quality treatment facility, such as sediment
basins, grease and oil skimming devices, and water aerators.
(e) Wet Ponds -- The portions of parcels occupied by wet ponds will be charged at a
rate of one third of the rate for undeveloped lands. A "wet pond" is defined as a
pond or inundation area that can store standing water below the elevation of the
outlet pipe or where the water would overflow when there is no outlet pipe.
(f) Dry Ponds -- The portions of parcels occupied by dry ponds will be charged the
same rate as for undeveloped lands. A "dry pond" is defined as a pond or
inundation area that cannot store standing water below the elevation of the outlet
pipe or where the water would overflow when there is no outlet pipe.
(g) Income-producing City -owned Properties -- The utility fee for City -owned properties
that produce income through rent or user fees shall be at the same rate as the parks
category. If the income through rent or user fees cannot cover the surface water
utility charge for that parcel, the City will issue a fee rate credit. That fee rate credit
will be determined each year by the City Council and/or its representatives.
Page 26
Fee Basis for Each Parcel
1. Land Use
The land use for determining the initial surface water management fee on a parcel shall be
the existing land use at the date of enactment of the Surface Water Management
Ordinance. As land is developed or redeveloped, the fees will be recomputed based on the
revised land use. This new fee will be assigned as soon as possible after the land use
change has been approved by the City.
2. Unit Rate Table
The following unit fee shall be applied in the Revenue Equation in Paragraph 3 (below)
for each non-exempt parcel of land within the City of Rosemount. These fees shall be per
acre per quarter of a year.
Land Use
Description
Charge
RR
Rural Residential
$ 4.48 (Ul)
RL, R-1, R-2
Single -Family Residential
$ 16.90 (Uo*
R-3, R-4
Apartments
$ 20.96 (U3)
C-1, C-2, C-3, C-4
Commercial
$ 26.20 (U4)
IP, IG
Industrial
$ 28.57 (Us)
P
Churches, Schools, Hospitals,
Government Buildings
$ 20.96 (U6)
PK
Parks, Golf Courses, Cemeteries
$ 11.66 (U,)
PL
Parking Lots
$ 28.57 (Ug)
AG
Agricultural (Zoned)
$ 0.50 (U9)
U
Undeveloped
$ 0.50 (U,o)
*
3.
The unit fee for single-family lots per quarter of a year shall be $5.6
5 I iU
Revenue Equation for Each Parcel
:J
The revenue equation for computing the quarterly surface water utility fee for any parcel
is as follows:
Page 27
R = (U1C1A1 + U2C2A2 + U3C3A3 + ... UIOCIOAIO)
where:
R = Quarterly surface water utility charge for a parcel.
U, through Ula = Unit fee per acre for corresponding land use shown in the
unit rate table in Paragraph 2 (above).
Cl through CIO = The established credit reduction rate for applicable credits for
qualified parcels. Applicable credits are described in
Paragraph 2 of the "Policy Statement" section of
"Rosemount's Surface Water Management Utility Policy" of
this document (page 24). Where no applicable credit
reduction rates have been established or where the parcel
does not qualify for a credit, the credit reduction rate to be
used in this formula shall equal 1.0.
Al through Alo = Total area within corresponding land use shown in the unit
rate table in Paragraph 2 of the "Fee Basis for Each Parcel"
section of "Rosemount's Surface Water Management Utility
Policy" of this document (page 27).
Adjustment of Fees
Surface water management fees will be adjusted under the following conditions:
1. Revision of Ouarterly Surface Water Revenue
The estimated Capital Improvement Budget (CIB) for the management of surface water
shall be revised at a frequency specified in the ordinance. The fees will be adjusted
accordingly and will follow established City procedures for adjustment of other City utility
(water and sewer) rates.
Page 28
2. Credited Parcels
Since parcels receiving surface water utility fee credits will be reviewed once each year,
fee adjustments on these parcels will be made only once per year, if an adjustment is
necessary.
3. Change in Developed Condition of Parcel
When the land use, exemption status, or credit status on a parcel is changed, a
corresponding fee adjustment will be made by the utility administrator as soon thereafter
as possible.
Page 29
Section 8: Public Information
and Education Program
The Rosemount City Council wishes to inform and educate its constituents about its intent
to establish a Surface Water Management Utility. The Council will do this through the following
means:
1. An informative brochure describing the rationale and methodology of the intended
utility will be sent to the residents, business, and land owners within the City.
2. An article about the utility will be published in the legal newspaper for the City of
Rosemount.
3. A public meeting will be held to hear public comments and answer public questions
about the utility. NOTE: Based on this input, changes to the utility may be made.
4. The public will be invited to call specific individuals to answer other questions about
the utility.
5. A public hearing will be held by the City Council to receive any final public input
before formally deciding on whether to institute the utility.
Page 30
References
City of Roseville, MN, Stormwater Utility Ordinance.
Honchell, Charlie V., 1986. "Creating a Storm Drainage Facility." APWA Reporter, 10-11.
Jouseau, Marchel, 1983. "Stormwater Management: Financing Local Stormwater
Management," Publication No. 10-83-143. Metropolitan Council of the Twin Cities Area,
St. Paul, MN.
Krempel, Roger E., 1988. "Stormwater Management by Utility Approach." Proceedings of
the 1988 National Conference, Hydraulic Engineering. Steven R. AN and Johannes
Gessler, eds. ASCE: New York, NY, pp. 1234-1239.
U.S. Department of Commerce, 1961. "Rainfall Frequency Atlas of the United States for
Durations from 30 Minutes to 24 Hours and Return Periods from 1 to 100 Years,"
Technical Paper No. 40.
Page 31