Stormwater fees: Infrastructure financing tool, sustainability initiative, or both?

Photo credit Emily Cikanek










By Matt Nichols

When we think of utilities, we tend to think of the bills we pay each month: heat, water, sewer, electricity, etc.  However, stormwater management is also an important public service, much like the services provided by traditional utilities. It channels rain water away from homes, through underground pipe systems, typically to a natural body of water, like a river, stream, or lake.  Without it, we end up with flooded streets, degraded streams, and backed-up sewers.  Like other utilities, our stormwater management system also requires public investment in infrastructure, repair after natural disasters, and long-term planning to meet the demands of a changing built environment. Most communities pay for their stormwater systems through revenue from water or sewer bills, or through general revenue, but funding storm sewers in this way doesn’t allow property owners to understand the real cost of this service or recognize its value. Thus, it is not altogether surprising that some towns in Illinois now charge for stormwater as they would for other utilities, with a monthly fee proportional to a property owner’s use of the system. The more stormwater a property contributes to the system, the more the property owner pays, and vice versa.

Six towns across Illinois have fees related to the amount of impervious surface on a given property: Downers Grove, Highland Park, Morton, Normal, Rock Island and Rolling Meadows. The systems function essentially the same way in each town: monthly fees are calculated as a factor of the area of impermeable surfaces on a property, such as roofs, driveways, and patios, which contribute to run-off and overload storm sewers.  An average homeowner pays between $3 and $5 each month as part of their water bill, or about $40 to $60 annually.  Downers Grove is the exception; when their system goes into effect in 2013, they will charge $8.40/month for an average home, although a corresponding reduction in property taxes should make the changes budget-neutral for most residents.

Although the monthly surcharges are relatively small, these programs have the potential to serve as a substantial revenue source for Illinois municipalities.  Downers Grove, for example, projects it will collect $3.5 million in stormwater fees in 2013, increasing to $4.7 million by 2017.  That money can fund much-needed infrastructure projects – such as replacing storm sewer pipes, upgrading culverts, and armoring stream banks eroded by heavy storms – without cutting city services or increasing other taxes. Equally important, this revenue can help pay back municipal bonds taken out to pay for repairs after major disasters.  Although major rain events and the ensuing floods are an inevitable part of the water cycle, urban sprawl and increased run-off exacerbate the problem, so it is only logical that property owners contribute to mitigation efforts.

Stormwater fees also provide incentives for property owners to invest in green infrastructure – the more green infrastructure, the less the property’s contribution of runoff to the sewer, and the lower the fees as a result. However, the true usefulness of stormwater fees as a sustainability initiative and not just a revenue booster depends on two factors: how the money is spent, and whether the fee successfully incentivizes property owners to alter their behavior. Revenue from stormwater fees should be reinvested in stormwater infrastructure and services, period. While so-called grey infrastructure (concrete pipes, culverts, etc.) handles the bulk of stormwater in urban and suburban settings, green infrastructure, such as rain barrels, rain gardens, green roofs, bioswales, permeable paving, and natural wetlands, plays a vital role in reducing the damaging effects of too much stormwater.  Our region’s aquifers and vegetation can absorb and hold precipitation, ultimately assisting with managing stormwater.  If we work with nature to take advantage of these ecosystem services, stormwater management becomes less expensive and more practical.

Encouraging home- and business-owners to adapt their behavior depends on the strength of the “carrots” and “sticks” included in the fee structure.  With fees in most of the six Illinois towns currently at roughly $1.50/month per 1,000sq ft of impermeable area, even a commercial property with a massive footprint, such as a 100,000sq ft “big box” store, would only pay $150/month, or $1,800/year – perhaps not enough of a motivator to induce major investment in, say, a permeable parking lot with bioswales or an adjacent wetland retention area.  Thus, to encourage private property owners to transform the built environment even in subtle ways, stronger economic incentives are necessary, in the form of either higher fees or rebates and credits for those that implement positives changes.  As seen during public hearings leading up to the vote on Downers Grove’s stormwater fee earlier this year, the prospect of higher fees may not sit well with local businesses and residents.

Fortunately, there is hope that suburban spaces may become greener (or “bluer,” as it were) even without stronger incentives. In many suburbs, such as Rolling Meadows, the cycle of real estate use suggests that older sites, such as 1970s-era strip malls with parking lots, will be redeveloped in the coming decade into single-family homes or modern commercial spaces. These instances of new construction offer possibilities for enhanced permeability, integration of green infrastructure, and adoption of best practices for stormwater management. Of course, local ordinances and state standards, as well as the demands of area residents, will influence just how “blue” the next cycle of suburban redevelopment will be.  Stormwater fees, both for their capacity to generate dedicated revenue for stormwater infrastructure and services, and their potential role in incentivizing sustainability, offer one tool to municipal governments.

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