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Policy & Program Options:
Montgomery County
Stormwater Management


CONTENTS:

   EXECUTIVE SUMMARY

   I. INTRODUCTION AND BACKGROUND

   II. WORKING GROUP POINTS OF AGREEMENT

   III. EXPERIENCE OF OTHER JURISDICTIONS
Table 1. Municipalities with Stormwater Maintenance Utility Fees

   IV. THE COUNTY'S CURRENT MAINTENANCE/FUNDING APPROACH
Table 2. Property Ownership and Structure Type of Montgomery County Stormwater Facilities
Table 3. Estimated Costs of Stormwater Facility Maintenance Program

   V. SUMMARY CHARACTERISTICS OF THE CURRENT SYSTEM

   VI. PREVIOUSLY IDENTIFIED FINANCING OPTIONS
        Table 4. "Impervious Area" User Charge
        Table 5. Equivalent Residential Unit (ERU) User Charge
        Table 6. Ad Valorem Tax User Charge
        Table 7. Total Revenue Shares for Three Financing Options
        Table 8 . Summary of Financing Options
        Table 9. Pros and Cons of User Fee vs. Ad Valorem Tax

  VII. OPTIONS
Option 1 - County Inspection with Property Owner Maintenance
        Table 10. Cost Estimate for Option 1
Option 2 - Stormwater Utility with Voluntaryt Multiple Subdistricts
                     Table 11. Cost Estimate for Option 2
Option 3 - Mandatory Countywide Stormwater Comprehensive User Fee/Tax
                     Table 12. Annual Cost Estimate for Option 3

  VIII. NEXT STEPS

  APPENDICES
         Public Participation Program
      Estimate of Costs to Maintain Conveyance Systems
        Working Group Membership


Policy and Program Options for Montgomery County Stormwater Management

October 1999

Prepared by the Stormwater Financing Options Working Group
at the Request of County Council President Isiah Leggett
and County Executive Douglas Duncan

 

EXECUTIVE SUMMARY

For a number of years, policy makers have struggled with the daunting task of equitably funding the maintenance and construction needs of the County’s stormwater management facilities. These facilities provide critical water quality and quantity functions, and are an essential tool in the effort to protect and preserve the environment. Many of the facilities have been constructed according to changing design standards. Many are privately maintained, and there has not been consistent maintenance and inspection of these facilities. As a result, many are in a state of disrepair and need various levels of restoration and/or maintenance.

County policy regarding who should bear maintenance responsibility – determined at the time of subdivision – has varied greatly over the past 30 years. As a result, there is often only a limited nexus between the beneficial users and the financially responsible party. In some cases, the burden falls disproportionately on the taxpayer, who through the general fund, supports facilities that benefit a discrete, identifiable group of private property owners. In other cases, the burden falls on the private property owners, often a homeowners association. In some cases these property owners are financially responsible for facilities that benefit other private or public users, yet, they have no practical recourse to collect a proportional share of the maintenance expense from others who may benefit from the structure. In yet other cases, the taxpayer and the private owners share maintenance expenses through "participation agreements" where the County pays for costly structural maintenance such as dredging and pipe replacement, and the owners pay for routine maintenance such as mowing and trash removal. The variability in funding sources has resulted in some citizen objections to the inequity of the revenue system.

Over the years, there have been a number of attempts to identify solutions that would both preserve the environment and resolve funding issues. In 1990, OLO Report 90-4 indicated that the maintenance of public and private stormwater facilities was problematic. Again, in 1996, recognizing the existing organizational arrangements were not achieving the desired outcome, the Montgomery County Council adopted Resolution 13-467, to establish a Stormwater Financing Options Working Group. The Group was charged by the Council with developing an analysis of financing options for stormwater management programs in the County. This group issued a report in July 1996 that proposed rates and revenue burdens by land use categories for three funding options. Discussions followed but no concurrence was reached as to which recommendation to implement.

In March 1996, as required by the Clean Water Act, the Maryland Department of the Environment issued a National Pollutant Discharge Elimination System (NPDES) permit to the County. This permit requires that all stormwater facilities be inspected at least once every three years and requires proper construction and maintenance of new facilities. This permit, as well as recognition that this long-standing funding equity issue had to be addressed, prompted the Council President and the County Executive to form another Stormwater Financing Options Working Group.

The Group was charged with assessing the current system with regards to maintenance and environmental protections for equity and public benefit. The group was composed of representatives of agencies and organizations with a common interest in the implementation and financing of the stormwater management programs in the County, and met approximately every two weeks from January through October, 1999. While there was considerable data and information already available, much of it needed to be updated. It was also necessary to expand the Working Group’s knowledge base to allow full consideration of all options. In addition, the group reviewed how other jurisdictions have funded their stormwater management programs.

The Working Group was also charged with finding a sustainable and equitable source of revenue for state and federally mandated stormwater facility maintenance activities. The Group framed the assignment by identifying the stakeholders, examining the existing inequities, studying other jurisdictions, defining an appropriate level of service to be provided by the County, and estimating the approximate cost of providing these services. Various management options were evaluated in terms of implementation difficulty, equity and benefit distribution, political acceptability and reliability of the funding sources.

There was considerable deliberation regarding the scope and the appropriate mechanisms for funding and maintenance. Early on, the Working Group came to the consensus that stormwater management facilities and storm drainage systems must be considered as parts of a comprehensive system for handling of stormwater. Then, the Working Group agreed that a user fee was a more equitable measure for financing this unified program than an ad valorem tax, thereby eliminating the present storm drain tax. Therefore, the Working Group recommends a comprehensive Stormwater User Fee be instituted for property owners in Montgomery County set at a level to adequately fund the inspection and maintenance of all public and private stormwater management and storm drain facilities in the County. This is Option#3 in the text of the report.

This recommendation recognizes the broad public benefit that results from proper management of stormwater and storm drain facilities and, therefore, suggests broad-based funding sources. Both public and private facilities (including residences, businesses and County property) are encompassed by this solution.

The User Fee concept, which is widely employed by other jurisdictions, assigns shares of costs to landowners based on each property’s contribution to the amount of impervious surface area for the property type. Revenue generated by the fee is used to clean and repair public and private stormwater conveyance and storage facilities throughout the county. This recommendation ensures that all pay a fair and reasonable rate, reduces reliance on general fund tax monies, and, by providing credits, encourages reductions in stormwater quantity as well as improvements in quality controls. The Working Group’s recommendation also ensures that the County will be in compliance with its National Pollutant Discharge Elimination Discharge System (NPDES) permit.

Under the current stormwater management program, four county agencies - the Department of Environmental Protection, the Department of Permitting Services, the Department of Public Works and Transportation, and the Maryland-National Capital Park and Planning Commission – all share some responsibility for the maintenance, construction, and or inspection of stormmwater and storm drain facilities. The Working Group believes that both types of facilities are included in a comprehensive stormwater system, and believes that inspection and maintenance may be the responsibility of one department or agency. However, the Working Group did not conclude which department or agency should assume these responsibilities, and believes that a consultant working with the County Agencies should address this issue.

The Group also identified and discussed many issues that were outside its original mandate, and will require further consideration, analysis and implementation to ensure a successful management of stormwater facilities maintenance and construction program. These issues include:

  • Identify and make the necessary statutory and regulatory changes to implement the proposal.
  • Develop an organizational structure for implementing the recommendations.
  • Develop and implement a billing procedure for the fee.
  • Coordinate the implementation of this program with the State authorized municipalities and special taxing districts within the County.
  • Map all impervious surface in the County on the Geographic Information System.
  • Develop a public information program to receive public input on the proposed changes.

The Working Group believes that the County would be best served by contracting out many of the remaining tasks to consultants with prior experience in these highly technical areas to ensure implementation of the Working Group recommendations. These consultants would work closely with a group of staff from the necessary County departments and agencies.

  I. INTRODUCTION AND BACKGROUND

Stormwater management facilities throughout Montgomery County perform multiple beneficial water quality and quantity functions including water storage and settling, bio-filtration, nutrient and sediment removal, groundwater recharge, as well as infrastructure preservation. Together, these functions are essential to preserve viable aquatic habitats in the County's streams, and to protect public safety by providing flood control throughout the region. Montgomery County, along with Counties across the United States, is required by the authority of the Federal Clean Water Act to insure that all stormwater management facilities are inspected and maintained in accordance with the conditions mandated in the National Pollutant Discharge Elimination System (NPDES) permit. Montgomery County's NPDES permit was issued March 1996 by the Maryland Department of the Environment. State and Federal legislation recognize the evolution of stormwater management technologies from simple quantity control to a more sophisticated combination of quantity and quality control.

There are approximately 2,300 stormwater management facilities in the county (dry ponds, wet ponds, infiltration trenches, oil grit separators, open ditch lines, infiltration and sand filters and underground storage structures) that are either publicly or privately owned. Additionally, there are over 800 miles of enclosed storm drain systems, over 1,000 miles of ditches, and thousands of inlet structures within the public right of way. While public facilities are inspected and maintained by the County, existing law (Chapter 19 of the County Code) requires that private property owners perform maintenance on their own management structures.

Many of the County’s stormwater and storm drain structures have not been adequately inspected nor maintained. The average age of the stormwater management facilities within the county is 15-20 years old, and the majority of the enclosed storm drains are over 40 years old. This lack of oversight has resulted in continued deterioration of the system, and therefore significant and costly reconstruction. Clogged and failed storm drain systems also negatively impacts private properties and streambeds. Delays in adequate maintenance to the stormwater and storm drain management systems ultimately produce erosion to the roadway infrastructure. This too contributes to the increase of overall reconstruction and repair costs. Some stormwater management structures have never received maintenance. Without consistent and comprehensive inspection and maintenance, stormwater facilities cannot accomplish their design goal of water quality and quantity control. If maintenance does not occur, the law specifies that the County can enter a facility, perform the maintenance and place a lien on the property to recover costs.

Unlike the water/sewer and stormdrain systems, which are supported by user fees and ad valorem taxes, stormwater management facilities lack a dedicated source of revenue to ensure consistent and responsive performance of inspections and maintenance. Throughout the county and its subdivisions, these facilities constitute a silent infrastructure with a significant financial liability. The area of stormwater management maintenance and inspection is one of many unfunded federal mandates.

County policy regarding who should bear maintenance responsibility – determined at the time of subdivision – has varied greatly over the past 30 years. As a result, there is often only a limited nexus between the beneficial users and the financially responsible party. In some cases, the burden falls disproportionately on the taxpayer, who through the general fund, supports facilities that benefit a discrete, identifiable group of private property owners. In other cases, the burden falls on the private property owners, often a homeowners association. In some cases these property owners are financially responsible for facilities that benefit other private or public users, yet, they have no practical recourse to collect a proportional share of the maintenance expense from others that may benefit from the facility. In yet other cases, the taxpayer and the private owners share maintenance expenses through "participation agreements" where the County pays for costly structural maintenance such as dredging and pipe replacement, and the owners pay for routine maintenance such as mowing and trash removal. The variability in funding sources has resulted in some citizen objections to the inequity of the revenue system.

In 1990, OLO Report 90-4 indicated that the maintenance of public and private facilities was problematic. Again in 1996, recognizing the existing organizational arrangements were not achieving the desired outcome, the Montgomery County Council adopted Resolution 13-467, to establish a Stormwater Financing Options Working Group. The Group was charged by the Council with developing an analysis of financing options for stormwater management programs in the County. This group issued a report in July 1996 that presented proposed rates and revenue burdens by land use categories for three funding options. Policy discussions followed, but no consensus was reached as to which recommendation to implement.

Another attempt to respond to the newly issued municipal stormwater permit program was made through proposed legislative revisions. An interagency task force was formed in 1998, to provide a legislative solution to the stormwater management challenge. This group of 11 departments met for a year and proposed revisions to Chapter 19 of the County code that would have explicitly privatized the inspection and maintenance components of the stormwater program. The proposed revisions met with considerable controversy from the Commission on Common Ownership Committees, who felt there were issues of equity and fairness that the revisions did not address.

During this same period the Council appropriated $700,000 to the Department of Environmental Protection (DEP), as a temporary fix, to hire a contractor to perform the initial round of inspections and to develop an automated records system. This effort is currently ongoing, funded at $300,000 for 2000 and scheduled be completed in 2001. In addition to the actual inspections, this funding was used to leverage a federal grant for public education and outreach. The importance of this educational effort was recently highlighted in a study by the Center for Watershed Protection. The study revealed the extent of misconceptions among the general public:

  • Few residents are aware that stormdrains empty directly into creek and rivers.
  • Many residents do not know or whether or not they own a stormwater management facility
  • Few residents are aware that stormwater facilities require maintenance.
  • Without a common understanding of stormwater management, compliance and cooperation are unlikely.

In search for a fair and sustainable solution, County Council President Isiah Leggett and County Executive Doug Duncan, in January 1999, convened a Working Group to investigate options for financing stormwater maintenance activities. The Working Group consisted of members from various County government agencies including: the Department of Environmental Protection (DEP), the Office of Legislative Oversight, the Office of the County Attorney, the Department of Permitting Services, the Maryland-National Capital Park and Planning Commission (M-NCPPC), County Council Staff, and the Department of Public Works and Transportation (DPWT). A cross section of interested stakeholders such as the Sierra Club, Montgomery County Taxpayers League, the Commission on Common Ownership Communities, the development community, a large Homeowner Association (HOA), and a stormwater management engineer/contractor were also group members.

Mr. Leggett and Mr. Duncan recognized that the problem of maintaining of stormwater management facilities had long been neglected and required final resolution. The issue has also provoked concern in many County residents because of the high costs involved and because of the increase in inspection and enforcement activities by DEP to adhere to NPDES permit requirements.

Mr. Duncan and Mr. Leggett charged the study group with examining the recommendations made by the previous Stormwater Financing Options Working Group and determining a sustainable source of revenue for stormwater maintenance activities. The group met approximately 15 times from January through October. Initial Working Group meetings were dedicated to understanding the regulations, structure inventory, ownership arrangements, and costs of maintaining stormwater management facilities in the County. The Group also examined how these structures fit into the overall stormwater management system. In addition, the Group reviewed previous work on possible financing approaches and discussed many of the equity issues that need to be addressed to produce a long term financing solution.

 

II. WORKING GROUP POINTS OF AGREEMENT

There were a number of basic points of consensus that provided the basis for the development of the Group’s recommendations. These are:

  • Maintenance of storm drains and stormwater management facilities is a basic countywide service that yields broad public benefits in the form of flood control and stream protection.
  • The County's lack of appropriated funds for an inspection and enforcement program has allowed some property owners to ignore significant maintenance needs.
  • In some cases inequities exist because either public funds are paying for maintenance of private land, or a private individual property owner is paying for maintenance that benefits other private individuals.
  • The existing program will not result in compliance with the NPDES permit, potentially exposing the County to fines under the Clean Water Act.
  • The challenge of providing adequate stormwater financing increases annually as the County permits an average of 254 new facilities per year (averaged over the last 3 years) and approximately 20,000 feet of new storm drains.
  • If the stormwater facilities are to be optimally maintained and comply with the NPDES permits, thereby protecting water quality, the County should assume responsibility for both maintaining and inspecting the facilities.
  • If the County decides to take over maintenance responsibility, it should require public easements and that the facilities be in working order and meet the standards and operating conditions set forth in the original approval. If the County decides to re-build a facility to standards that exceed the original approval, the previous responsible party may pay a fee in lieu to the County equal to the amount that would have been needed to bring the facility into compliance with the original approval.

 

III. EXPERIENCE OF OTHER JURISDICTIONS

Traditional governmental funding sources have proven problematic for programs for the management of stormwater. Allocation from local taxes is often an unreliable means of generating revenue because leaders find it difficult to divert adequate general funds from more politically popular uses to stormwater management. Many local governments have turned to alternative funding strategies, such as charging inspection and permit fees, collecting dedicated contributions from land developers, taxing new development at increased rates, forming regional management districts and creating stormwater utilities. Table 1 is a compilation of lists from the "Report on National Stormwater Utility Survey" prepared by Black and Veatch in 1995. The table indicates that over 300 local governments throughout the United States now fund both inspection and maintenance of stormwater facilities through a dedicated utility fee.

In nearby Virginia, Fairfax County funds its stormwater work through the general fund. An attempt to pass a Stormwater Utility Tax was unsuccessful in Fairfax County but passed in Prince William's County, Virginia.

Locally, Prince George's County and Mount Airy, Maryland provide inspection and maintenance services to all stormwater facilities that serve two or more properties. These programs are funded through an ad valorem tax. In other parts of Maryland, the Baltimore Metropolitan Council (which includes Baltimore City, Baltimore, Anne Arundale, Hartford, Carroll and Howard Counties) has recently evaluated funding options for stream restoration and stormwater facility maintenance and has determined that a stormwater tax, in the form of a utility is necessary. Due to the inherent controversy of proposing new taxes, member jurisdictions are uniting to implement the revenue proposal concurrently, rather than by individual municipality. Based on a recent self-assessment the Environmental Finance Alternative Committee of the Baltimore Metropolitan Council estimates that an average tax increase of $43 per household per year is necessary to ensure a dedicated revenue for approximately 8100 stormwater management facilities.

Within Montgomery County, some municipalities have opted to perform their own stormwater maintenance. Takoma Park passed a stormwater utility tax in 1996. It is defined as a utility because a measurable public service is provided. Takoma Park switched from an ad valorem property tax to a user fee system to address equity issues. The Utility covers construction and maintenance of the stormwater drainage system, review of stormwater management plans, inspection and enforcement activities, watershed planning, and water quality monitoring. In the Takoma Park program, tax-exempt properties such as churches, schools, State and Federal Government facilities are included as service users.

Fees in Takoma Park are based on the extent to which each property contributes to stormwater runoff, the amount of impervious surface on each property and the cost of program implementation. Non-residents and multifamily properties are charged a fee based on actual impervious area. The annual fee for single family residents is a flat fee of $24. Owners of undeveloped property pay no fee. This program has produced an equitable and dedicated stormwater management funding source for the City of Takoma Park.

TABLE 1. MUNICIPALITIES WITH STORMWATER MAINTENANCE UTILITY FEES

California Delray Beach North Miami Kansas Medford Anacortes
Berkeley Deltona Oakland Park Topeka Portland Auburn
Chino Dunedin Ocala Wichita West Linn Bellevue
Los Angeles Edgerwater Ocoee     Clark County
Modesto El Portal Oldsmar Kentucky South Carolina Everett
Monterey Eustis Opa-Locka Louisville Aiken Federal Way
Ontario Fort Lauderdale Orlando   Charleston King County
Palo Alto Fort Meade Ormond Beach Maryland Greenville Lacey
Richmond Fort Myers Oviedo Takoma Park   Lynnwood
Sacramento Fort Pierce Palm Bay   South Dakota Mercer Island
San Jose Gainesville Plant City Michigan Sioux Falls Olympia
Santa Clarita Golden Beach Pompano Beach Ann Arbor   Pt. Orchard
Santa Cruz Hallandale Port Orange Detroit Texas Pt. Townsend
Stockton Hialeah Port St. Lucie Marquette Allen Redmond
Tracy Hialeah Gardens Safety Harbor   Arlington Spokane
  Homestead Sanford Minnesota Austin Seattle
Colorado Hillsborough Sarasota County Roseville Bedford Tacoma
Aurora County Satellite beach St. Paul Colleyville Vancouver
Boulder Holly Hill South Daytona Dallas
Denver Jacksonville South Miami Missouri Euless Wisconsin
Fort Collins Beach St. Augustine Columbia Gainesville Glendale
Longmont Jupiter St. Petersburg Kansas City Garland  
Loveland Key Biscayne Sunrise St. Louis Irving  
  Kissimmee Surfside Lubbock  
Florida Lake Mary Sweetwater Montana Mesquite  
Altamonte Lake Worth Tallahassee Billings North Richland  
Springs Largo Tamarac Great Falls Hills  
Atlantic Beach Leesburg Tampa Piano  
Auburndale Leon County Tavares North Carolina San Antonio  
Bay Harbor Longwood Titusville Charlotte    
Island Margate Venice Greensboro Utah  
Boca Raton Medley Volusla County   Provo  
Boynton Beach Miami West Miami Ohio Salt Lake City  
BrevardCounty Miami Beach West Palm Cincinnati    
Cape Coral Miami Shores Beach Columbus Virginia  
Casselberry Miami Springs Wilton Manors   Chesapeake  
Clearwater Miami-Dade Winter Garden Oklahoma Hampton  
Clermont County Winter Park Edmond Newport News  
Cocoa Miramar Winter Springs Oklahoma City Norfolk  
Cocoa Beach Mount Dora   Tulsa Portsmouth  
Collier County Naples Indiana   Prince William  
Coral Gables North Fort Wayne Oregon County  
Dade County Lauderdale   Corvallis Virginia Beach  
Daytona Beach North Miami Iowa Forest Park    
Deland Beach Des Moines Hillsboro Washington  

The Cities of Rockville and Gaithersburg have legislation and programs that require property owners to be responsible for their own facility inspection and maintenance and storm drains. Other municipalities rely on the County for inspection, including the Town of Barnesville, Chevy Chase Village, Chevy Chase Section 3 and 5, the Town of Chevy Chase, the Town of Garrett Park, the Town of Glen Echo, the Town of Laytonsville, Village of Martin's Addition, the Town of Poolesville, the Town of Somerset, and the Town of Washington Grove. Half of these towns pay the storm drain tax. The Towns of Barnesville, Brookeville, Garrett Park, Laytonsville, Poolesville and Washington Grove manage their own storm drain systems. The Town of Kensington inspects the construction of stormwater facilities and provides its own storm drainage program. It uses the County for stormwater maintenance inspections. Property owners in the Special taxing District of the Village of Friendship Heights do not pay the County’s storm drain tax. The village built and maintains its own storm drains.

The Phase II NPDES Interim Rule requirements (CWA section 402(p)(6) will require permits for discharges from Municipality Separate Storm Systems (MS4s) serving urban populations of 50,000 to 100,000. These municipalities will be required to obtain their own permit or join the County permit program. The Final Report, due October 1999, stipulates that states will have 1-2 years to change their regulations and one year for program implementation. Five municipalities within Montgomery County will be influenced by this new requirement: Takoma Park, Kensington, Rockville, Gaithersburg and Chevy Chase Section 2. This legislative modification may result in an additional financial burden on the County if any or all of these jurisdictions opt into the County’s program.

 

IV. THE COUNTY'S CURRENT MAINTENANCE/FUNDING APPROACH

According to the 1996 OLO report, the County spends about $10 million annually on all stormwater management operations and capital projects. Approximately $5 million of this is programmed for retrofit and capital projects. Under existing legislation, the Montgomery County Department of Environmental Protection is responsible for inspection (but not the maintenance) of stormwater management structures countywide. The Department of Public Works and Transportation is also responsible for the maintenance of all storm drains in the public right of way, and the stormwater maintenance facilities built to support its projects. There are 21 independent incorporated municipalities within Montgomery County. The County has stormwater management authority in each municipality, with the exception of the cities of Rockville, Takoma Park, Gaithersburg, the Town of Kensington, and the Town of Chevy Chase Village. Throughout the County, individual property owners, including business owners, homeowner associations (HOAs) and individual homeowners, are responsible for the funding and completion of ongoing preventative and structural maintenance stormwater management facilities. The sources of funds for maintenance include:

  • private money - usually set aside in a reserve fund for facilities that serve HOAs and commercial properties, and
  • the General Fund ( generated by property taxes and income taxes)

The level of funding required for proper maintenance varies, depending on the type and age of a facility, the history of its upkeep, and the ownership arrangements. Table 2 provides a breakdown of structure type and ownership for facilities within the County. County permits do not indicate transfer of ownership, hence the column labeled "unknown" ownership. Field verification is currently under way to determine ownership of these facilities. Table 3 provides an estimate of inspection and maintenance costs. The costs reflect inspections performed at the frequency dictated by the NPDES permit. The average cost per inspection is $480; this again varies with the size and condition of the structure.

TABLE 2. PROPERTY OWNERSHIP AND STRUCTURE TYPE OF MONTGOMERY COUNTY STORMWATER FACILITIES (CURRENT AS OF JUNE, 1999)

Ownership HOA Commercial County 1 Unknown 2 Total
Number of

Facilities

Ponds 402 329 180 180 1,091
Oil Grit 97 245 120   462
Infiltration

Trenches 61

303 116   480
Underground

Structures 15

144 28   187
Total 575 1021 444 180 2,220

Footnotes:

1. Numbers include MNCPPC , MCPS, MCDFS, facilities that belong to the County, including Participation Facilities.

2. Permits do not indicate transfer of ownership. Field verification required to determine ownership

TABLE 3. ESTIMATED COSTS OF THE STORMWATER FACILITY MAINTENANCE PROGRAM

ANNUAL INSPECTION COSTS ANNUAL MAINTENANCE COSTS3 TOTAL FOR INSPECTION AND MAINTENANCE COSTS.
Initial Inspection of 3641 Ponds X $480 $174,720 1,091 ponds X $24002 (not all ponds require maintenance every year) $2,618,400 $2,793,120
    1,091 ponds X $1500 for non structure

maintenance

$1,636,500 $1,636,500
Initial Inspection of 1129 Underground Structures X $480 per inspection. $541,920 462 oil/grit separators X3 $1200 (oil/grit separators require annual maintenance) $554,400 $1,096,300
    187 underground storage structures X

$30003 (underground storage structure require annual maintenance)

$561,000 $561,000
    480 infiltration trenches, and other structures X3$250 $120,000 $120,000
Inspection of 254 new structures each year 254 X $480 $121,920 254 X $3000 $762,000 $883,920
Salary (2 field staff) for final inspection, 1 Program Manager $202,000     $202,000
Total $1,040,560 Total $6,252,3000 $7,292,8404

ASSUMPTIONS:

1. Ponds are inspected once every 3 yrs., 364 represents 1/3 of the total. All other structure types are inspected yearly. Total number of structures is estimated and will increase over time.
2. Maintenance costs for ponds were taken from Prince George's County records.
3. Costs are estimated. Individual costs will depend on size, capacity, previous maintenance and structure type.
4. Costs include 254 new facilities anticipated each year.
5. Cost per inspection is $480. Lawn mowing and trash removal costs assumed to be $1500 per pond.

Based on the inspections and maintenance work already completed, and using the figures in Tables 2 and 3, DEP estimates that a routine stormwater management program, conducted at the frequency dictated in the NPDES permit, will cost approximately $7.5 million per year. In addition, it is estimated that the average commercial property owner pays $1,600 per year, per facility.

Similarly, DPWT staff estimates an approximate cost of $6.8 million per year to adequately inspect and maintain its storm drain systems. This figure includes approximately $3.5 million necessary to implement the Federal Clean Water Act, which requires the County to increase the level of inspection and maintenance activities related to stormwater. The remaining $3.3 million would be required to perform routine maintenance on the system itself. This maintenance program is based on a 10-year, proactive maintenance cycle, and includes all aspects of storm drainage work, including: erosion repairs, roadway ditch/channel repairs, cleaning of enclosed storm drainage systems, installation/repairs of drainage pipe and catch basins/spillways/walls, and paving drainage ditches. In addition, DPWT estimates a level of $1 million yearly for capital improvements to correct deficiencies in the existing system. Currently, DPWT is allocated approximately $2.6 million from the ad valorem storm drain tax.

 

V. SUMMARY CHARACTERISTICS OF THE CURRENT SYSTEM

  • The quality and type of stormwater management in County varies widely because of the range of land uses, the evolution of regulatory requirements and available technology.
  • The County system for stormwater conveyance consists of catch basins 811 miles of storm sewers, over 1,000 miles of open ditches and thousands of inlet structures and outlets, 7,173 outfalls, 2220 stormwater facilities, and several thousand miles of free-flowing streams.
  • Ad Valorem taxes generated $2.7 million in fiscal year 1999 in storm drain taxes that go to the General Fund. The General Fund provides some revenue for watershed restoration activities. DEP spends $3 million per year for stream restoration. No funds are designated for a habitual and comprehensive facility inspection program. For a number of years, DPTW has been allocated approximately $2.6 million for storm drain maintenance.
  • A one-time appropriation and education grant is funding the current round of facility inspections. When this funding is exhausted, there is no identified revenue source for the future inspections required by local County code and by the County’s NPDES permit.
  • There is no funding for routine inspection of storm drain facilities. DPWT reacts to complaints from citizens and to routine observations by members of their crews, while they perform normal work responsibilities.
  • The County is in the process of field verification for the inventory of stormwater management structures in terms of ownership, type and current condition. It is anticipated that this initial inspection program will be completed in FY 01. This program includes transferring all existing paper files (design plans, photos, and records) to a digital format, which can be accessed by laptop computer in the field to expedite inspections. County inspections completed to date (approximately 700) suggest a wide range of conditions - from structures that receive little or no maintenance, to those that have been maintained regularly. The overwhelming majority of facility inspections, 97%, have identified maintenance needs. That figure may increase when the inspection process is completed.
  • Of the inspected facilities in need of maintenance, approximately 42% require a major level of repair and/or maintenance. Major repairs are those that require work costing $10,000 or more, and include such activities as dredging and structural repair. The remaining facilities require lower cost, routine maintenance, including tree removal and grass mowing.
  • Within the County, there are instances where parties who benefit from the stormwater management facilities (beneficial users), do NOT share in the financial burden of maintaining those facilities. That responsibility currently falls only on the property owner – individual citizens, homeowner’s associations, commercial property owners, or county government.
  • The amount a property owner currently pays and how they pay depends on several factors including: when the property was constructed, the facility type and location, the adequacy of the HOA’s reserve, the ownership arrangement with the County, and the frequency maintenance has been performed.
  • Maintenance arrangements vary. In some instances, the County requires private stormwater facility maintenance. Other facilities were accepted for public maintenance or entered into a participation agreement. These agreements often call for routine maintenance, such as mowing and trash removal to, be the responsibility of the property owner, and preventative and restorative maintenance, such as dredging, to be the responsibility of the County.
  • Homeowners living in Common Ownership Communities (COC’s) responsible for stormwater management structures essentially pay twice for stormwater management. First, these residents pay fees to fund repairs to the associations’ privately-owned facilities. Then, these residents also pay taxes, assessed at the same rate as paid by other taxpayers who do not pay association fees.
  • Some homeowner associations with responsibility for maintaining storm drains and/or stormwater management facilities have not set aside adequate funds over time, and therefore have to impose specially designated fees or significantly increase association fees to make the structural repairs required to correct years of poor to non-existing maintenance.
  • The County is currently participating in the development of Total Maximum Daily Loads (TMDLs) with the Maryland Department of Environmental Protection. These pollutant load limits, authorized by the Federal Clean Water Act, are being implemented statewide to control nonpoint source pollution. It is anticipated that TMDLs will require a higher design standard for Best Management Practices (BMPs) addressing stormwater runoff. TMDLs will likely increase stormwater management costs and potentially impact rates of development in the County.

 

VI. PREVIOUSLY IDENTIFIED FINANCING OPTIONS

The 1996 "Analysis of Financing Options for Stormwater Management Programs in Montgomery County" identified three funding sources available for stormwater management programs - the general fund, user fees, and ad valorem tax.

General Fund

The County General Fund includes property taxes, income taxes, fees, fines and other miscellaneous revenue sources. The major advantage of using the General Fund for the management of stormwater is the administrative efficiency for revenue collection, it is legally defensible, and the public accepts use of the General Funds to pay for programs with a public benefit. The primary disadvantage of the General Fund is that it is subject to Montgomery County’s Spending Affordability Guidelines, and therefore would need to compete with other, often more politically popular programs for limited funds. Other disadvantages of using General funds for stormwater programs is that government staff must spend time each year to secure funds.

Stormwater User Fee

A stormwater user fee is a charge paid by property owners to fund stormwater services. The fee levels are based on an estimate of the amount of stormwater runoff from each property. The fee typically relates to the impervious area of the property, although other factors such as the number of accounts or the size or the pervious area of the property may also be considered. User fees may pay for operating costs, capital regional projects to serve a large area, or small capital projects to serve sub-areas. Three advantages of a fee over funds generated through property tax revenues are 1) increased stability and predictability, 2) greater equity, including the ability to capture fees from properties owned by Federal, State and non-profit entities, and 3) the opportunity for incorporating incentives for implementing onsite stormwater management. The disadvantages of a user fee, when compared to the general fund and a tax are: 1) the higher initial startup and ongoing administrative costs, 2) the non-deductibility of the fee on federal and state income taxes: and 3) the greater burden the fee may place on agricultural properties and other businesses in the County.

The 1996 OLO Report calculated rates for two types of user fees.

The first option, an impervious area user charge, determines the impervious coverage of a property based on its tax assessment class. This calculation multiplies impervious factors by the acreage in a tax class to determine the impervious acres for each tax class. Next, unit charge per impervious acre is established based on the total amount of revenue that needs to be raised.

The second option, an equivalent residential unit (ERU) user charge, assumes a uniform impervious area of 2,500 square feet for all single family residential parcels. The amount of impervious area for each tax class is divided by the ERU factor to determine the total number of ERU’s. Again, a rate per ERU is set based on the total amount of revenue that needs to be raised.

Tables 4 and 5 show the calculation of sample user charges for Montgomery County using FY 99 data from the State Department of Assessments and Taxation. Table 4 presents the calculation of an impervious area user charge and Table 5 displays the ERU user charge.

The rate base includes improved properties in Montgomery County, excluding property in the cities of Takoma Park, Gaithersburg, Rockville, and Chevy Chase Village. Properties in certain municipalities are excluded because these jurisdictions currently have separately funded stormwater management programs. Unimproved properties are excluded because they do not currently contribute to the stormwater problem. They would be added to the rate base as they developed.

The impervious factors or runoff coefficients represent factors typically used in national studies with one exception. The impervious factor for agricultural land has been dropped from 10 percent to 2 percent to more accurately reflect the impervious area of farms in Montgomery County. If the County moves forward with a stormwater user fee approach, the GIS system would be used to develop customized rates which would likely differ from the assumptions in Tables 4 and 5.

Tables 4 and 5 display sample rates for an impervious area user charge and an ERU charge. The tables also highlight some differences between the developed land use profile of the County, the distribution of impervious areas, and the burden of each user fee charge. For example, single family residential uses make up 44 percent of the developed acreage in the County but contain 60 percent of the impervious area countywide. Under Option 1, (Table 4) single family residential uses would contribute 60 percent of the revenues. Under Option 2, (Table 5) this revenue share would drop to 40 percent.

Agricultural uses make up 34 percent of the County’s improved acreage but represent only three percent of the "impervious base." They would contribute 3 percent of total revenues under Option 1 (in Table 4) and 4.5 percent of all revenues under Option 2.

Commercial and Industrial uses combined comprise 4 percent of the County’s improved acreage with 11 percent of its impervious base. Business would contribute 11 percent of all revenues under Option 1 (Table 4), increasing to almost 16 percent in Option 2 (Table 5).

Tax Exempt properties represent 15 percent of the County’s improved acreage and 17.5 percent of its impervious base. Under Option 1, these properties would contribute 17.5 percent of all revenues. Under Option 2 (Table 5) their share of total revenues would increase to almost 26 percent.

It is important to keep in mind that the rates in Tables 4 and 5 are those needed to raise $1 million in revenue. While the cost estimate for a stormwater program will vary widely depending on the scope of the program, multiplying each rate by a factor of 15 would yield a more realistic idea of an annual fee for Option #3. The rates vary widely by tax class. Under Option 1, the impervious area charge, average residential charges range from $2 to $3. The average fees for commercial and industrial properties range from $20 to $30 and $42 to $62 respectively. Tax exempt properties, which would not pay under an ad valorem approach, would pay $46 on average under Option 1 and $67 under Option 2. Agricultural owners would pay $28 under Option 1 and $41 under Option 2.

TABLE 4. RATES TO RAISE $1 MILLION UNDER THE "IMPERVIOUS AREA" USER CHARGE OPTION

Land Use Category

Total

Acres

Share of

Improved

Acres

Imp.Rate

Factors

Impervious Share Acres by

Land Use

Share Imp. Base

Fee/

Acre (LU)

Share of Rev.by LU

Annual fee/

Ave.Parcel

Agricultural 60,741

34%

0.02

1,215

3.1%

$ 0.51

3.1%

$ 27.64
Commercial 3,181

2%

0.90

2,863

7.3%

$ 23.06

7.3%

$ 19.55
Industrial 2,217

1

0.60

1,330

3.4%

$ 15.37

3.4%

$ 42.07
Residential (SF) 77,458

44

0.30

23,237

59.5%

$ 7.69

59.5%

$ 3.18
Apartments 3,996

2

0.75

2,997

7.7%

$ 19.21

7.7%

$ 1.87
Other 2,295

1

0.25

574

1.5%

$ 6.40

1.5%

$ 73.13
Exempt 27,269

15

0.25

6,817

17.5%

$ 6.40

17.5%

$ 45.85
Total 177,157    

39,033

100.0%  

100.0%

 

Source: OLO, State Department of Assessments and Taxation, Levy Year FY99

TABLE 5. RATES TO RAISE $1 MILLION UNDER THE EQUIVALENT RESIDENTIAL UNIT (ERU) USER CHARGE OPTION

Land Use Cateorgy

Total Acres

Share of Developed Acres

Imp. Rate Factors

ERUs (2500SF)

Share of ERU Base Fee Rev Acre (LU) Ave ERU Size Annual fee Ave. Parcel
Agricultural

60,741

34%

0.02

21,167

5

$ 0.75

18.80

$ 40.68
Commercial

3,181

2%

0.90

49,883

11

$ 33.93

13.30

$ 28.77
Industrial

2,217

1%

0.60

23,177

5

$ 22.62

28.61

$ 61.91
Residential (SF)

77,458

44%

0.30

186,932

40

$ 5.22

1.00

$ 2.16
Apartments

3,996

2%

0.75

52,220

11

$ 28.28

1.27

$ 2.75
Other

2,295

1%

0.25

9,997

2

$ 9.43

49.74

$ 107.62
Exempt

27,269

15%

0.25

118,784

26

$ 9.43

31.19

$ 67.48
Total

177,157

   

462160

       

Source: OLO, State Department of Assessments and Taxation, Levy Year FY99

An Ad Valorem Tax

An Ad Valorem Tax is a tax based on the assessed value of property. Two separate sections of State law give the County the authority to collect ad valorem taxes for stormwater management (Section 6-106 and 3-205). The County currently levies a one-cent storm drain tax on property in the storm drain district. The revenues are placed in the County’s General Fund. These funds are not directly allocated to DPWT. This ad valorem tax generated $2.7 million in FY 99 and DPWT was allocated $2.6 million for storm drain maintenance. Unlike other Special Revenue funds, the County does not use the Special Revenue Fund to track the relationship between the amount of revenue the county collects from the tax and the storm drainage maintenance expenditures.

The advantages of the ad valorem tax authorized under Section 6-106 is that it is already in place and already pays for a portion of the stormwater management in the County. Also because it is a property tax, it is deductible on federal and state income taxes. The disadvantage of the existing tax is that it does not raise enough money to pay for all facets of the management of stormwater. Moreover, state law limits the amount of the tax so that the county cannot increase the amount collected. Also, federal, state and nonprofit properties are exempt from the tax.

The County does not currently collect the ad valorem tax authorized under Section 3-205 of the State Law. The Section 3-205 law gives the county the added authority to establish an ad valorem tax at a rate that would pay for all facets of the county’s stormwater management programs. Under this law the county could set up a program modeled after the funding structure in place in Prince George’s county.

The 1996 OLO report also calculated sample rates for an ad valorem tax for stormwater management. Table 6 updates these rates using FY99 data from the State Department of Assessment and Taxation. The rate base excludes the cities of Rockville, Gaithersburg, Takoma Park and Chevy Chase Village.

The data show marked differences between the profile of improved properties and the assessable base profile. For example, single family residential properties make up 44 percent of the improved property but represent 74 percent of the assessable base. Commercial and industrial properties comprise 3 percent of developed property and make up almost 15 percent of the assessable base. Finally, tax exempt properties, which are not in the assessable base, represent 15 percent of all developed parcels.

The sample ad valorem tax rates for average parcels vary from $3.93 for single family residential parcels to $48.42 for industrial properties. These rates are based on a revenue estimate of $1 million. 

TABLE 6. RATES TO RAISE $1 MILLION UNDER THE AD VALOREM TAX USER CHARGE OPTION

Land Use Cateorgy

Total Acres

Share of Improved

Assessed Value

Share of Assessment Base

Total Revenue by Land Use Tax Rev/Acre Annual tax/ Ave Parcel
Agricultural

60,741

34%

$ 119,390,330

0.5%

$ 4,972 $ 0.08 $ 4.42
Commercial

3,181

2%

$ 2503231710

10.4%

$ 104,240 $ 32.77 $ 27.78
Industrial

2,217

1%

$ 941,774,750

3.9%

$ 39,217 $ 17.69 $ 48.42
Residential (SF)

77,458

44%

$ 17,639,604,500

73.5%

$ 734,550 $ 9.48 $ 3.93
Apartments

3,996

2%

$ 2,703,680,780

11.3%

$ 112,587 $ 28.17 $ 2.74
Other

2,295

1%

$ 106,473,440

0.4%

$ 4,434 $ 1.93 $ 22.06
Exempt

27,269

15%

 

0.0%

- - -
Total

177,157

  $ 24,014,155,510

100.00%

     

Source: OLO, State Department of Assessments and Taxation, Levy Year FY99

Table 7 shows how the burden of who pays varies among the two user fee options and the ad valorem tax. Single family residential uses contribute almost 75 percent of all revenues under an ad valorem tax. The user fee approaches distribute some of this burden among other uses. Under the impervious area charge, tax exempt properties provide 17.5 percent of the revenue and the agricultural contribution increases from .5 percent to 3.1 percent. Under the ERU charge, contributions from tax exempt properties increase to 26 percent and the single family residential share drops to 40 percent.

TABLE 7. TOTAL REVENUE SHARES FOR THREE FINANCING OPTIONS

Land Use Category Ad Valorem Tax "Impervious Area"

User Charge

ERU

User Charge

Agricultural 0.5% 3.1% 4.6%
Commercial 10.4% 7.3% 10.8%
Industrial 3.9% 3.4% 5.0%
Residential (SF) 73.5% 59.5% 40.4%
Apartments 11.3% 7.7% 11.3%
Others 0.4% 1.5% 2.2%
Exempt 0.0% 17.5% 25.7%

Table 8 summarizes the key characteristics of the potential sources of revenue from FY1999 OLO data, two ad valorem taxes, and the user charge/fee. All are currently authorized under state law.

TABLE 8. A SUMMARY OF STORMWATER MANAGEMENT FINANCING OPTIONS

  User Fee Ad Valorem Tax Ad Valorem Tax
Legal Authority Environment Article

Section 4-204

Article 29 Section 6-106 Article 29 Sections 3-205
Date Enacted 1992 1981 1987
Current Status Not Collected Collected Not Collected
Rate Limits Not Limited Limited – not to exceed .01/$100 assessed value Not limited- may be set at a rate needed to fund the activity. Not subject to Spending Affordability Guidelines.
Authorized Activities Inspection and enforcement, watershed planning, retrofitting , water quality programs. Maintenance of storm drainage systems in that portion of the sanitary district previously created. Maintenance of storm drainage systems including management facilities.

Reference: 1996 OLO Report

Table 9 highlights the pros and cons of a user fee verse an ad valorem tax as a revenue option. Developing and updating an accurate database on land use and impervious area on some 260,000 land parcels, as required for the rate formula proposed in the 1996 OLO report, would be a complex undertaking that would be costly to administer. There could be numerous appeals regarding the applicability or accuracy of assigned user fees charges. The user fee is also more vulnerable to legal challenges on technical grounds than an ad valorem tax. Based on input from the County Attorney, the user fee charge would also have exempted municipalities while the ad valorem tax would not (except for Takoma Park) thus providing a broader revenue base.

 TABLE 9. PROS AND CONS OF A USER FEE VERSUS AN AD VALOREM TAX

OPTION

PROS

CONS

USER FEE Has the potential to capture federal and nonprofit property

Based on the amount you benefit or contribute to the problem

Cheaper for residential property than a tax

Self adjusts as the amount of impervious surface grows

Provides the public with a link between benefit and cost

Stable and predictable source of revenue

More complicated and costly to set up initially

 May be more difficult to administer

Municipalities may opt out

Vulnerable to legal challenges

 

AD VALOREM TAX(3-205) Ease of setup and administration

Tax deductible from State and Federal taxes

 

Revenue fluctuates with property value

Taxes are politically unpopular

Taxes private property only - federal and nonprofit property are exempt

VII. OPTIONS

The Stormwater Financing Working Group developed and considered three alternative models to illustrate the range of solutions that are available. The management alternatives move from Option 1, which is enforcement based and requires the property owner to fund maintenance, to Option 3, which treats the management of stormwater as a public service and spreads the costs among the county taxpayers and other beneficiaries. These options are described below and provide a continuum of choice, from very little change to an entirely new management format. Each option includes an underlying rationale or definition of the main problem the option addresses, a brief summary of the key elements, a cost estimate, and a list of the advantages and disadvantages of the option.

The Stormwater Financing Options Working Group recommends adoption of Option 3 – a comprehensive Stormwater User Fee be instituted for property owners in Montgomery County set at a level to adequately fund the inspection and maintenance of all public and private stormwater and storm drain management facilities in the County.

In developing its recommendations, the group considered a number of issues, including:

  • Will the scope of work to be included in the new management and finance approach address: a) only existing stormwater management structures, b) new stormwater management structures plus storm drains c) retrofit projects or d) all of the above?
  • What approach will best provide assurance that permit conditions will be met and that water quality and quantity control will be adequate?
  • Who will be legally responsible for ensuring inspection of the stormwater management structures occurs with the frequency dictated in the permit? Who will perform maintenance activities? Is there a clear distinction between routine preventative maintenance and more expensive structural work? The NPDES permit states that the County is responsible for "ensuring" the work is performed but not necessarily performing the work.
  • What will the source(s) of funding be? Will there be a source of dedicated funds?
  • What legislative revisions to Chapter 19 are required to ensure a successful program?

 Option 1. Minimal Changes to Existing Hybrid Approach - County Inspects/Property Owner Maintains

Underlying Rationale

The current approach for maintaining stormwater management facilities is a hybrid of public and private responsibility. The County performs inspections and the property owner conducts and pays for maintenance activities. Option 1 retains this hybrid approach with minor revisions included to resolve equity issues, clarify existing county law, provide financial assistance and establish funds for a sustained inspection program. These revisions are required to comply with NPDES permit conditions. Option 1 improves on the existing approach by identifying dedicated funds for the notification, inspection and enforcement program and revising legislation to allow for stronger enforcement of County code. Furthermore, this approach corrects the inequity of non-contributing private property owners who benefit from publicly funded facilities by requiring these private property owners to contribute to the cost of maintenance.

Key Elements

  • Revise existing legislation (Chapter 19) to clarify the roles and responsibilities entailed in stormwater management. Retain the current division of responsibilities (County inspects, property owners maintain).
  • Establish a dedicated public fund to enable the County to operate a sustained inspection and enforcement program. Funds may be obtained through a tax, user fee, or the general fund.
  • Develop "set aside" cost guidelines for private property owners, so they may be aware of the costs involved in maintenance activities.
  • Establish a financing/revolving loan program to assist private property owners who need help with the costs of bringing the facilities into compliance (i.e. low interest loan). Require reserve funds be available for long-term capital maintenance costs of private facilities.
  • Establish a mechanism, such as a sub-assessment district, to enable private property owners, who currently benefit from one of the 49 large regional ponds or 40 smaller ponds/facilities which receive publicly funded maintenance, to contribute to the maintenance costs.

TABLE 10. COST ESTIMATE FOR OPTION 1

Fully fund County Inspection Program $1,040,600
Establish a Stormwater Assistance Fund

Establish Assessment Districts

$1,201,000*

$3,000,000

Total Cost $5,241,600

*Estimate assumes one third of the existing facility owners need assistance.

Advantages of Option 1

  • Assists private property owners with insufficient funds to pay for repairs, and to comply with State and County regulations by financing the cost of required repairs and maintenance through a low-interest loan that may be paid back over time. This loan program would allow Common Ownership Communities to avoid levying a large fee increase or special assessment that may pose a hardship on households with limited incomes.
  • Assures continuation of the County’s notification, inspection and enforcement programs by providing a dedicated public funding source.
  • Addresses deferred an/or substandard maintenance, which will improve water quality and public safety.
  • Provides the lowest cost alternative of the three options.
  • Sustains current level of responsibilities within the County government.
  • Assures a good faith effort is made towards meeting NPDES permit requirements.
  • Corrects some cost inequities by establishing assessment districts that would require private property owners who benefit from County owned facilities without payment.
  • Helps ensure that private property owners understand the cost of properly maintaining a stormwater management structure so adequate funds may be set aside for future maintenance.

 

Disadvantages of Option 1

  • Fails to address the long-term affordability of stormwater management for private property owners and the suitability of these property owners to properly maintain this vital infrastructure.
  • Fails to address two of the three equity issues discussed in this report; private property owners potentially supporting facilities that serve other non-contributing beneficiaries; and private property owners paying twice; once through taxes for stormwater structures that benefit both public and private users and again through assessments to support their own facilities.
  • Provides assistance funds for only one third of the existing facilities. Complex selection criteria will be needed to determine who is eligible for loans. Additional staff will be required to administer funds.
  • Fails to address maintenance of conveyance systems.

 

Option 2.  A Stormwater Utility with Voluntary Multiple Subdistricts

Underlying Rationale

Option 2 is similar to Option 1 in that it retains all the features of the hybrid approach described in Option 1. In addition, private property owners of stormwater management facilities may petition the County to assume long-term capital maintenance responsibility for their facilities. Such maintenance would be financed through a County-administered assessment district composed of all beneficial users within the facility’s drainage area. Routine maintenance, such as mowing, trash pickup and tree removal would remain the responsibility of the private property owner.

 

This option corrects most of the current inequities by establishing a system where all those benefiting from a stormwater management facility – whether privately or publicly owned – contribute to its upkeep. Option 2 improves on the existing approach by identifying dedicated funds for the notification, inspection and enforcement program and revising legislation to allow for stronger enforcement of county code, also by providing financial assistance and/or where requested allows the property owner to relinquish maintenance responsibilities. Option 2 establishes assessment districts for the 40 large public regional ponds and the 49 structures.

 

Key Elements

  • Revise existing legislation (Chapter 19) to clarify the roles and responsibilities entailed in stormwater management. Retain the current division of responsibilities (County inspects, property owners maintain).
  • Establish a dedicated public fund to enable the county to operate a sustained inspection and enforcement program. As described in Section IV, funds may be obtained through a tax, user fee, or the general fund.
  • Develop "set aside" cost guidelines for private property owners, so they may be aware of the costs involved in maintenance activities.
  • Establish a financing/revolving loan program to assist private property owners who need help with the costs of bringing the facilities into compliance (i.e. low interest loan). Require reserve funds be available for long-term capital maintenance costs of private facilities.
  • Establish a mechanism (sub-assessment district) so that those private property owners, within the drainage area of one of the 49 large regional ponds or 40 smaller ponds/facilities which receive publicly funded maintenance, will contribute to the maintenance costs.
  • Allow private property owners to petition the County to relinquish long-term capital maintenance responsibilities to the County. The property owner would retain ownership of the stormwater facility and perform routine maintenance. This requires that the facility be in good working order prior to acceptance, or that an in lieu of fee is paid, and that an assessment district for those within the drainage areas who relinquish maintenance responsibility to the County is established.

 

TABLE 11. ANNUAL COST ESTIMATE FOR OPTION 2

Fully Fund County Inspections $1,040,600
Establish a stormwater assistance fund $1,000,000
Cost to set up and administer assessment districts $ 500,000
Continue maintenance on County facilities $1,201,000
Providing credits for SW improvements $1,000,000
TOTAL ANNUAL COST $4,741,600

Advantages of Option 2

  • Assures County notification, inspection and enforcement occurs.
  • Assists private property owners with insufficient funds to pay for repairs and to comply with State and County regulations by financing the cost of required repairs and maintenance through a low-interest loan that may be paid back over time. This loan program would allow Common Ownership Communities to avoid levying a large fee increase or special assessment that may pose a hardship on households with limited incomes.
  • Provides private property owners who may lack the expertise to responsibly maintain complex stormwater management facilities with option of relinquishing that maintenance responsibility to the County, with capital maintenance costs to be borne by the facility’s beneficial users. This approach ensures good water quality and increased public safety by shifting the responsibility for maintenance to knowledgeable providers while ensuring that those who benefit pay for services.
  • Ensures a good faith effort is made towards meeting NPDES permit requirements.
  • Corrects most cost inequities by establishing assessment districts to include all those who benefit from a stormwater facility, whether publicly or privately owned, and are not required currently to contribute to its upkeep.
  • As a condition of using the revolving loan program, private property owners receiving low-interest loans to pay for stormwater facility repairs would be required to set aside reserve funds for long term capital maintenance of their stormwater management facilities. This requirement would move property owners toward financial self-sufficiency and ensure that private funds are available to pay for future repairs.
  • Addresses long-term financing and budgeting for some private property owners through the low interest loan program or the creation of an assessment district for owners willing to relinquish responsibility for capital maintenance to the County.

Disadvantages of Option 2

  • Requires establishing a mechanism to administer both the loan program and creation/operation of assessment districts around the stormwater management facilities of private owners who apply voluntarily to the County to assume capital maintenance of their facilities. This will require additional staffing to establish and implement these new functions.
  • Equity issues are not addressed entirely. Private property owners of some stormwater management facilities still pay twice: once for on-site maintenance and then again through taxes to support public-funded retrofit projects that serve both public and private land.
  • Requires establishing a mechanism to administer both the loan program and creation/operation of assessment districts around the stormwater management facilities of private owners who apply voluntarily to the County to assume capital maintenance of their facilities. May require additional staffing to establish and implement these new functions.
  • Does nothing to simplify the existing array of financing arrangements and, through the creation of new programs, will increase administration costs.
  • Municipalities may choose not to participate.
  • Fails to address maintenance of conveyance systems

 

Option 3.  RECOMMENDED OPTION:

A Mandatory Countywide Stormwater User Fee/Tax

Comprehensive Approach

Underlying Rationale

Option 3 is the most comprehensive of the three options provided. Option 3 improves on the existing approach by identifying dedicated funds for the notification, inspection and maintenance program and revising legislation to establish a funding mechanism to assure property owners are capable of meeting their financial maintenance responsibilities.

Option 3 integrates collection, conveyance, storage, treatment and disposal of stormwater runoff programs, so as to prevent channel erosion and the reduction of water quality in receiving streams. This Option recognizes that safe (unflooded) roads and clean streams are broad public benefits that require broad public funding. It spreads the cost of the programs needed to bring the County into compliance with its NPDES permit throughout the County and eliminates the existing inequities in the stormwater management programs.

Key Elements

  • Establishes a mandatory countywide stormwater district and utility fund. The County should attempt to draw the district boundaries as broadly as possible. The broadest boundaries would include municipalities, the agricultural reserve, and federal and non-profit properties.
  • Establishes a dedicated public fund to enable the county to operate a sustained inspection and enforcement program. Funds may be obtained through a user fee.
  • Establishes a stormwater utility fund/ or Non-Departmental Account to collect assessments to pay for inspection, maintenance and enforcement program(s). The user fee would replace the existing ad valorem storm drain tax.
  • Provides legislative revisions which authorizes the County to inspect, maintain and provide structural maintenance and repair of facilities that serve more than one property, to undertake planning and design activities to retrofit critical nonfunctioning facilities.
  • Provides that the County would only take over maintenance of facilities that were in proper working order and brought up to current standards wherever possible and subject to appropriate easements.

TABLE 12. ANNUAL COST ESTIMATE FOR OPTION 3

Fully fund County Inspection program $1,040,600
Maintenance costs for all private facilities that serve more than one lot and all public facilities $6,252,300
Cost of maintenance and inspection conveyance system. $6,800,000*
Cost estimate for retrofit facilities Comes from Capital Budget
Credits $2,000,000
Cost to set up billing system $ 500,000
ANNUAL TOTAL COST $16,592,900

*DPWT believes a comprehensive program would require $6.8 million/year for the proactive inspection and maintenance of storm drain conveyance systems. A detailed breakdown of estimated costs is not available at this time. Appendix B provides the Agency’s current assumptions.

Advantages of Option 3

  • Fully funds County's water quality and stormwater management programs to come into full and timely compliance with NPDES permit requirements.
  • Provides implementation engine for the Countywide Stream Protection Plan.
  • Provides increased funding and flexibility to deal with storm drain problems, homeowners’ complaints and public safety.
  • Addresses deferred maintenance and retrofits of nonfunctioning structures. These efforts will correct flooding problems and significantly improve water quality over time.
  • Recognizes stormwater management as broad public benefit that should be broadly funded.
  • Achieves economies of scale with routine countywide system of inspection, maintenance and repairs.
  • Addresses long term financing problems for HOAs.
  • Ensures expertise for stormwater repairs by shifting responsibility to qualified providers.
  • Addresses inequities where one property owner may be currently paying for the stormwater maintenance of structures that benefit those who do not pay.
  • A user fee potentially obtains from non-profit and federal property owners.
  • Potentially provides for new funding for construction of facilities to correct flooding, particularly in older, downcounty communities.
  • Addresses maintenance of conveyance systems.

Disadvantages of Option 3

  • Most costly approach.
  • Imposes additional government levy on a majority of current taxpayers.
  • Imposes a new county fee on traditionally tax-exempt properties.
  • A user fee is not a deductible expense for income tax purposes for an individual homeowner.
  • Municipalities and special taxing districts may not want to participate in a comprehensive, countywide stormwater system.

 

VIII.  Next Steps

The Working Group recognizes that there is still much work left to be done before real change can be effected. However, the Group also believes that the next steps need to be taken by the County, with broader public input and the assistance of consultants that specialize in these issues. Specifically, the Group identified the following tasks that should be accomplished as soon as possible in order to address the critical issue of reforming our financing system for stormwater infrastructure.

  • Identify and make the necessary statutory and regulatory changes to implement the proposal.

The Working Group’s recommendations reflect significant changes in how the County finances and manages the inspection, construction, and maintenance of all stormwater infrastructures in the County. In order to implement the changes, there will need to be changes to both County laws and regulations. The County Attorney’s Office should be charged with identifying the necessary changes and developing proposed legislation and regulations to implement the proposed changes.

  • Develop an organizational structure for implementing the recommendations.

The Work Group did not resolve how the County’s departments or agencies should be organized to best implement the proposal. The current system has the Department of Environmental Protection implementing all programs and policies related to stormwater storage structures; the Department of Public Works and Transportation is responsible for stormwater conveyance structures. The intent of the Group’s proposal is to allow the County to more comprehensively fund and manage all stormwater programs. It would therefore be logical that the administration of these programs be unified as well. Consultants may have greater objectivity and experience in this issue and could provide the County with a recommended organizational structure. The management of the contract should be at a level to allow for consideration of inter-departmental issues.

  • Develop and implement a billing procedure for the fee.

In order to collect a user fee, a billing procedure needs to be established within the County. This can be a complex undertaking and may be another area where consulting firms with prior experience may benefit the discussion.

  • Coordinate the implementation of this program with the County’s Special Taxing Districts.

The County needs to determine how this program will work in coordination with the State authorized municipalities and special taxing districts within the County to determine how the fee will work in these jurisdictions.

  • Map all impervious surface in the County on the Geographic Information System.

Much of the County’s impervious surfaces have already been mapped on the Geographic Information System. However, several gaps in this mapping need to be filled before the County can implement this program.

  • Develop a public information program to educate the public on the proposed changes and solicit public input.

The Group recognizes that any legislative and regulatory changes have an established public hearing process. However, the Group also believes that given the extensive nature of the proposed changes that there should be a comprehensive public outreach effort to make others aware of the proposals. The appendix provides a list of groups that should receive copies of this report and be asked to provide comments.

Appendices

 

Montgomery County Stormwater Financing Report

Public Participation Program

Suggested Community Groups to Receive Final Draft Report or Presentation

 

Chambers of Commerce

Water Quality Advisory Board

Commission on Common Ownership Communities

Suburban Maryland Building Industry Association

Upcounty Citizens Advisory Board

Montgomery County Taxpayers League

Citizen Regional Advisory Boards

Washington Metropolitan Chapter Community Associations Institute

Montgomery Village Foundation

Sierra Club

Eyes of the Paint Branch

Audubon Naturalist Society

Maryland National Capitol Building Industry Association

Apartment and Office Building Association

Municipalities

Montgomery County Civic Federation

League of Women Voters

Maryland Homeowners Association, Inc.

Montgomery County Planning Board

The Glen Preservation Foundation

Trout Unlimited

Chesapeake Bay Foundation

Isaac Walton League

 

   
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Last edited: 10/13/2004