Sustainable Stormwater Funding System

After an internal audit noted that the cities of Kitchener and Waterloo were underfunding their stormwater management infrastructure by $4.7 million every year, these cities undertook a revision of the infrastructure funding model in 2012 resulting in more money for stormwater management while at the same time incentivizing property owners to reduce the amount of overland runoff they generate. The Federation of Canadian Municipalities recently reported that more than $50 billion is needed to replace or repair municipal storm and wastewater infrastructure and the existing, aging, infrastructure is increasingly unable to handle the capacity of water flowing into the system. This issue will only be exacerbated as time goes, as the infrastructure deficit increases, the infrastructure itself ages and loses capacity, and the total volume of water entering the system increases due to climate change and an increase in impermeable surface area.

Understanding and Assessing Impacts

Across Canada, many municipalities are struggling both to maintain their existing storm and wastewater infrastructure and also with expanding it to meet future needs. A report from the Federation of Canadian Municipalities (FCM) found that roughly $50 billion is needed across the nation in order to replace or repair municipal storm and wastewater infrastructure. This report joins others published by organizations such as the Canadian Water and Wastewater Association and the Canadian Water Network indicating that local governments across Canada are facing significant infrastructure deficits and that much of the core infrastructure on which current cities rely is outdated and under-maintained. As cities continue to grow, the expanded needs for waste and stormwater will also grow, both as needed for new housing and other development as also as a result of the increase of impermeable surface area that comes with development. Both of these trends will only be exacerbated by climate change’s effect on local weather patterns; it is likely that extreme rainfall events will only become more common in the near future. The cities of Kitchener and Waterloo, officially distinct cities but whose boundaries have long since melded together, recognized the need for reforming their funding model for waste and stormwater management as it was continuously underfunded for years.

Identifying Actions

Kitchener and Waterloo’s first step in creating a new funding model for storm and wastewater infrastructure was to conduct a thorough review of their current funding models; this began in 2004. This review confirmed that the same issues affecting many other Canadian cities were also operating in Kitchener and Waterloo – their infrastructure was aging, costs were increasing, and continued development combined with the catalyst of climate change were pushing the systems beyond their capacity. The system was already a significant burden on the tax base, retrofits would necessarily only increase this. A new funding model was deemed necessary. The two cities conducted a joint five-year feasibility study which included extensive public consultation and review. The result of this study was the development of a funding mechanism that would provide revenue for infrastructure while giving property owners a more direct interest in awareness of the quality of their infrastructure system and its impact on the environment. This new model was a user-pay system in which property parcels are allocated to one of several tiers and are required to pay stormwater service fees based on the estimated amount of runoff created by properties in each tier. Once this decision was made, the main task for implementation was determining how much runoff each tier contributed and, therefore, how much each property should pay.

Implementation

In order to calculate the estimated runoff, and therefore the fee payments, for teach tier, the City of Kitchener sampled 500 properties measured the total impervious area and statistically correlated that information to building footprints. With this information, Kitchener established a 13-tier system, with the lowest tier required to make payments of $47 while the largest non-residential properties, at the highest tier, would be paying $23,000 annually. Waterloo also used a tiered system but arrived through a slightly different means. Instead, they used a combination of property size and land-use classification to estimate the expected runoff and based their tiers off of those values. In Waterloo, the system was implemented over the course of four years, being fully realized in 2014. Both cities have also adopted a stormwater credit system in which property owners can undertake interventions that reduce stormwater runoff and receive credit towards their stormwater fees – an equitable solution because they now contribute less to the overall load on the system. Non-residential interventions include stormwater management ponds, oil grit separators, rooftop storage, underground storage, parking lot storage, filter strips, paved area sweeping program, salt management plans, and others. Institutional properties can also receive credits for educational programs such as training programs to increase employee awareness of stormwater management or distributing educational material.

Outcomes and Monitoring Progress

In Kitchener, under the previous tax-based model, residential home properties accounted for roughly 75% of the payments for funding stormwater maintenance and expansion. Under the new model, these same properties now contribute 55% of the total funding while larger industrial, commercial and institutional properties pay the rest. In addition to shifting the tax base from the average citizens towards larger organizations, this new model also brings in roughly $4 million extra a year, with the different being derived from those same larger organizations. The new program appears to be successful, as the cities have recently used the money to undertake several stormwater infrastructure improvements such as the Victoria Park Lake Improvements project in Kitchener. In providing financial incentives for property owners to lower their own runoff, the system achieves long-term sustainability by both increasing the funding available for infrastructure maintenance and expansion and also by lowering the expected amount of stormwater entering the system, reducing the need for spending in the long run. The stormwater credits have proven to be very popular, with 750 requests for credit being made in Waterloo between its implementation in 2013 and writing of this case study in 2014. Kitchener had even more success, with some 4500 applications for stormwater credits being made in the first year of the model’s implementation. All of these applications represent stormwater runoff reduction interventions of some sort.

Resources


Understanding and Assessing Impacts

Across Canada, many municipalities are struggling both to maintain their existing storm and wastewater infrastructure and also with expanding it to meet future needs. A report from the Federation of Canadian Municipalities (FCM) found that roughly $50 billion is needed across the nation in order to replace or repair municipal storm and wastewater infrastructure. This report joins others published by organizations such as the Canadian Water and Wastewater Association and the Canadian Water Network indicating that local governments across Canada are facing significant infrastructure deficits and that much of the core infrastructure on which current cities rely is outdated and under-maintained. As cities continue to grow, the expanded needs for waste and stormwater will also grow, both as needed for new housing and other development as also as a result of the increase of impermeable surface area that comes with development. Both of these trends will only be exacerbated by climate change’s effect on local weather patterns; it is likely that extreme rainfall events will only become more common in the near future. The cities of Kitchener and Waterloo, officially distinct cities but whose boundaries have long since melded together, recognized the need for reforming their funding model for waste and stormwater management as it was continuously underfunded for years.

Identifying Actions

Kitchener and Waterloo’s first step in creating a new funding model for storm and wastewater infrastructure was to conduct a thorough review of their current funding models; this began in 2004. This review confirmed that the same issues affecting many other Canadian cities were also operating in Kitchener and Waterloo – their infrastructure was aging, costs were increasing, and continued development combined with the catalyst of climate change were pushing the systems beyond their capacity. The system was already a significant burden on the tax base, retrofits would necessarily only increase this. A new funding model was deemed necessary. The two cities conducted a joint five-year feasibility study which included extensive public consultation and review. The result of this study was the development of a funding mechanism that would provide revenue for infrastructure while giving property owners a more direct interest in awareness of the quality of their infrastructure system and its impact on the environment. This new model was a user-pay system in which property parcels are allocated to one of several tiers and are required to pay stormwater service fees based on the estimated amount of runoff created by properties in each tier. Once this decision was made, the main task for implementation was determining how much runoff each tier contributed and, therefore, how much each property should pay.

Implementation

In order to calculate the estimated runoff, and therefore the fee payments, for teach tier, the City of Kitchener sampled 500 properties measured the total impervious area and statistically correlated that information to building footprints. With this information, Kitchener established a 13-tier system, with the lowest tier required to make payments of $47 while the largest non-residential properties, at the highest tier, would be paying $23,000 annually. Waterloo also used a tiered system but arrived through a slightly different means. Instead, they used a combination of property size and land-use classification to estimate the expected runoff and based their tiers off of those values. In Waterloo, the system was implemented over the course of four years, being fully realized in 2014. Both cities have also adopted a stormwater credit system in which property owners can undertake interventions that reduce stormwater runoff and receive credit towards their stormwater fees – an equitable solution because they now contribute less to the overall load on the system. Non-residential interventions include stormwater management ponds, oil grit separators, rooftop storage, underground storage, parking lot storage, filter strips, paved area sweeping program, salt management plans, and others. Institutional properties can also receive credits for educational programs such as training programs to increase employee awareness of stormwater management or distributing educational material.

Outcomes and Monitoring Progress

In Kitchener, under the previous tax-based model, residential home properties accounted for roughly 75% of the payments for funding stormwater maintenance and expansion. Under the new model, these same properties now contribute 55% of the total funding while larger industrial, commercial and institutional properties pay the rest. In addition to shifting the tax base from the average citizens towards larger organizations, this new model also brings in roughly $4 million extra a year, with the different being derived from those same larger organizations. The new program appears to be successful, as the cities have recently used the money to undertake several stormwater infrastructure improvements such as the Victoria Park Lake Improvements project in Kitchener. In providing financial incentives for property owners to lower their own runoff, the system achieves long-term sustainability by both increasing the funding available for infrastructure maintenance and expansion and also by lowering the expected amount of stormwater entering the system, reducing the need for spending in the long run. The stormwater credits have proven to be very popular, with 750 requests for credit being made in Waterloo between its implementation in 2013 and writing of this case study in 2014. Kitchener had even more success, with some 4500 applications for stormwater credits being made in the first year of the model’s implementation. All of these applications represent stormwater runoff reduction interventions of some sort.

Resources