Commissioner Jim Francesconi
Commissioner Charlie Hales
Commissioner Dan Saltzman
Commissioner Erik Sten
REPORT TO COUNCILAlternative Methods of FinancingPortland’s Stormwater Utility
- Stormwater Rate Alternatives. The Bureau presents four methods of calculating stormwater management charges. The alternatives have the general effect of shifting monthly charges from properties that manage stormwater on-site to those properties that do not manage stormwater at all. Two of the alternatives rely on impervious area, a simple, efficient and widely accepted measure for allocating stormwater management charges. A third alternative introduces trip generation data to link stormwater management charges to use of Portland’s transportation system, the source of 70% of the demands on the stormwater utility. A fourth alternative uses a mix of five characteristics of property to closely link hydrologic factors to the allocation of charges.
- Discount Programs. The City had a difficult experience when it first offered discounts for stormwater charges between 1992 and 1998. History suggests that the City exercise extreme caution in devising and implementing any new discount program, and that such a program complement and support other City environmental policies and programs. Discount programs are incorporated in each of the four rate alternatives to approximate their rate impacts, however the Bureau recommends that the City Council carefully address a number of policy and program issues before considering the reintroduction of a discount program.
- Itemized Charges. For each rate alternative, the Bureau divided stormwater management charges into three components representing three major contributors to the demands of the utility: transportation uses (70%), property runoff (23%), and environmental protection and restoration (7%). The Bureau arrived at the 70% allocation for transportation uses by calculating the stormwater runoff and pollutant loads that are generated by public rights-of-way, versus those generated by private property. The Bureau’s methodology and calculations have been reviewed and approved by the Portland Office of Transportation.
- Drainage Districts. The Bureau is exploring the feasibility of an intergovernmental agreement with the three Drainage Districts in the City (Peninsula No. 1, Peninsula No. 2 and Multnomah No. 1) to provide fair participation in Portland’s stormwater utility by properties located within the boundaries of the districts. The Bureau and Drainage Districts agree that these properties should participate to a limited extent in the transportation and environmental components of the stormwater management charges. The level of participation should be determined by considering the extent to which the Drainage Districts provide uncompensated stormwater management services which benefit the City.
- Revenue Enhancements. The Bureau estimates that limited rate relief (a 2% to 3% reduction) would be obtained by expanding the utility rate base to include riparian properties and other properties not currently paying stormwater management charges. The City could reduce stormwater rates by nearly 25% by shifting the financial burden of environmental programs to a mix of new taxes, fees and general obligation debt. The reduction could be as high as 70% by shifting transportation-related costs to transportation based fees and taxes. The Bureau encourages a public discussion of alternative financing mechanisms, including local or regional general obligation bonds, gasoline taxes, sales taxes on commodities that increase the pollutant load in stormwater, and special assessments for violations of environmental regulations. Such a discussion should be broad enough to link stormwater management to the broader challenge of financing public infrastructure in Portland.
- Program Reductions. Another way of holding down stormwater management charges is to cut programs. A one-dollar reduction in the current monthly residential stormwater management charge and a commensurate reduction in charges for commercial and industrial properties yields an annual revenue reduction of $2.7 million out of revenue requirements totaling $28 million. Such an annual revenue loss results in significant reductions in stormwater programs. For example, a $2.7 million reduction in resources is equal to the utility’s annual funding of watershed programs, lab services for stormwater monitoring, facilities planning and the stormwater utility’s share of the costs of the Endangered Species Act.
- Program Enhancements. The Bureau recommends that the City Council coordinate efforts to restructure utility rates with program enhancements envisioned in the Clean River Plan. Through a combination of incentives, technical support and education, the City can mobilize significant private efforts to reduce the damaging effects of stormwater runoff.
- Portland receives between 80 and 100 billion gallons of precipitation annually, enough water to supply Portland’s domestic water needs for 4 to 5 years.
- Portland’s varied topography, geology and history of infrastructure development have produced a complex stormwater management system, consisting of 1700 miles of pipes, 420 miles of ditches and culverts, 14,200 sumps and 365 ponds. These facilities convey, control, treat and dispose of stormwater runoff into streams, rivers and underground aquifers.
- The City invests more than $28 million per year in stormwater facilities and operations. The three largest components of the annual stormwater budget include capital investments and debt service (44%), system operations and maintenance (30%), and environmental restoration and protection programs (26%).
- Responsibility for these functional costs are divided among three general categories:
- Transportation uses are responsible for 70% of the demands on Portland’s stormwater management systems. Nearly 2000 miles of public streets convey large volumes of polluted stormwater that must be collected, controlled and treated before being released into streams, rivers and underground aquifers.
- Private properties are responsible for 23% of the demands on Portland’s stormwater utility by adding runoff to street systems and injecting excess stormwater into groundwater systems.
- The remaining 7% of the demands on the stormwater utility are the responsibility of every Portlander to protect and restore our environment. This includes City efforts to restore the health of streams and rivers, rehabilitate endangered species and protect groundwater resources.
- Monthly residential stormwater fees have grown by nearly 10% per year from 1977 to 1999. Adjusted for inflation, the fee increases have averaged 6.45%. Between 1990 and 1999, residential stormwater fees grew by 13% annually, and 9% adjusted for inflation. The pressure on rates and charges will continue to increase as the stormwater utility confronts new demands for facilities and services in response to the recent listing of salmon and steelhead trout on the endangered species list, and growing regulatory concerns about the environmental protection of groundwater resources.
- Estimated rates and charges are based on utility revenue requirements in excess of $28 million for FY 99-00, and a utility rate base of nearly 637 million square feet of impervious area. The analysis does not include impervious area estimates for riparian properties and properties served by drainage districts.
- Discount programs are limited to the on-property component of the utility charge and are fully financed within the stormwater utility. Administrative costs for the discount program assume relatively high eligibility criteria and requirements for documentation of on-site stormwater facilities.
- The Bureau’s estimated rates and charges are based on the assumption that all properties and ratepayers are responsible for the costs of the transportation and environmental components of the stormwater utility.
- Should the City offer discounts to all customers or limit the program to specific customer classes? Should the discount program be linked to other City policies or goals, such as the Clean River Plan?
- Should the City allow discounts for any private facility that detains, controls, treats and disposes of stormwater on-site? OR, should the City limit the discount to private facilities that meet or exceed stormwater standards?
- Should the City require full documentation of improvements (permits, inspection reports, receipts, etc) as a part of a discount application procedure? OR, should the City provide a simple application process and perform a random audit of applicants to assure compliance with City standards and criteria?
- Should the City’s discount application process include fines, penalties and the retroactive billing of stormwater charges in cases of false or fraudulent applications?
- Should the City charge an application fee for processing discount applications? OR, should the application process be funded by the entire customer base through the calculation of stormwater charges?
- Should the impact of discounts be fully financed by stormwater charges? OR, should the discounts be funded from other City resources?
- The 1992-1998 Discount Program attracted low to moderate participation from eligible property owners despite Bureau efforts to inform existing customers as well as new customers from east Portland. The Bureau estimates that between 20% and 25% of eligible property owners in east Portland participated in the program. The Bureau granted an average reduction in billable impervious area of 79% overall, and 77% for single family residences. The reductions in east Portland averaged 96% overall, and 86% for single family residences.
- The Downspout Disconnect Program recently completed a phase of work in north and northeast Portland, an area comprising 30,480 single family residences. The Program reports an aggregate reduction in stormwater runoff of 57% from private property due to the use of drywells and downspout disconnects. Less than 10% of properties in the program area had drywells.
- The Downspout Disconnect Program recently completed a survey of 11,686 of the 25,765 single family residences located in the central eastside and inner southeast Portland. The program reports that 29% of stormwater runoff from private property is diverted from combined sewers, and that an estimated 30% to 41% of additional runoff could be diverted through the efforts of the Downspout Disconnect Program. The survey found that 20% of the single family residences in the study areas had drywells.
- The Bureau recently surveyed 350 properties in east Portland to determine the extent of on-site stormwater facilities. The survey found that less than 30% of properties have drywells, soakage trenches and pits, or other stormwater facilities, based on city and county building records.
- Three independent Drainage Districts serve a combined area of more than 10,000 acres along the south shore of the Columbia River. The area is located within the Columbia River floodplain, a natural collection area for surface water runoff and groundwater infiltration from areas of east Portland south of Columbia Boulevard.
- Landowners within the Districts have invested in significant stormwater collection and pumping systems that are maintained and operated by the Drainage Districts. Property owners pay for the capital and operating requirements of the Drainage Districts through annual special assessments that are collected by Multnomah County. Their assessments pay for the following activities:
- The operation and maintenance of a system of levees, and pumps that move excess water from protected properties, over the levees and out into the Columbia River.
- The operation and maintenance of pumps, ponds, ditches, swales, culverts and other stormwater facilities that remove runoff from approximately 10,000 acres of land inside their service areas, including runoff from 1,044 acres of City streets.
- The removal and treatment of additional runoff that originates from 3,520 acres of City streets that are located outside the boundaries of the Districts and extend south of Columbia and Sandy Boulevards.
- The Drainage Districts assist the City of Portland to achieve valuable economic development goals by facilitating private development within the Columbia River floodplain. All developments within the Drainage Districts are dependent on the ability of the Districts to maintain more than 25 miles of levees and remove millions of gallons of stormwater from low-lying properties.
- A "cross-subsidy" exists between the Drainage Districts and the City of Portland due to investments and expenses made by one party on behalf of the other. The components of the cross-subsidy include the following:
- A significant portion of costs incurred by the Drainage Districts relates to stormwater runoff from public rights-of-way, pumping groundwater to stabilize the soils that support public streets, assisting with environmental restoration of the Columbia Slough, and handling excess stormwater runoff from areas south of the boundaries of the Drainage Districts. More than 60% of the expenditures (including debt service and excluding maintenance of levees) is attributable to the City of Portland.
- The City of Portland spends more than $20 million per year to remove and treat stormwater from public rights-of-way, and to protect and restore the environment. These responsibilities and costs are held in common by all property owners of the City. Property owners within the Drainage Districts have avoided the burden of contributing their fair share to these stormwater management costs, despite their common use of the City’s street and transportation facilities and their direct link to the health of Portland’s environment.
- Any calculation of a "net" stormwater management charge to property within the Drainage Districts should be limited to the transportation and environmental components of the utility’s revenue requirements, net of cross-subsidies. Property owners pay the property component directly to the Drainage Districts in the form of their annual assessments.
- The Bureau defines stormwater runoff as peak discharge (cubic feet per second) for a 10-year storm as calculated using the Rational Method. The Rational Method relies on acreage of property. For private property, the Bureau used data provided by the City’s geographic information system (GIS). For public rights-of-way, the Bureau used GIS data, as well as data provided by the 1998 Status, Condition and Value reports of the Portland Office of Transportation (PDOT). The report provides detailed information for 1967 miles of public rights-of-way, owned and operated by PDOT. Based on City GIS data, the Bureau estimated that an additional 4740 acres of public rights-of-way are owned by the Oregon Department of Transportation (ODOT).
- The Bureau divided each class of property into impervious and permeable components. For private property, the Bureau used GIS data. For public rights-of-way, the Bureau classified paved streets, sidewalks and curbs as impervious, and unimproved streets and landscaping as permeable. The Bureau estimated ODOT properties to be between 25% to 50% impervious.
- The Rational Method defines peak stormwater discharge as a function of the intensity of a storm and the acreage of property (Qp = CiA). The Bureau used an intensity factor (i) of 1.95 for private property and 2.72 for public rights-of-way. In addition, the Bureau used the following runoff coefficients (C):Impervious Private Property and Improved Streets .90 to 1.00 depending on topographyPermeable Private Property .15 to .40Unimproved Streets .20 (average of factors for lawns/pasture/meadows)Sidewalks .30 (loose gravel areas and walks)Curbs .90Landscaping .20 (average of factors for lawns/pasture/meadows)
- The Bureau estimated pollutant loads of stormwater runoff by multiplying the peak discharge results times a weighting factor for each class of property. The weighting factor is a composite of pollution values for five common stormwater pollutants (total suspended solids, total copper, dissolved copper, total zinc and total phosphorus). The source for the data was Analysis of Oregon Urban Runoff - Water Quality Monitoring Data Collected from 1990 to 1996, prepared by Woodward-Clyde Consultants for the Oregon Association of Clean Water Agencies (June 1997). The Bureau used the following weighting factors:
Single Family Residential Property 1.67Multi-Family Residential Property 1.67Commercial Property 2.45Industrial Property 2.50Public Rights-of-Way 3.10
- A complete loss of current annual financing for watershed planning and management programs, re-vegetation work performed for the watershed program, stormwater monitoring and investigations performed by the Water Pollution Control Lab, and stormwater facilities planning. Also, more than 50% of the stormwater share of the City’s response to the Endangered Species Act.
- A 42% reduction in current annual financing for stormwater operations and maintenance, including a commensurate reduction in the stormwater portion of the Bureau’s interagency agreement with the Bureau of Maintenance.
- A one-time loss in the utility’s borrowing capacity of $30 million. This is roughly twice the projected capital requirements of the surface water management program over the next five fiscal years.
- Offer free or discounted trees to property owners and organize tree-planting efforts in neighborhoods to increase the tree canopy and reduce the impacts of impervious development.
- Provide technical assistance, education and training to property owners who wish to invest in on-site stormwater management facilities. Provide grants and low interest loans for on-site stormwater management facilities that exceed existing City standards.
- Provide education and training on the proper use of herbicides, insecticides, fertilizers, and other potential pollutants. Develop a certification program for property owners who pledge to abstain from using these potential pollutants.
- Increase the amount of rate relief provided to low income ratepayers who have made investments in on-site stormwater management facilities.
- Provide discounts to property owners who are unable to install stormwater management facilities on their properties but do so elsewhere in the City as a part of a neighborhood or community initiative.