Effective Stormwater Management in Florida s. Waterfront Communities: Nonpoint Source Pollution and. the Need for a Stormwater Utility

Transcription

1 Effective Stormwater Management in Florida s Waterfront Communities: Nonpoint Source Pollution and the Need for a Stormwater Utility University of Florida Levin College of Law Conservation Clinic Jason Evans, Ph.D. Candidate Adam Regar, J.D. Candidate Thomas T. Ankersen, J.D. Conservation Clinic Director Thomas Ruppert, J.D. Conservation Clinic Fellow 1

2 Table of Contents I. Introduction: Why Do Florida Waterfront Communities Need a Stormwater Utility?...1 II. Nonpoint Source Pollution Management...1 A. Federal Stormwater Regulation: Clean Water Act Permitting, Municipal Separate Storm Sewer Systems, and the National Pollutant Discharge Elimination System...1 B. State and Local Regulation of Nonpoint Source Pollution...4 III. Florida Stormwater Management: The Stormwater Utility...5 A. Statutory Authority for Local Governments to Adopt a Stormwater Utility...5 B. Sources of Revenue for a Stormwater Utility: Fees and Special Assessments...7 C. The Billing and Rate Structure of a Stormwater Utility...9 IV. Incentives for Stormwater Management...10 A. Grants, Impact Fees, Taxes, and Loans...10 B. Adjustments and Exemptions...10 V. Conclusion...12 ii

3 I. Introduction: Why Do Florida Waterfront Communities Need a Stormwater Utility? Waterfront communities often have dense development and, by definition, exist at the bottom of a stormwater basin. Chemicals, heavy metals, pesticides, and other pollutants from traffic, industry, fertilizer, and other activities accumulate on impervious surfaces such as roads, roofs, and sidewalks and wash into the receiving water body during precipitation events. This nonpoint source pollution often triggers undesirable consequences in the aquatic ecosystems, including rapidly decreasing water clarity, the proliferation of noxious algae and weeds, and declines in native biodiversity. Many communities struggle to manage stormwater runoff because they lack adequate infrastructure and staff resources, are more concerned with economic growth than pollution prevention, cannot pay for utility upgrades, or any combination thereof. A community implementing its stormwater management plan, however, may adopt a stormwater utility ordinance to generate a revenue stream, which enables the community to pay for stormwater runoff design, construction, and management costs. II. Nonpoint Source Pollution Management A. Federal Stormwater Regulation: Clean Water Act Permitting, Municipal Separate Storm Sewer Systems, and the National Pollutant Discharge Elimination System Congress created the Clean Water Act to restore and maintain the integrity of our nation s waters. 1 This policy resulted in the regulation of stormwater as nonpoint source pollution. Congress uses National Pollutant Discharge Elimination System (NPDES) 2 and Municipal 1 Federal Water Pollution Control Act, 33 U.S.C (2004) U.S.C (2004). 1

4 Separate Storm Sewer System (MS4) permitting under the Clean Water Act to prevent, reduce, and mitigate this pollution. 3 Communities affected by MS4 and NPDES permitting must comply with regulations promulgated by the Environmental Protection Agency (EPA), who may delegate to states the regulation enforcement responsibility. 4 For example, the EPA has delegated operation of Florida s NPDES program to the Florida Department of Environmental Protection. 5 Few local governments who are not subject to MS4 permitting under the EPA, however, have implemented stormwater quality programs. A municipal separate storm sewer system (MS4) is a conveyance or system of conveyances, such as roads with drainage systems, municipal streets, catch basins, curbs, gutters, ditches, man-made channels, or storm drains. 6 These conveyance systems collect or convey stormwater, but they are neither a combined sewer 7 nor part of a publicly owned treatment works (POTW). 8 The NPDES Phase II Rule, 9 unless waived by the NPDES permitting authority, automatically and on a nationwide basis covers all small MS4s located in urbanized areas (UAs) 10 or, if designated by the NPDES permitting authority, covers those small MS4s located 3 33 U.S.C. 1251(b), 1342 (2004). 4 Delegation allows the EPA to pass down to the state and local levels responsibility for enforcing the NPDES and MS4 rules. Delegation allows a state to design a regulatory program for implementing regulations. The state program must meet the federal standards, which constitute the base requirements. 33 U.S.C. 1342(b) (2004). In 2004 a lawsuit sought to revoke Florida s NPDES plan for failure to comply with the Clean Water Act. Sierra Club v. EPA, No. 04-CV401-RH/WCS (N.D. Fla. filed Oct. 5, 2004). The federal district court dismissed the case. Sierra Club v. U.S. E.P.A., 377 F.Supp.2d 1205 (N.D.Fla.,2005) Fed. Reg. 25,718 (May 12, 1995) CFR (b)(8)(i). 7 A combined sewer carries both stormwater runoff and sanitary sewage materials while a separate sewer carries either stormwater or sanitary sewage, but not both. The combined or separate designation affects the design of a treatment plant, which must be able to accommodate sewer flows CFR and (b)(8)(ii)-(b)(8)(iv) C.F.R (2004). The Phase II Rule expanded regulation of stormwater discharges under the NPDES permit program from medium and large MS4s under the Phase I Rule to include small MS4s under Phase II. Id. 10 An urbanized area is an area of at least 50,000 inhabitants as established by the most recent decennial census with a core density of at least 1,000 people per square mile in the core area and at least 500 in the surrounding census blocks. 71 Fed. Reg , 2779 (2006). 2

5 outside of UAs. Operators of regulated small 11 MS4s are required to design their stormwater management programs to reduce the discharge of pollutants to the maximum extent practicable, protect water quality, and satisfy the appropriate water quality requirements of the Clean Water Act. Meeting these requirements typically requires the development and implementation of best management practices 12 and the achievement of measurable goals to satisfy minimum pollution control measures. The Clean Water Act also regulates some MS4s located outside UAs. If the NPDES permitting authority determines the small MS4 s discharges cause or have the potential to cause an adverse impact on water quality, an operator of a small MS4 located outside of an UA may be designated a regulated small MS4. 13 To be regulated, a small MS4 located outside an UA should meet certain designation criteria 14 and serve a jurisdiction with a population of at least 10,000 and a density of at least 1,000 people per square mile. 15 Each operator of regulated small MS4s must seek a permit, the application for which must include best management practices (BMPs), the names of those persons responsible for operating the MS4, and other information as required by the Code of Federal Regulations. 16 If a small MS4 s discharges do not threaten water quality, however, the permitting authority may waive the regulation of that MS4. 17 These waivers are categorized into C.F.R. 122 (2004). A small MS4 serves under 100,000 people, while large and medium MS4s serve over 100,000 people. Id C.F.R (2004) C.F.R (a)(2) (2004) C.F.R (b) (2004). When determining impact of discharge, a NPDES permitting authority should consider discharge to sensitive waters, high growth or high growth potential, high population density, contiguity to an urbanized area, significant contributor of pollutants to waters of the United States, and ineffective protection of water quality by other programs. 40 C.F.R (b)(1)(ii) (2004) C.F.R (b)(2) (2004) C.F.R (b)(1), (2)(i) (2004) C.F.R (d) (2004). 3

6 jurisdictions under 1,000 people and jurisdictions under 10,000 people. 18 Each category has specific requirements that must be met for a waiver to be possible. 19 If an automatically designated MS4 s discharges do not cause or have the potential to cause water quality impairment, those MS4s also have waiver options available. The NPDES permitting authority periodically reviews any waivers granted. 20 Even if not regulated under the NPDES program as an MS4, any community with pressing stormwater issues will need a steady revenue stream to implement its stormwater management plan, and the stormwater utility can satisfy that need. B. State and Local Regulation of Nonpoint Source Pollution To complement the NPDES and MS4 rules, Florida enacted the Surface Water Improvement and Management (SWIM) Act, which seeks to protect against damaged ecosystems and degraded water quality resulting from point and nonpoint source pollution. 21 Local water management districts have used the SWIM Act to create Surface Water Improvement and Management programs such as the Tampa Bay SWIM Plan. 22 State and local water management programs also implement federal Clean Water Act standards such as Total Maximum Daily Load (TMDL) 23 limitation an effort to improve degraded water quality caused by pollutant overloading. The TMDL approach develops models, assesses pollutant discharges, identifies necessary and possible reductions in pollutant loads, and allocates required reductions to point and nonpoint source discharges. Similar to the TMDL requirement, state and local 18 Id. 19 Id C.F.R (d)(1) and (d)(2) (2004). 21 FLA. STAT et seq. (2004). 22 Tampa Bay Surface Water Improvement and Management Plan, Southwest Florida Water Management District, at The plan seeks to protect the ecological, aesthetic, recreational, and economic value of the state s surface waters by establishing a source of funding to rehabilitate degraded water bodies U.S.C. 1313(d)(1)(C) (2004). 4

7 regulations also include pollutant load reduction goals (PLRG). 24 As with the MS4, the stormwater utility, charged to persons and based on relative contribution to stormwater runoff, may serve as an effective tool to help meet the TMDL and PLRG requirements. III. Florida Stormwater Management: The Stormwater Utility A. Statutory Authority for Local Governments to Adopt a Stormwater Utility The Municipal Home Rule Powers Act (Act) gives municipalities broad home rule authority to do what is necessary to fulfill municipal purposes. 25 Under the Act, non-charter areas have powers only granted by general or special legislation. The Florida Statutes also give all counties broad home rule authority to govern their own affairs. 26 Thus, charter counties also get the broad exercise of home rule powers authorized by the State Constitution [] 27 and have the same powers as cities, including imposing any tax or charge (e.g., a stormwater utility fee) a city can impose. 28 County ordinances of a charter county may preempt municipal ordinances conflicting with the county ordinance if this is specified in the county s charter. 29 Thus, if a charter county sets a standard for stormwater regulation, all cities within the county s jurisdiction must comply with the regulation. A county may enter into an agreement with a municipality under which the county would operate the municipality s stormwater utility or combine the municipal stormwater utility with the county s. 30 However, such a transfer of authority requires a vote by the citizens of the affected county and municipality. 31 Therefore, a county cannot 24 FLA. STAT (3)(b) (2004). 25 FLA. STAT et seq. (2004) (supporting decision in City of Miami Beach v. Forte Towers, 305 So. 2d 764 (Fla. 1974)). 26 See State v. Orange County, 281 So. 2d 310 (Fla. 1973); Speer v. Olson, 367 So. 2d 207 (Fla. 1979). 27 FLA. STAT (3)(b) (2004). 28 See Volusia County v. Dickinson, 269 So. 2d 9 (Fla. 1972). 29 FLA. CONST. art. VIII, 1(g). 30 FLA. CONST. art. VIII, Id.; Sarasota County v. Longboat Key, 355 So. 2d 1197, (Fla. 1978) (holding a county s ordinance attempting to transfer several municipal functions from a city to the county require approval by vote of the electors of the transferor and transferee or otherwise by law). 5

8 expropriate a pre-existing municipal stormwater system without the municipality s prior consent. 32 As mentioned above, Florida Statutes grant to counties 33 and cities 34 authority to govern locally. Under this authority, the Florida Statutes, which require all comprehensive plans to have a drainage and natural groundwater aquifer recharge element, 35 also grant local governments specific authority to create a stormwater utility. The stormwater utility generates a revenue stream, enabling a local government to meet the stormwater management requirements placed upon it. For example, concurrent with any development, a local government must have the stormwater management infrastructure in place or funding available to support the creation of the infrastructure. 36 Florida Statutes further regulate stormwater by requiring the filing of public facilities reports showing existing and planned activities 37 and the consideration of Department of Environmental Protection water source rules. 38 The Florida Statutes also offer local governments various methods of funding a stormwater utility. Local governments may adopt by ordinance a stormwater utility fee 39 and may also set aside money from other sources (taxes, etc.) to maintain, construct, plan, and operate a stormwater system. 40 Local governments may also create benefit areas and subareas where the local governments may charge a special assessment fee relative to the benefit received from the system. 41 B. Sources of Revenue for a Stormwater Utility: Fees and Special Assessments 32 See id. 33 FLA. STAT (2) (2004). 34 FLA. STAT (2004). 35 FLA. STAT (2004). 36 FLA. STAT (2004). 37 FLA. STAT (2004). 38 FLA. STAT (3) (2004). 39 FLA. STAT (1) (2004). 40 FLA. STAT (2) (2004). 41 FLA. STAT (3) (2004). 6

9 Assigning the costs for a stormwater utility through fees and special assessments should be done with the goal of proportionally spreading the burden customers places on water quality. While the legal distinction between fees and specials assessments sometimes becomes hazy, 42 fees are typically associated more with operation and maintenance costs while special assessments typically generate capital for infrastructure building. These are addressed in turn. As a result, when calculating the utility fee, local governments should use a differential fee structure. 43 If charging a special assessment, however, a local government may use non-ad valorem assessment methods in Florida Statutes Chapter 197 (such assessment can be placed on the ad valorem tax bill for annual collection). Often, a local government will base the utility fee on the amount of impervious cover on a developed parcel of land within the utility area. 44 Local governments integrate strategies for determining fees, including measuring the fee to charge a parcel by determining the square footage of impervious surface a parcel occupies. 45 For example, a local government may assess fees for commercial property based upon the parcel s square footage of impervious surface but charge residential properties a flat rate (such as $2.95 per month). The high cost of developing varied rates based upon square footage of impervious surface often causes local governments to use the flat rate fee structure for residential properties. Local governments may then reserve for commercial properties the more expensive process of calculating varied fees. 46 Local governments have available financing tools other than the fee. For example, a local government may use both a fee and a special assessment to finance a stormwater utility. A 42 See, e.g. City of Gainesville v. Fla. Dept. of Transp., 778 So. 2d 519, (1 st DCA 2001). 43 Id. 44 City of Gainesville v. State, 863 So. 2d 138 (Fla. 2003). See also Janice Kaspersen, The Stormwater Utility: Will it Work in Your Community?, The Journal for Surface Water Quality Professionals, at 45 Id. 46 Id. 7

10 special assessment requires the amount of the special assessment be commensurate with the benefit or increase in value of the property assessed 47 while a fee requires the amount charged be commensurate with the burden caused by the property. Thus, local governments must charge to each property owner fees and special assessments proportional to the pro rata cost of the capital and operation of the system for each benefited owner. 48 Local governments typically use fee revenues often put into an enterprise fund to pay for ongoing operation of a utility and use a special assessment to cover the initial capital costs of a stormwater management project. 49 While counties in Florida may also create special assessments, 50 cities with home rule authority are not bound by statutory procedure rules for imposing special assessments; they can devise their own systems by local ordinance. 51 When creating a redevelopment district, a city uses the special assessment to levy on property owners the redevelopment district costs, as measured by the increase in the assessed property value resulting from the district. 52 A special assessment usually requires expenditures for a capital purpose, such as a one-time benefit to the value of the property, while user fees usually cover expenditures on operations and maintenance. Further, in making a special assessment, a local government must localize the benefit conferred within the assessment district. 53 The benefits of a special assessment, however, may be indirect, as when a local government considers uphill property users with well percolating soil to still to derive a benefit from a stormwater system assessment levied on downhill users FLA. STAT. 170 (2004). 48 Id. 49 Watts, C. Allen. Establishing a Stormwater Utility in Florida, 2003 Edition, at 50 FLA. STAT (1)(9) (2004). 51 City of Boca Raton v. State, 595 So. 2d 25 (Fla. 1992). 52 Id. 53 Hanna v. City of Palm Bay, 579 So. 2d 320 (Fla. 5th D.C.A. 1991). 54 Carson v. City of Ft. Lauderdale, 244 So. 2d 485 (Fla. 2d D.C.A. 1965). 8

11 In determining whether a benefit to a property owner exists, courts should defer to a local government s determination. 55 A court s distinction, however, between a fee as commensurate with the burden on the land and a special assessment as commensurate with the benefit of the utility has blurred under recent cases. 56 In fact, Florida s First District Court of Appeals recently found a stormwater utility fee charged to the Florida Department of Transportation constituted a user fee even though the fee was not voluntary. 57 C. The Billing and Rate Structure of a Stormwater Utility The billing method and rate structure of a stormwater utility are as unique as the community itself, and the methods and structures vary greatly. For example, a stormwater utility may piggyback its user fee on a water or sewer bill rather than sending a separate bill. A local government, however, may not include the stormwater utility fee on the same cost line as another fee; the stormwater utility fee must have a separate line. A local government benefits from piggybacking the stormwater utility fee on another bill in several ways. Piggybacking enables the local government to enforce the fee by creating an incentive for property owners subject to the stormwater utility fee to pay the fee, as a failure to pay may enable the local government to cancel water or sewer services included in the same bill. 58 Piggybacking also reduces the administrative workload associated with sending a separate stormwater utility bill. The rate structure of a stormwater utility fee may vary, and local governments often divide the costs of a utility into separate components based on impervious surface area and administrative fees. The impervious surface area component, based on the equitable unit cost 55 Sarasota County v. Sarasota Church of Christ, Inc., 667 So. 2d 180 (Fla. 1996). 56 See id.; Harris v. Wilson, 693 So. 2d 945 (Fla. 1997); Lake County v. Water Oak management Corp., 695 So. 2d 667 (Fla. 1997). 57 City of Gainesville v. Florida Department of Transportation, 778 So. 2d 519 (Fla. 1st D.C.A. 2001). 58 Janice Kaspersen, The Stormwater Utility: Will it Work in Your Community?, The Journal for Surface Water Quality Professionals, at 9

12 approach, is often measured using the equivalent residential unit (ERU) 59 and varies depending upon the classification and square footage of impervious surface area of a regulated property. 60 For example, a local government may assess a property classified as a single family dwelling with 2,500 sq. ft. of impervious surface area a flat fee 61 of $36 per year. To reduce their burden on a stormwater management system, customers may employ on-site stormwater treatment techniques, such as swales and catch basins. In doing so, a customer may be eligible for a downward adjustment of their stormwater utility fee. Most importantly, a local government designing a stormwater utility must ensure the fees assessed to a property are commensurate with the burden of the property on the stormwater management system. IV. Incentives for Stormwater Management A. Grants, Impact Fees, Taxes, and Loans Local governments may find funding for stormwater management through supplemental avenues, rather than solely from a utility fee, as the fee may fail to cover all stormwater management costs. On the federal level, Section 319 of the Clean Water Act creates a grant for specific water quality protection projects that include the prevention and control of nonpoint source pollution. The Clean Water Act may pay up to 60% of a state project s cost if the state pays at least 40% from non-federal funds. 62 Local governments may also charge an impact fee on new development. A local government may also assess special local taxes. On the state level, revolving fund loans, which are low interest and pay for infrastructure investments, may be available to local governments seeking supplemental funding for stormwater management. 59 An ERU is generally established as the average or median impervious area of a single-family home. City of Gainesville v. State of Florida, 863 So. 2d 138, 142 (Fla. 2003). 60 FLA. STAT (6) (2004). 61 See Gainesville v. State, 863 So. 2d 138, 147, 148 (Fla. 2003) (upholding the use of a flat rate when the rate bears a substantial correlation between the burden and use) U.S.C. 1329(h)(2) (2004). 10

13 B. Adjustments and Exemptions A local government may also offer adjustments and exemptions for certain properties within a stormwater utility area. For example, if a property owner takes flood control or water quality measures on his or her property, and the measures ease the burden on the utility, a local government may adjust downward the cost of the utility fee. 63 The adjustments, however, must not cause other customers to pay more than their proportional share of the burden on the system. 64 A local government may consider adjustments when a property owner dedicates road or drain easements or constructs an on site retention facility as a condition for plat or site plan approval. 65 When establishing rates for stormwater utility user fees or special assessments, a local government should calculate the value of the adjustments. 66 A local government should have as a goal to restore proportionality between those fee payers who have on-site stormwater management facilities and those property owners who do not (likely a result of building before the utility took effect). 67 A local government should consider requiring on-site stormwater management facilities whenever possible but should also measure this requirement against whether the old site has had enough time to amortize any investments made in reliance on old laws in existence at the time of the original construction. 68 Several possible exemptions apply to stormwater utility fees. Exemptions may be political (statutory immunity by another government body), social (exemptions for public housing), or 63 Watts, C. Allen. Establishing a Stormwater Utility in Florida, 2003 Edition, at (last visited Sept. 9, 2004). 64 Id. 65 Id. 66 Id. 67 Id. 68 See Lamor Advertising Associates of East Florida v. City of Daytona Beach, 450 So.2d 1145 (Fla. 5th D.C.A. 1984). 11

14 economic (promotion of development by excusing fees for industrial projects). 69 A local government should fund the cost of the exemption by a source other than the fees and special assessments in place to finance the utility. 70 Federal and state property is usually exempt from special assessments but usually not exempt from customary utility fees. For example, a public school board may not be liable for impact or service availability (special assessment), but may be liable for water and sewer connection (fee). 71 Florida Statutes do allow for use of school district funds for stormwater improvements, but the cost must be agreed to before the improvement is made. 72 V. Conclusion Because Florida s waterfront communities reside at the bottom of their water drainage basins, they face particularly difficult stormwater challenges; untreated stormwater runoff presents an issue that can no longer be ignored. Federal NPDES permitting and state laws require waterfront communities to prevent and mitigate the adverse effects of untreated stormwater. Stormwater utilities offer a tool to allow local governments to meet this responsibility and help maintain healthy ecosystems. 69 Watts, C. Allen. Establishing a Stormwater Utility in Florida, 2003 Edition, at 70 Id. 71 See Hernando County Water and Sewer District v. Hernando County Bd. of Public Instruction, 610 So. 2d 6 (Fla. 5th D.C.A. 1992). 72 FLA. STAT (1)(c) (2004). 12