New Municipal Funding for Stormwater Authorities Enabled By The Connecticut Legislature

Governor Lamont’s Climate Bill, substitute House Bill 6441, passed on May 27th.  On July 1, 2021, municipalities in Connecticut will now be able to establish new Stormwater Authorities to implement a stormwater enterprise fee on real property to fund and finance staff, equipment, and services for stormwater projects. Fees can be collected by the Stormwater Authority for the “control and abatement of stormwater pollution from existing land uses, and the detection and elimination of connections to the stormwater system that threaten the public health, welfare or the environment.”

This enabling legislation creates the opportunity for a dedicated funding mechanism to pay for eligible stormwater and expenses regulated by MS4 regulations. Since 2003, Connecticut’s municipalities have been struggling to fund capital improvements to comply with the emerging Municipal Separate Storm Sewer System (MS4) regulations. MS4 regulations impose minimum pollution prevention requirements on municipalities, contractors, and property owners to improve water quality entering stormwater drainage systems before stormwater discharges to water bodies. 

Municipalities are further challenged by aging and unmapped stormwater infrastructure, and more frequent and extreme precipitation events due to climate change.  MS4 permit requirements also continue to evolve, requiring additional operations and maintenance resources for public works departments that lack a dedicated capital improvement fund for stormwater infrastructure. In effect, maintenance and improvement projects are currently funded with general tax revenues, with no guarantee that the projects will be funded when other higher priority or emergency projects are needed.

This legislation enables Connecticut to fund green and gray stormwater infrastructure with stormwater enterprise funds like municipalities already do in Maine, Massachusetts, New Hampshire and Vermont. The Western Kentucky University Stormwater Utility Survey 2020 indicates an estimated 1,807 communities in 41 states have implemented stormwater utility fees and dedicated enterprise funds. 

Highlights of substitute House Bill 6441 regarding stormwater authorities include:

• Any state or town owned property located in a stormwater authority's jurisdiction would be subject to such fees
• Fees collected on certain hospital-owned properties are capped at 15% of the total annual fees and these hospital properties can be fully exempt until FY 2027 at the option of the stormwater authority
• Fees for farm, forest, or open space land, or property owned by state or local governments and their agencies, are restricted to impervious surfaces that discharge to a municipal separate storm sewer system
• Property owners who use onsite stormwater best management practices can earn credits to their fee.
• Natural and nature-based features for stormwater management like rain gardens and green infrastructure are eligible capital expenses for the stormwater authority to invest in.
• Each stormwater authority must present its budget annually to the municipality’s legislative body for approval. The budget must include:
  1. The specific programs the authority proposes to undertake during the fiscal year
  2. Its projected expenditures for the programs, and
  3. The fee amount it proposes to levy to pay for the expenditures.
•  In setting fees, the authorities are required to consider:
  1. The amount of impervious surface generating stormwater runoff
  2. Land use types that result in higher concentrations of stormwater pollution,
  3. The property’s grand list valuation.
  4. Land use types that result in lower concentrations of stormwater pollution.

Ideally municipalities would annually invest 2% of the total estimated value of their stormwater systems. In 2018, the City of New London became the only municipality in Connecticut to establish a Stormwater Authority and a dedicated stormwater enterprise fund via a pilot program with Connecticut DEEP enabled in 2007 under Public Act 07-154. GZA attended two webinars by representatives from the City of New London and Connecticut Conference of Municipalities which are referenced below to learn more about the Connecticut’s Stormwater Enterprise Fund Pilot Program. 

The City with an estimated population in 2019 of under 28,000, had estimated the value of their stormwater assets at $50 million and approved very modest fees on property owners, including not-for-profit corporations exempt from property tax. New London’s fees were based on a transparent community outreach process to gain feedback and support from residents, businesses and political leaders. Total impervious cover surface area estimated from GIS data resulting in stormwater entering a MS4 regulated stormwater system became the basis for charging the stormwater utility fee. The City emphasized the need to effectively and proactively communicate with stakeholders paying the fees to enable community buy-in and ultimately reaching consensus on an equitable fee system. Severe flooding on Bank Street in New London in 2015 from extreme precipitation events helped residents and businesses understand the need for the funding. The City representative advised other municipalities not to over-promise to the community that all their flooding problems would be solved by their stormwater utility program. Instead flooding problems will be reduced and mitigated by more frequent maintenance and capital improvements enabled by dedicated funding. 

The City now generates about $1 million annually through their stormwater utility fee. New London’s fee schedule was based on residential property size (four tiers) and a separate flat rate for municipal, tax exempt and commercial properties. The areas of impervious cover per property within New London’s borders were estimated using University of Connecticut’s CLEAR statewide GIS model of impervious cover. The City’s stormwater enterprise fund adoption process was started by staff and volunteers in March 2017, and fees were charged with the water and sewer utility invoicing in October 2018. The City had not budgeted for the pilot program and incurred only one minor consulting fee estimated at $3,000. 

Now we will see which of the 168 remaining municipalities in Connecticut take advantage of this well proven and dedicated funding system, which is based on the premise that each user of a stormwater utility system pay their fair share for operating, maintaining and improving the stormwater quality entering wetlands, watercourses and the Long Island Sound.

UCONN's CLEAR Program has recorded two webinars on stormwater authorities that may be of interest:

• Overview of Stormwater Utilities in the Northeast by Amanda Ryan 
• Webinar highlighting New London’s experience in establishing a stormwater utility in 2018 

GZA has completed a three-part blog series on stormwater utility enterprise fee programs that may be of interest to municipalities who are looking for further information for setting up your Stormwater Authorities:

Part 1: Be Prepared With Your Funding of Expanded Stormwater Services

Part 2: What Is A Stormwater Utility Enterprise Fund?
  
Part 3: Fair, Equitable, and Legally Defensible Stormwater Enterprise Funds