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Sustainable and equitable stormwater funding: a British Columbia case study

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flooding in vernon BC
By Jason Foster

In light of aging infrastructure, lack of preventative maintenance, and more instances of failures, municipalities are reviewing their stormwater systems and looking for ways to match desired levels of service to available stormwater funding. Stormwater is historically the most underfunded (see Figure 1).

Funding for the City of Vernon, British Columbia’s stormwater management program is generated through property taxes, a dedicated infrastructure levy, and grant funding. Recent work completed identified funding shortfalls and environmental issues with stormwater runoff quality.

stormwater funding reinvestment bar graph
Figure 1: Annual capital reinvestment normalized by system replacement cost for Canadian municipalities. Source: National Water & Wastewater Benchmarking Initiative.

Vernon had already taken steps to correct insufficient funding for infrastructure renewal. In 2013, a dedicated 1.9% cumulative levy was implemented. Each year until 2022, this levy will add 1.9% of the taxation budget to the capital program budget. It is allocated to infrastructure renewal of the programs funded through general taxation which include: stormwater, roads, municipal facilities, parks, and the airport. The levy is a positive step forward, but does not provide dedicated funding, nor address operations and maintenance budgets.

Maintenance of the stormwater system in Vernon is done to remedy a failure or to prevent an imminent failure. Lack of preventative maintenance and renewal can save money in the short term, but will become more costly as the system ages and emergency work becomes more common. This will likely increase incidences of flooding, slope failure, road failure, and potentially lead to beach closures.

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Costs and service levels

The primary goal of a stormwater management program is to manage stormwater and protect life and property. If this is not accomplished, all other goals are virtually irrelevant. Managing stormwater means implementing and maintaining infrastructure such as pipes, catchbasins, ditches, detention facilities, infiltration facilities, treatment structures, overland flow routes and outlets to receiving waters.

Other goals of an effective stormwater management program include: mitigating pollutants; managing destructive peak runoff flow rates; keeping residents informed and satisfied; and providing sustainable funding.

A review was done of the existing programs and past engineering reports in Vernon and in other municipalities, to identify levels of service that would provide sustainable renewal rates, a proactive preventative maintenance program, and/or sufficient water quality in order to not negatively impact adjacent creeks and lakes. From this review, three levels of service were developed: status quo; minimum renewal and maintenance; and, sustainable renewal, maintenance and water quality.

Funding methodologies

Stormwater funding methodologies include: taxation; rates (also known as fees); and other income such as grant funding, or debt financing. Developing the “right” funding methodology for each community requires analyzing details such as impervious area as well as the values of the community toward rate payer equity, environmental impacts and the cost of program administration.

Funding methods that fall under the “other income” category are used universally. While these methods are recommended income sources, they cannot fully cover stormwater program costs. The focus of the study was to review sustainable funding methodologies available through taxation and stormwater rates.

Taxation provides two funding methods: general taxation and dedicated tax levies. Alternate stormwater funding methodologies have become more common in recent years but general taxation is still the most significant revenue source to support municipal stormwater programs in Canada. Revenue derived from the municipality’s portion of property tax goes into a general fund which covers the operating and capital expenditures of many services. General taxation provides financial flexibility through a well-established system. Downsides include lack of dedicated funding and typically poor equity.

An alternative to general taxation is a dedicated levy. A levy can be administered specifically to raise revenue for stormwater services and is itemized on the property owner’s annual tax bill. The advantage of a levy is a dedicated revenue stream for the stormwater program, but the potential for inequity is not solved. A disadvantage for all tax-based systems is that taxes must be raised to increase stormwater funding.

A stormwater rate can be a solution to many of the issues with tax-based funding. A rate allocates charges to individual properties and is administered as a user fee. In the same way water rates can be based on volume of water consumption, stormwater rates can be based on the volume of stormwater runoff.

overhead view of a home's stormwater area
Figure 2: Example of impervious areas of a single-family detached home.

It is impossible to directly measure the volume of runoff from each property and so an indicator is used. The area of impervious ground cover (e.g., rooftops, driveways, and parking lots) is a common indicator of stormwater flow and pollution discharge potential. Figure 2 illustrates the impervious area for a non-residential property, highlighting the building footprint in the left panel and the driveway and parking areas in the right panel. The sum total of these areas within the lot boundary represents the total impervious area for this property.

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