Getting Rates Right

By Public Works Magazine
Washington, DC (January 1, 2007)- One formula does not fit all. It’d be nice if there were a simple formula for setting up a stormwater utility’s rate structure, but there isn’t.

Consultants will chatter on about equivalent residential units and parcel billing units, pervious and impervious areas, property size, type of land use, and other factors. Then, you have to consider your in-place and future best management practices and National Pollutant Discharge Elimination Systems requirements.
The basic formula is to establish service costs and to assign those costs based on the customer’s need for services, says Santa Monica, Calif.’s urban runoff management coordinator, Neal Shapiro. This basis for assigning costs should not be arbitrary, and should correspond to the runoff generated from the site. For example, a typical approach is to evaluate the impervious area and to account for differences between residential and non-residential properties.
You then have to determine when to bill residents. Monthly is pretty common, but some stormwater utilities opt for quarterly or annual billing.
– Neal Shapiro, City of Santa Monica, Calif.
Santa Monica’s Virginia Avenue Park parking lot was remodeled using block pavers with small gravel in the gaps in the parking stalls. This made the pavement more pervious and helped absorb stormwater runoff.
Once the billing structure is set, credits may be issued to property owners who reduce the need for downstream stormwater services by incorporating green roofs, rain detention areas, or other facilities.
Santa Monica has had a stormwater utility for more than 10 years. The city council and management strongly support the runoff management program, so the rate structure is in place and works well, says Shapiro.
The language in the city’s municipal code is simple and clear when explaining how the fees are structured:
The basic fee (BF) shall be calculated by applying the following formula:
BF = Annual budget / City-wide parcel billing units (PBU)
The stormwater management user fee for each parcel shall be calculated by applying the following formula:
Annual fee = PBU x BF
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