APPENDIX B: A COLLECTION OF CASE STUDIESCASE: STATE REVOLVING LOAN FUND (SRF) FOR SEPTIC CONNECTIONS AND AGRICULTURE WASTE SHEDS (WASHINGTON STATE AND DELAWARE) Applicable Option: Expansion of State Revolving Fund (SRF) for Septic Connections and Animal Waste Sheds
Background and Summary Washington and Delaware use their State Revolving Funds (SRFs) to finance septic remediation. In Washington, the Department of Ecology approves loans to counties and cities, as the borrowers of record. The locality then makes loans to private individuals and small businesses to fix septic problems. The locality is free to decide the terms of repayment and whether:
2. pay a low annual interest rate without fee. In Delaware, the Department of Natural Resources lends funds with low or no interest directly to homeowners and farmers. A resident is evaluated on the basis of need and current employment or harvesting contract. To ensure repayment, the state places a lien on the property. If borrowing as an individual to remediate septic systems, the borrower has 20 years to repay the loan. If borrowing as a farm to pay for agricultural waste sheds and composting, the farmer has 7 years to repay the loan. References Terry Deputy, State Revolving Fund, DE Department of Natural Resources, Dover, DE, (302) 739-5081. David Goldsmith, Jefferson County Water Quality Improvement Fund, WA Dept. of Ecology, Olympia, WA 48319, (206) 385-9140. Bryan Howard, Water Quality Financial Assistance Program, (206) 407-6510.SOUTH
CASE: DAKOTA'S UNTQUE STATE REVOLVING LOAN(SRF) PROGRAM Applicable Option: Nonpoint source/groundwater protection activities
Background and Summary The South Dakota Department of Environment and Natural Resources (DENR) was honored by the Council of State Governments' Innovative Awards Ceremony for its unique loans to protect groundwater. DENR was the first in the nation to award a loan for solid waste management remediation activities that will provide nonpoint source/groundwater protection. In order to help communities comply with tougher environmental regulations, South Dakota amended the State Revolving Loan Program (SRF) to include groundwater protection as an eligible environmental infrastructure project. With EPA approval, the SRF became available to offset an estimated $28 million of solid waste management handling and disposal facilities that will entail groundwater protection. The SRF loan program, administered by the Division of Water Resources Management in DENR, was one of thirteen finalists evaluated by the Council of State Governments' awards committee composed of legislators from the midwest states. The Council program awards innovations in the delivery of state programs. Reference Case description excerpted from the Council of Infrastructure Financing Authorities "Infrastructure Commentary," December 1994, page 6.
CASE: OHIO LINKED DEPOSIT PROGRAM Applicable Option: Many agricultural nonpoint source pollution control activities
Background and Summary Ohio EPA has developed an innovative approach using the State Revolving Loan Fund (SRF) that could become the prototype for many nonpoint source control loan arrangements throughout the nation. Characterized as the Linked Deposit Program, the State EPA, along with the cooperation of the Ohio Water Development Board, devised the lending arrangement to assist farmers and other land owners with low cost financing for control of agricultural run-off. Essentially, the Linked Deposit approach entails investment of State Revolving Loan Funds in a commercial bank at below market interest rates with the bank, in turn, providing lending to the private landowner for the control project, at a reduced rate. The advantage of this approach allows the SRF to provide low interest financing to the private landowner while at the same time employing the normal lending criteria of the commercial banking industry. Other states are looking at the Ohio linked-deposit arrangement for possible application to their nonpoint source control problems. References Case description excerpted from the Council of Infrastructure Financing Authorities "Infrastructure Commentary," December 1994, page 5. Linked Deposit Program Contact: Tracy Harrison Bruny, Division of Environmental and Financial Assistance, Ohio EPA, (614) 644-3642.
CASE: ANNE ARUNDEL COUNTY, MARYLAND PUBLIC/PRIVATE OWNERSHIP OF A WASTEWATER TREATMENT FACILITY Applicable Option: Public/Private Ownership of a Wastewater Treatment Facility
Background and Summary Anne Arundel County situated between Baltimore, Maryland, and Washington, D.C., is one of Maryland's fastest growing jurisdictions. With a population of 400,000 and a land area of 418 square miles, the county has been the center of dynamic residential and commercial development activity. The county has turned to greater use of developer financing alternatives to accommodate construction of new wastewater service infrastructure needed for this growth. The culmination of an unprecedented public/private partnership between Anne Arundel County and Russett Center Limited Partnership was realized in October, 1990 when the new Maryland City Water Reclamation Facility was dedicated. The agreement provided that the county issue bonds in the amount of $29 million to finance construction of the new plant and water lines. The completed facility supplies sufficient water and sewer capacity to service Maryland City, Russett and other nearby land. The Russett developers, along with two other major land developers, assume the obligation to pay off 80% of the bonds and will, in turn, receive 50% of the new system capacity. This gives the county a new, state-of-the-art sewage treatment facility and provides Maryland City with water and sewer service at less cost to the taxpayer. The new sewage treatment facility includes a system offering biological nutrient removal to curb harmful nutrients from reaching the rivers and the Chesapeake Bay. Russett is a planned community located in the heart of the Washington/Baltimore corridor. Bordered by the Little Patuxent River and a 150 acre wetland area which will be maintained as a wildlife preserve, the site totals 613 acres, about 75% of which will be developed for residential use. The balance will be preserved in a natural state. An adjacent 50 acre site is planned for offlce/retail use. Reference Russett Center Limited Partnership, (410) 951-4900.
CASE: DEVELOPER FINANCING Applicable Option: Wastewater Treatment Plant Financing
Background and Summary Developer financing usually involves private developers who finance the construction and/or expansion of infrastructure systems in return for the right to build homes, facilities, etc. This option is typically under local control, so arrangements can be negotiated on a project-specific basis or mandated through an ordinance which specifies the required contribution based on facility size. Contributions can be in the form of funds or the construction of projects such as sewer lines, BNR technology, or whole sewage treatment plants. The Sewer Access Rights Program in the Upper Merion Municipal Utility Authority in Pennsylvania provides a good example of how developer financing can be used by communities. Implemented to finance a sewage treatment plant expansion project, this program required customers to purchase capacity in advance to guaranty future connection to the system. The fees paid by future customers were then used to finance construction of the increased treatment plant capacity. Thus, the program ensured the construction of infrastructure necessary to support economic development, while not overburdening the current users of the system. Based on the sale of capacity for equivalent dwelling units (EDU), $3,200 is received for each EDU capacity (200 gallons of sewage per day) sold. Nonparticipants have no guaranty of sewage treatment availability. To date, the program has collected $7.2 million in connection fees from 167 applicants. Some states have provided legislation or other guidance authorizing local governments to use developer financing for certain projects. Others have statutes that attempt to standardize the implementation of fees throughout the state. For example, Pennsylvania adopted legislation in 1990 to standardize the methodology for implementing water and sewer tapping fees to recover the cost of additional system capacity that was constructed to serve new customers. Reference Infrastructure Financing Study, Ernst & Young, Washington, D.C., 1993.
CASE: OHIO WASTEWATER FACILITY-PRIVATIZATION Applicable Option: Public/Private Ownership of a Wastewater Treatment Facility
Background and Summary In mid 1994, three small towns in Ohio signed off on the sale of their 4.5-million-gallon-per-day wastewater treatment plant to Hampton, New Hampshire-based Wheelabrator EOS Inc., the contract operator of their regional facility. The $6.8-million transaction will be the first test of a 1992 Executive Order (12803) promoting infrastructure privatization. If the IRS signs off on the deal, Wheelabrator EOS Inc. proposes to:
Reference Adapted from an article in RCC's Public Works Financing journal: Ohio Wastewater Asset Sale Will Open Up Infra-Refinance Market, by William G. Reinhardt, RCC's Public Works Financing. (Westfield, New Jersey: June 1994), pg. l-6.
CASE: VIRGINIA STORMWATER UTILITIES Applicable Options: Stormwater Management, Watershed Planning, Stormwater Retrofits and Conversions, land acquisition for various options, Public Education
Background and Summary A stormwater utility provides stormwater management services, which are paid for by fees levied on landowners. Fees increase with the size and degree to which a parcel of land is developed under the premise that larger, more highly developed land causes more stormwater runoff to manage. Relative to other revenue generating mechanisms, stormwater utilities tend to be more acceptable to the public. This is because the dedicated funds foster a greater sense of accountability and because the fee system, based on the "polluter pays" principle, is deemed to be more fair than a tax, based on property value. At least seven stormwater utilities have been implemented in Virginia over the last four years in jurisdictions with populations ranging from 104,000 to 420,000. These utilities were implemented in the cities of Chesapeake, Virginia Beach, Portsmouth, Hampton, Newport News and Norfolk, as well as, Prince Williams County. Henrico County is currently developing a utility. The typical residential charge ranges from $21 to $48 per year. Norfolk, VA, with a population of 260,000, generates annual operation and maintenance funds of $2.78 million and supports 55 public works employees. References Black and Veatch, "1991-1992 Stormwater Utility Survey", Black & Veatch, 8400 Ward Parkway, Kansas City, MO 64114. Steer, Chris, Maryland Department of Environment, Chesapeake Bay and Watershed Management Administration, phone interviews of Virginia jurisdictions July, 1994. George, J. and G. Lindsey, "Potential Revenues from Stormwater Utilities in Maryland", Maryland Department of Environment, July, 1991.
CASE: EROSION & SEDIMENT CONTROE PROGRAM, UNIFIED SEWERAGE AGENCY, TUALATIN RIVER BASIN, OREGON Applicable Option: Stormwater Utility
Background and Summary The Erosion & Sediment Control Program serves Washington County and portions of Mutnomah and Clackamas Counties. The Erosion & Sediment Control Program is responsible for erosion and sediment control throughout the service area. The program sets overall standards and fee rates while allowing each city to individually determine which staff will perform the reduction and control activities. For cities who inspect and review sites themselves, program inspectors evaluate the results against the program's standards during site visits. Grading fees are payable when the original subdivisions' plan is filed. The developer is charged $80 for the first acre of disturbed land and $20 for each additional acre. Developers pay fees for plan review and on-site inspections for each unit built. The building fee is tied to the property's value. If the final value equals $100,000, then the inspection fee is $40 and the review fee is $24 (65% of inspection fee). The program has enforcement authority; it has issued 40 stop work orders and imposed approximately 6 civil infraction fines of up to $100,000 per day. Reference Chris Bowles, Senior Inspector, Erosion & Sediment Control Program, Unified Sewerage Agency (USA), 155 North First Av., Hillsboro, OR 97124, (503) 693-3609.
CASE: THE BELLEVUE STORM & SURFACE WATER UTILITY, CITY OF BELLEVUE, WASHINGTON Applicable Option: Stormwater Utility
Background and Summary Over 100 stormwater utilities exist throughout the country. Most of these utilities follow a standard model; however, one of the oldest utilities, the Bellevue Storm & Surface Water Utility in Washington, employs a complex structure which differs from most utilities. User fees are based on the percentage of impervious surface and the number of acres within a category of user. The category of user is determined by the percent of impervious surface on the land. A coefficient is determined and then multiplied by the number of acres owned. New developers either buy into the utility's system or build on-site stormwater management controls. The Bellevue Utility is successfully generating revenue and reducing runoff while commanding customer support. The current operating budget is $8.7 million. Debt service is $1.9 million for prior capital investments and $300,000 is set aside for the capital investment program. References Sally Starbuck, Finance & Budget, Utilities Department, 11511 Main Street, Bellevue, WA 98009, (206) 455-6963. Jim George, CBWMA, MDE, 2500 Broening Highway, Baltimore, MD 21224, (410) 631-3591. Bill Spearman, Wolburt Consulting, 3850 Fernandina Rd., Suite 103, Columbia, SC 29210-3815, (803) 731-0261.
CASE: CLEAN WATER DISTRICTS (ALSO CALLED SHELLFISH PROTECTION DISTRICTS) IN WASHINGTON STATE Applicable Option: Resource Protection and Watershed Planning (Various)
Background and Summary In 1992, the Washington State Legislature passed a provision for the creation of shellfish protection districts-more commonly referred to as clean water districts (CWDs)-to facilitate nonpoint source pollution control efforts. Districts may be created by a county's legislative authority or by voter referendum. Also, in cases where the State Department of Health has issued a downgrade or closure of a shellfish growing area due to nonpoint source pollution (NPS), counties in the downgrade area are required to establish a CWD in 180 days. District boundaries may cover an individual watershed, an entire county, or by interjurisdictional agreement, parts of several counties and incorporated areas. There are currently 4 CWDs established in the state. Once a CWD has been established, a citizens advisory committee determines priorities for controlling NPS pollution. Counties finance CWD programs through taxes, "reasonable" fees, rates, charges for specified protection programs, and grants or loans from other sources. The specific combination of revenue sources to be used is determined by each county's legislative authority. In Mason County, for example, property owners in the Lower Hood Canal CWD are assessed $52/year for any structure with an on-site septic system. The annual fee for complexes with multiple connections to a septic system is $250, and $450 for state parks. In addition, tideland property owners are assessed $27/year because they are perceived to benefit the most from NPS pollutant reductions. This revenue is supplemented by state grants (some of which require a 25% local match), which are dedicated to other specific NPS pollution control efforts. In neighboring Totten-Little Skookum CWD, the assessment for households with on-site septic systems is $52/year, but there is no fee for tideland property owners. Shellfish growers have agreed to contribute $18,000 a year for the first two years to the CWD's pollution control efforts, although they maintain that access to clean water for fisheries is a right, not something for which they will be charged. The Totten-Little Skookum CWD also receives funds from a 3-year $369,000 state grant, which is matched by a 25% contribution from Mason County. References Laura Porter, Mason County Commissioner, (206) 427-9670 x424. Stuart Glasoe, Puget Sound Water Quality Authority, Olympia, WA 98504-0900, (206) 493-9161. Marilou Pivirotto, Environmental Planner, Shorelands & Coastal Zone Management Program, (206)-407-6787.
CASE: NATURAL RESOURCE DISTRICTS (NEBRASKA) Applicable Option: Resource Protection and Watershed Planning (various practices)
Background and Summary Nebraska has 23 multijurisdictional natural resource districts (NRDs), which manage soil and water conservation, wildlife habitat, and other natural resource protection functions across the state. In response to the problem of overlapping boundaries and responsibilities for water-related problems, the state legislature created NRDs in 1969, establishing their boundaries along Nebraska's naturally delineated river basins. In order to implement natural resource protection programs, NRDs have the authority to levy local property taxes (previously collected by counties or local soil and water conservation/conservancy districts) and to administer funds from other local, state, and federal revenue sources. For projects of particular benefit to a specific area, NRDs can also levy special assessments to the businesses or individuals of that area. NRDs may issue revenue bonds, but not general obligation bonds. Unfortunately, revenue bonds have a very limited applicability to environmental projects/programs. The average property tax rate is 3.2 cents per $1 of actual valuation. NRD budgets range from $323,000 to $11.7 million, although 17 of the 23 NRDs have budgets smaller than $1.9 million (the statistical average). Property tax revenues provide anywhere between 28% and 60% of an NRD's total budget; the rest comes from federal, state, and local funds, and special assessments. NRD spending is primarily dedicated to the following areas:
Soil: NRDs administer federal, state, and local funds for erosion and sediment control practices and structures (predominantly for agriculture) and develop local management plans. Habitat: In conjunction with the Nebraska Game and Parks Commission, NRDs administer a Wildlife Habitat Improvement Program (WHIP) for the acquisition, leasing, and enhancement of habitat areas. Using funds raised through habitat stamp sales, the state provides 75% of WHIP costs, while individual NRDs pay 25%. Tree Planting: NRDs cover the costs of tree-planting programs, which target private landowners for voluntary participation. Each NRD has a locally elected board of directors as its governing body. In addition, the Nebraska Association of Resource Districts (NARD) provides some administrative support for NRD programs and operations and represents NRDs at state and federal levels of policy-making. References Mr. Gayle Starr, Administrative Officer, Nebraska Natural Resources Commission, 301 Centennial Mall South, P.O. Box 94876, Lincoln, NE 68509, (402) 471-3933. Mr. Jim Cooke, Attorney, Nebraska Natural Resources Commission, (402) 471-3930.
CASE: CALIFORNIA'S ADOPT-A-BEACH PROGRAM Applicable Option: Urban Nutrient Management
Background and Summary California's Adopt-A-Beach Program is a nonprofit entity created by the California Coastal Commission. The program provides community outreach to schools and youth groups through a specially designed curriculum that promotes recycling, litter abatement, and conservation of natural resources. It also promotes awareness by reaching millions of people through a multifaceted, coordinated publicity campaign. It creates a sense of environmental stewardship among the widest possible diversity of groups and individuals cutting across jurisdictional, institutional, and social boundaries. The program is a joint effort between the California Coastal Commission and the California State Parks Foundation. Funding is also provided by corporations, including Lucky Stores, Pepsi, Kraft General Foods, The American Plastics Council, Dial Corporation, and Southern California Edison. Reference Jack Liebster, Director of Public Affairs, California Coastal Commission, 45 Freemont Street, Suite 200, San Francisco, CA 94105 (415)904-5216.PEPINCOUNTY,
CASE: WISCONSIN, CONSERVATION CREDIT SYSTEM Applicable Options: Soil Conservation and Water Quality Planning and Implementation; Stream Protection with and without fencing
Background and Summary In Wisconsin, farmers have concluded that conservation programs are flawed in that they only reward those landowners who have misused natural resources and offer limited or no help to landowners who avoid conservation problems through continued good stewardship of these resources. The Conservation Credit approach to improved water quality encourages the commitment of local, state and federal entities to an equitable partnership, thereby reducing the federal/state funding for conservation incentive programs. Farmers in Pepin County and in several other counties, after considering all available programs, have identified the Conservation Credit approach as the simplest and most cost-effective way to change farm behavior. The original Resource Conservation Act-Sponsored Conservation Credit Project (1984-1991) only dealt with cropland soil erosion on individual farms and did not address the nutrient management issues, rural well contamination, wetland protection and holistic watershed protection issues. In an effort to address these issues, the revised proposal includes the following: tax credit incentives of $2/acre for cropland protection; $4/ acre for nutrient management; $2/acre for Perennial Streambank Management; $1/acre for Upland Intermittent Stream; $0.25/acre bonus when 75%, of the watershed is protected; and an additional $0.25/acre bonus when 85% of the watershed is protected-making a total of $9.50/acre credit. Reference Betty Plummer, County Conservationist, Pepin County Land Conservation Department, 740 7th Ave. W., P.O.Box 39, Duran, WI 54735, (715) 6728665.FORT
CASE: WAYNE, INDIANA DRINKING WATER SUPPLY PROTECTION PROJECT Applicable Options: No-till farming
Background and Summary The city of Fort Wayne, Indiana draws its water from the St. Joseph River, which is noted for having one of the most erosive watersheds in the country, due largely to eroding cropland. The city's water utility spends thousands of dollars annually to remove sediment from the public drinking water supply. City officials, recognizing that a large source of the sediment is due to moldboard plowing by upstream farmers, agreed to acquire and lease to the local Soil and Water Conservation District (SWCD) a tractor and no-till drill (combined cost: $51,988) at a rate of $1.00 per year. The SWCD then makes the equipment available to farmers within the watershed on the basis of a priority listing of acreage that would most benefit from no-till farming. The SWCD is responsible for maintenance and service, so risk to the farmer is minimal. During the off-season the equipment is available to the city as, for example, a power source for pumps during the flooding season. By the middle of the following year, the mayor of Fort Wayne said the equipment's cost had already been recovered by the city. References "Fort Wayne Drinking Water Supply Protection Project," in Bushwick, et al., eds. Cooperating for Clean Water, 1986. Author/contact: Greg Lake, Allen County SWCD, 2010 Inwood Drive, Fort Wayne, Indiana, 46815; (219) 422-3373.
CASE: STATEWIDE PDR/TDR BANK Applicable Option: Create a state bank to purchase, hold and transfer development rights
Background and Summary A TDR/PDR bank could be developed and funded with agricultural transfer tax revenue, general obligation bonds, and local government contributions. Such a bank could be formed by a State and local government partnership, a non profit entity, or some combination. In any jurisdiction in the State with a purchase or transfer of development rights program (or both), the bank would purchase the development rights of agricultural land. Other resource lands could also potentially be purchased via this system. The bank could either extinguish the rights or sell them as TDRs to developers to raise money to purchase more rights. In 1987 New Jersey created a statewide TDR bank and funded it with $20 million. The New Jersey Pinelands Development Credit Bank has been created for a sub-state region in New Jersey. Three TDR banks exist in California: San Luis Obispo, Monterey County and Morgan Hill. In addition, Montgomery County, Maryland has set up a TDR bank. References (California) Putting Transfer of Development Rights to Work in California, by Rick Pruetz, Solano Press Books, 1993, p. 104. (New Jersey) Planning for Transfer of Development Rights: A Handbook for New Jersey Municipalities, by Amanda Gottsegen and Charles Gallagher, Burlington County of Chosen Freeholders, Mt. Holly, NJ, 1992, p. 67. Mr. Robert Shinn, Commissioner, New Jersey Department of Environmental Protection and Energy, Trenton, NJ. Mr. Donald Applegate, Deputy Director, New Jersey Department of Agriculture. (Maryland) Mr. Denis Canavan, Montgomery County Planning Dept., MNCPPC Design, Zoning and Preservation Division, (301) 495-4570. Maryland Office Planning, Baltimore, MD, (410) 225-4562.
CASE: HABITAT AND WATERFOWL STAMPS, IOWA Applicable Options: Land Acquisition for Wetlands, Buffers, Forest Conservation, etc.
Background and Summary Many states require purchase of a habitat stamp or waterfowl stamp as part of every hunting/fishing/trapping license sold. The stamps, which range in price from about $2.50 to $7.50 depending on the state and resident status of the applicant, generate annual revenue for the purchase and enhancement of wetlands and other wildlife habitat. Iowa's Habitat and Waterfowl Stamp is $5.00 per hunting license. Money raised goes into a Fish and Wildlife Trust Fund, which is used by the Prairie Pothole Joint Venture-a partnership of the Iowa DNR, U.S. Fish and Wildlife Service, county conservation boards, and nonprofits to purchase wetlands and restore privately-owned wetlands for wildlife habitat. Lands acquired through habitat stamp revenues are subject to state property taxes. The state reimburses counties for lost local tax revenue on these lands, using habitat stamp revenues. The state is not required, however, to pay counties for lost property tax revenues on lands acquired with water fowl stamp revenues. References Lee Gladfelter, Iowa Dept. of Natural Resources, Wallace State Office Building, Des Moines, IA 50319-0034, (515) 281-4815. Case originally cited by Apogee Research, p. 67, 1990. See Also
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