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Forming a Stormwater Utility: 5 Major Lessons Learned

Posted By Emily Nelson on February 19, 2015

When it rains, stormwater hits the ground and other hard surfaces. Since it cannot be absorbed by impervious surfaces, the water runs over the surface as stormwater runoff.


Stormwater runoff must be managed through a stormwater collection system (pipes, culverts, ditches, swales, inlets, curb and gutter, detention ponds) to prevent standing water and flooding.

Once a community has a good understanding of its stormwater problems and how to solve them, the next goal is to get funding to implement the planned improvements.

There are several reasons why you might need to seek funding:

  • funds are not allocated to address your community’s stormwater management needs
  • your budget is limited
  • the number of drainage projects has grown
  • maintenance activities have been cut back because of a lack of resources

If a community finds itself in this position, they will need to establish a funding source. Municipalities have established stormwater utilities to serve as a practical means of providing funding for stormwater management activities.

Having worked with municipalities to help establish stormwater utilities, we've learned some valuable lessons to make the project successful. Here are our lessons learned:

1. Public education is key.

We cannot stress enough the importance of public education, which is key to successful stormwater utility formation. If your citizens don't understand the benefits, they will not vote in favor of the proposed rate, and you will not have a funding source available to pay for stormwater management related expenses.

People aren't used to paying a separate fee for the management of stormwater. They expect the street or sanitary department funds to continue covering stormwater management costs. Most citizens do not take into consideration that all residents and businesses paid for the existing storm sewers, which were most likely funded from the general fund (typically taxes) at some time in the past. 

2. A benefit to all, not just those with flooding problems.

Many citizens do not have flooding problems because they have adequate storm sewers or ditches in their areas. Why would they want to pay for improvements or upgrades for other areas of the community? 

Yes, stormwater utility funds can be used to pay for improvements and upgrades to the storm system, but they can also be used for community-wide programs that benefit everyone. These programs include things like:

  • street sweeping
  • leaf collection
  • catch basin cleaning
  • pollution prevention

3. Involve the community in various ways.

Invite members of the community (representing various property types, residential, commercial, industrial, school, etc.) to serve on an Advisory Committee. This group can make recommendations to the Council or Board responsible for forming the utility. 

Inform key community personnel about stormwater problems and issues. 

Conduct a public hearing on the presentation of a Stormwater Master Plan so citizens can attend and learn about the community’s drainage problems and recommended solutions. 

4. Do a thorough estimate of costs.

Before developing a utility rate, estimate all expenses for the utility, not just projects (including personnel wages & benefits, equipment, education, repairs & on-going maintenance). 

Significant and thorough consideration of stormwater management needs are essential to establishing user fees. Charging citizens a fee for stormwater management may be a new concept, and the fees must be equitable to survive public scrutiny and challenges to the stormwater utility. Revenues needed for stormwater management must be determined and weighed against “acceptable” fees charged to residents and businesses. In this guide, we lay out more steps to determine stormwater utility fees.

5. Keep rate credits simple.

Not all communities offer credits, but those that do usually want to encourage property owners to go above and beyond the stormwater management requirements. Credits are a good incentive for property owners, but communities should be cautious about offering too many credits or very complex credits. Why is this?

A complex system of credits can be burdensome for the stormwater utility staff responsible for reviewing them. Here are some tips for keeping rate credits simple:

  • Set a maximum credit limit (for example, 50%).
  • Don’t offer credits for measures required by ordinance, only offer credits which encourage desired stormwater control measures (for example, low-impact development).
  • And keep credit amounts equal to the benefit realized by the utility.

Let's clarify that last point with an example. For instance, lower credits should be offered for practices which have a small benefit to the utility (installing a rain garden on a property) and higher credits should be offered for practices which have a larger benefit to the utility (incorporating extra storage capacity in a detention basin to help solve flooding issues downstream).

Keep in mind that a stormwater utility must be fair and equitable and must have proper justification for the fees charged to the rate payer.

Taking time to establish the utility properly and educating the utility customers on the benefits of stormwater management will be key to a successful utility.

Key Elements for Creating a Storm Water Utility