1. Stormwater Utilities
  2. Fee Structures

Fee Structures

Overview

Stormwater utilities function the same as other utilities, such as water and sewage. Just as residents pay a fee for how much water they use, which in return funds the drinking water services within their area, stormwater utilities charge residents and property owners on the amount of impervious cover on their property. There are numerous types of fee systems to distribute a stormwater utility charge. However, not all fee systems are equal in fairness.

Below are in depth explanations of the most popular fee charges in order from most equitable to least. The information provided is adapted from the New Jersey Dept. of Environmental Protection and Dr. Warren Campbell of Western Kentucky University. For more information on his work, you can access his Stormwater Utility Surveys and his webinar with UConn CLEAR about stormwater utilities trends.

heirarchy of fee systems
This image, based on work from Dr. Warren Campbell from Western Kentucky University, demonstrates the hierarchy of fee systems from most complex and equitable to least complex and equitable.

Equivalent Residential Unit

The Equivalent Residential Unit (ERU) system is the most common type of stormwater utility, with it being used for more than 80% of all stormwater utilities (EPA). It is based on the effect of a typical single-family residential impervious cover footprint, billing an amount proportional to the impervious area on a parcel, regardless of the total area. After the ERU is established, This measurement can be done individually for each property, or can be done through a tiered flat rate.

The baseline ERU can be achieved by either taking a random sample of residential properties and getting the average impervious area or by using multispectral aerial photography or light detection and ranging (lidar) mapping to estimate the total impervious area of residential properties, and then dividing it by the number of residential properties.

The equation below shows the in-depth math of the payment distribution between residential and non-residential properties. The established baseline ERU derived from the methods above, gives an equal split of payment of 50% by residential property owners and 50% non-residential property owners. If this baseline ERU size were to increase, the residential property owners would bear more of the utility cost than the non-residential and vice versa if the baseline ERU size were to decrease.

Math equation for ERU fee system payment
Credit: Stormwater Utility Survey 2022; Dr. Warren Campbell, Western Kentucky University

Examples:

Park Ridge City, Illinois

Established in 2016, the City of Park Ridge uses an ERU system to distribute its stormwater utility fees. The following is a breakdown of the billing system by New Jersey’s Dept. of Environmental Protection. The city calculated a total of 18,141 TOTAL ERUs in the city, with one ERU being equal to 2,800 sq. ft. The city collects $2 million annually through the utility, creating a fee of $11/month. In order to find the ERU value for each property, the city divided the total impervious area of a single property in sq. ft by the single ERU of 2,800 sq. ft. They then multiply this value by $11 for the final utility charge of the property.

 

A single-family residential property with 3,725 sq. ft of impervious area would be as follows:

3,725 sq. ft. / 2,800 sq. ft. = 1.3 ERUs x $11 = $14/month

 

A commercial property with 25,812 sq. ft of impervious area would be as follows:

25,812 sq. ft. / 2,800 sq. ft. = 9.2 ERUs x $11 = $101/month

Wilson, North Carolina

Wilson, NC used a random selection of residential properties to achieve their baseline ERU of 2,585 sq. ft. The city then used aerial photography to evaluate the impervious area on all properties, allowing for appeals. The city then uses this ERU baseline to determine the fee for each property, with all partial ERUs being rounded up to the next whole number and no property being less than 1 ERU. A property’s ERU value will be multiplied by the monthly charge of $4.20.

 

A single-family residential property with 4,000 sq. ft. of impervious area would be as follows:

4,000 sq. ft. / 2,585 sq. ft. = 1.55 ERUs, rounded to 2 ERUs x $4.20 = $8.40 / month

 

A single-family residential property with 1,000 sq. ft. of impervious area would be as follows:

1,000 sq. ft. / 2,585 sq. ft. = 0.39 ERUs, rounded to 1 ERU x $4.20 = $4.20 / month

 

A commercial property with 15,500 sq. ft. of impervious area would be as follows:

15,500 sq. ft. / 2,585 sq. ft. = 5.99 ERUs, rounded to 6 ERUs x $4.20 = $25.20 / month

 

Residential Equivalence Factor

The Residential Equivalence Factor (REF) system calculates the amount of runoff from each property to then establish a fee. It can also include a flat rate charge and or the amount of impervious cover charge within the fee, but it will include runoff as a factor, differentiating it from an Equivalent Residential Unit fee. While highly equitable and precise for stormwater runoff measurements, this system requires a great deal of information on all properties in the area, their land use type, and their runoff rates. The system compares the runoff rates of each land use type and compares them to the runoff rate of a single-family residential property. This ratio is the Residential Equivalence Factor. Once you have your runoff ratio, the following equation is used to establish the utility fee:

 

SWU Fee = Base Fee x runoff ratio x property size

Examples:

Fort Collins, Colorado

Fort Collins has used a REF system to distribute their utility charges since the establishment of their utility in 1980. The monthly rate for the utility is based on three factors: lot size in sq. ft., base rate, which was calculated to be $0.00453, and runoff rate factor. The runoff rate factor is based on the percentage of imperious area and is calculated as follows:

 

Runoff coefficient = [(percent of effective impervious area) x 0.95] + [(percent pervious area) x 0.20] + [(percent semipervious area) x 0.50]

Where,

Percent effective impervious area is the total area “determined to constitute the equivalent impervious area on a parcel as calculated for the one-hundred-year, two-hour design storm” (Article VII, Sec. 26-512)

Percent pervious area is the amount of pervious area, such as lawn

Percent semipervious area is the amount of semipervious, such as gravel

 

This calculation was then formed into a tiered system based on percent of impervious area and the runoff coefficient:

Rate Factor Percent Impervious Area Rate Factor Category
.25 0 - 0.30 Very Light
.4 0.31 – 0.50 Light
.6 0.51 – 0.70 Moderate
.8 0.71 – 0.90 Heavy
.95 0.91 – 1.0 Very Heavy

 

Based on these factors, monthly rates were established for residential and commercial properties: monthly rate = base rate ($0.00453) x runoff rate factor x lot size (sq. ft.)

 

A single-family residential property with a total of 8,000 sq. ft., 40% of which is impervious area, would be as follows:

$0.00453 x .4 x 8,000 sq. ft. = $14.50 / month

 

A multi-family residential property with a total of 10,250 sq. ft., 60% of which is impervious area, would be as follows:

$0.00453 x .6 x 10,250 sq. ft. = $27.90 / month

 

A commercial residential property with a total of 15,500 sq. ft., 75% of which is impervious area, would be as follows:

$0.00453 x .8 x 15,500 sq. ft. = $56.20 / month

 

Tier System

Tier Systems are another very popular fee system for stormwater utilities. This system charges a set fee for a range of impervious area amounts in tiers. If not conducted in a proper and fair manner, the tier system can lead to the overcharging of small properties and undercharging of large properties. New Jersey’s Dept. of Environmental Protection has created an equation for calculating a tiered fee system:

Stormwater Utility Fee (Impervious Area Min <= x < = Impervious Area Max; # tier) = Base Rate x Base Rate Multiplier; # tier.

Examples:

New Jersey’s Example Broken Down (fictional location)

For this fictional location, the stormwater utility has a tiered system for an annual expenditure of 10,000, or $833.33 per month. The base rate is calculated by dividing the monthly expenditure of $833.33 by the number of properties which will be billed, which in this case will be 33.

$833.33 / 33 = $25.25

The minimum amounts of impervious area is determined by the location based on the properties in the area. The base rate multiplier will also be determined by the town in order to get a generated revenue outcome for each tier which fits their needs. The monthly revenue will be determined by multiplying the determined base rate multiplier by the base rate, $25.25. In this example, the breakdown can be seen in the table below:

 

Calculation Example:

Stormwater Utility Fee (Impervious Area Min <= x < = Impervious Area Max; # tier) = Base Rate x Base Rate Multiplier; # tier.

(2,001 <= 2,500 <= 3,000; Tier 3) = 0.3 x  $25.25; Tier 4 = $7.58 x 19 = $143.93

 

Tier Impervious Cover (Sq. Ft) Base Rate Multiplier Cost per Property per Month (base rate multiplier x base rate $25.25) Number of Properties in each Tier Total Monthly Revenue per Tier
1 0 – 1,000 0.1 $2.53 1 $2.53
2 1,001 – 2,000 0.2 $5.05 5 $25.25
3 2,001 – 3,000 0.3 $7.58 19 $143.93
4 3,001 – 10,000 0.4 $10.10 3 $30.30
5 10,001 – 30,000 3 $75.76 3 $227.77
6 30,001 – 70,000 5 $126.25 1 $126.25
7 70,001 – 110,000 11 $277.75 1 $277.77
Monthly Total: $833.30
Annual Total: $9,999.60

 

 Washington, North Carolina

Washington, North Carolina

 

Residential Non-Residential
Impervious Area (Sq. Ft) Monthly Charge Impervious Area (Sq. Ft) Monthly Charge
Up to 1,517 $2.00 201 – 600 $10.00
1,518 – 2,322 $3.00 601 – 20,000 $20.00
Greater than 2,322 $4.00 20,001 – 40,000 $40.00
    40,001 – 100,000 $50.00
    Greater than 100,000 $100.00

 

 

Millis, Massachusetts

Millis, Massachusetts

 

Number of Billing Units Impervious Area (Sq. Ft.) Annual Fee
0 0 - 199 $0
1 200 – 1,499 $33.00
2 1,500 – 2,499 $66.00
3 2,500 – 3,499 $99.00
One additional billing unit for each additional 1,000 sq. ft. increment of impervious area greater than 3,499 sq. ft.

 

ERU / Tier Combination

Tier systems can also be combined with ERU systems, to develop a fee system that charges by ERUs at different levels. For example, Westford, MA charges as follows:

Tier Single-Family Residential Property Impervious Area (sq. ft.) ERU Yearly Fee
Tier 1 < 2,000 0.5 $37.50
Tier 2 > 2,000 to <= 2,900 0.7 $52.50
Tier 3 > 2,900 to <= 4,100 1.0 $75.00
Tier 4 > 4,100 to <= 5,500 1.3 $97.50
Tier 5 < 5,500 2.0 $150.00

 

This system still evaluates a property by an ERU but categorizes the properties by tiers based on the amount of impervious cover. This can be a great option for assigning group fees rather than individual fees as with an ERU system and a more equitable distribution than a tier system.

 

Flat Fee

Another fee system option is the flat fee. This flat fee is exactly how it sounds – one fee for all property types regardless of the amount of impervious area. There is no way to make an equitable or fair flat fee. This system is typically used as a way to raise money for a feasibility study in order to develop a better, more equitable utility fee.

Flat fees can also be used in combination with other fee systems. For example, Newton, MA combines a flat fee and tiered system based on property type. Residential properties pay a flat fee of $100/ year, while all other properties are charged $0.047 per sq. ft. of impervious area.

 

 

 

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