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2019 Strategic Directions:Water Report

The Stormwater Resilience Roadmap: Integration of Delivery Frameworks and Financial Capacity

In an era when climate change, organizational capacity constraints, funding challenges and limited public support continue to test the resilience of a community's stormwater system, images of flooded neighborhoods and arterial streets turned into rivers highlight the urgency for a strategic vision and alternative approaches to stormwater management service delivery. The critical question is whether leaders and managers are exploring holistic alternative approaches that address program planning, organizational capacity, service delivery mechanisms and financing. 

In Black & Veatch's 2018 Strategic Directions: Water Report, we discussed the role of community-based partnerships (CBP) as an efficient, integrated approach to helping overcome the challenges municipalities face when it comes to delivery and funding for stormwater initiatives. In this report, we highlight the tangible value of integrating delivery frameworks and user fee-funding mechanisms as a practical path to long-term resilience.

The Paradigm Shift: A Call for Integrated Frameworks and Collaborative Management

While water and sewer systems are infrastructure-heavy, capital intensive and require a skilled workforce, two key factors distinguish them from stormwater systems. First, municipal water and sewer system management involves predominantly publicly-owned land; whereas, effective stormwater management requires management of both publicly-owned point sources and privately-owned, non-point sources.

Consequently, with respect to planning, operations and capital program management, water and sewer systems are more conducive to centralized management and governance. Stormwater management, on the other hand, lends itself more to alternative approaches such as distributed management and more collaborative partnerships.

As new trends in urban stormwater management emerge, Krishna P. Dhakal and Lizzette R. Chevalier explain in their research article, "Urban Stormwater Governance: The need for a Paradigm Shift," that since "stormwater management has become a highly integrated, multi-objective undertaking that includes flood control, water quality control, visual amenity," effective management of stormwater also requires an alternative form of governance. They opine that management must expand from a centralized governance to a multiple stakeholder management paradigm that includes private land owners, community organizations, residents, landscape designers and other business organizations.

In evaluating five U.S. cities that are heavily incentivizing green infrastructure, the authors conclude that while these locales encourage public participation through education and outreach, they still do not have any formal "community-level governance mechanism to involve individual land owners and other local stakeholders."

A structured path to a paradigm shift in stormwater management can be developed by integrating an alternative program planning and execution framework, and by enhancing financial resilience through effective funding mechanisms, as both involve multiple stakeholders beyond just a municipal entity. 

Alternative Planning and Execution Framework – Understanding Possible Solutions

Municipal entities are generally adept at meeting all their permit and regulatory compliance requirements despite and ever-evolving environment. However, utility managers still face four critical challenges:

  1. Developing a more holistic, multi-objective planning framework that integrates stormwater management and broader community development.
  2. Building their internal organizational capacity to accelerate program execution. 
  3. Leveraging available funding for greater cost efficiencies.
  4. Achieving performance driven outcomes that the community can readily support.

In Black & Veatch's 2019 Strategic Directions: Water Report survey, we asked municipal leaders about organizational capacity. Nearly two-thirds (64 percent) of respondents stated that their organization does not have adequate capacity to plan, design, deliver and maintain quality stormwater management services in their community. 

It is important to note that organizational capacity with respect to operations and maintenance (O&M) will come under increasing stress especially if the municipal entity continues to invest in and deploy distributed best management practices throughout the municipal jurisdiction. Those will require ongoing inspections and maintenance. 

For municipal entities that recognize their lack of capacity in delivering stormwater services, what is the level of awareness about other potential delivery frameworks, partnering with the private sector to augment capacity, manage risk and meet the municipality's service obligation?

The first step to considering an integrated framework approach is assessing the current level of understanding regarding alternative delivery methods. Of the survey respondents, more than half said they were not familiar and one-quarter only slightly familiar with mechanisms such as CBP3s. The results definitively point to a greater need among the public and private stakeholder groups and industry organizations to disseminate information on potential integrated frameworks. 

It's vital that utility leaders invest in an active evaluation of integrated delivery approaches that are performance and outcome-driven. This evaluation should not only assess the most efficient way to deliver the capital and O&M program through an aggregated delivery and risk management approach but should also consider ancillary community benefits that can be driven by stormwater investment into the community. Some of the benefits include workforce engagement, mentor-protégé programs, environmental equity, school education programs and economic development goals that best leverage the benefits of stormwater investment in the community.

For example, the Clean Water Partnership between Prince George's County in Maryland and private-sector company Corvias is one delivery model the municipal entity found viable when looking at how best to deliver its stormwater program. This project is further detailed below. 

Enhancing Funding Capacity and Customer Equity

In addition to building organizational and service delivery capacity, a continuing saga for municipal entities is a lack of funding. In Black & Veatch's 2018 Stormwater Utility Survey, utility leaders with user fee-funding mechanisms in place revealed that funding availability and public support for their stormwater management program were the two issues of highest importance.

The fact that there are well over 1,800 user fee-funded programs nationwide points to the multiple benefits they provide, such as a dedicated funding source, a more equitable approach to cost recovery, and a reasonable nexus between fees and costs incurred in providing services. 

A significant ancillary benefit to a user fee-funding approach is that it directly involves all public and private property owners who must contribute fairly to cost recovery. In addition, all owners gain recognition in the form of partial fee reductions and other incentives based on private on-site stormwater management stewardship. From emerging funding programs such as the Water Infrastructure Finance and Innovation Act, to established programs such as bond financing and the State Revolving Fund, user fee-funding offers additional assurance of debt repayment, thereby providing significant leverage in establishing a balanced portfolio of funding sources. 

Currently, most municipal jurisdictions in the United States strive to fund stormwater management through a tax-based revenue mechanism as opposed to establishing a dedicated stormwater user fee-funding mechanism. The lack of public acceptance and lack of political support, however, will continue to be major barriers to integrating user fee-funding into the overall stormwater management planning framework unless the public can see the economic and community benefit such a fee provides. Only six of 10 of this year's municipal respondents indicated having user fee-based funding as one of the approaches to funding stormwater management. 

Stormwater management requirements, organizational capacity constraints and the need for resilience to extreme weather conditions continue to increase. To address this combination of challenges, municipal entities should consider development of a "resilience roadmap" that incorporates two key components: an integrated capital and O&M delivery framework that can synthesize both broader community benefits and specific stormwater management objectives, and an equitable and dedicated user fee-based funding mechanism to effectively support both existing and integrated delivery frameworks while providing long-term financial resilience.