No formal action will be taken during this work session. Council will be asked whether it wishes to direct staff to reconvene the Stormwater Advisory Committee this fall to further evaluate potential stormwater rate credit options.

At the request of City Council, this work session will provide an opportunity for Council to provide direction to staff regarding further evaluation of stormwater fee credit for commercial customers. During the development of the City’s stormwater utility program and rate structure, both the City’s consultant and the Stormwater Advisory Committee evaluated stormwater rate credits and ultimately recommended continuing the current practice of not offering credits due to administrative complexity, limited impact on overall system costs, and the continued need to maintain citywide stormwater infrastructure and services. No formal action will be taken during the work session; however, Council may provide direction on whether staff should further evaluate stormwater rate credit options in FY27, including reconvening the Stormwater Advisory Committee.

As part of the Stormwater Utility Development process initiated in 2020, the City retained FCS Group to complete a comprehensive stormwater rate study and assist in the development of a long-term stormwater utility program. In conjunction with that effort, the City also formed a Stormwater Advisory Committee consisting of community stakeholders to evaluate program needs, capital requirements, operations, maintenance, and rate structure alternatives. The development process was completed in 2024 and included discussions regarding potential stormwater rate credits for customers who provide onsite stormwater mitigation measures.

As part of the rate study process, FCS Group prepared “Issue Paper #4 – Rate Credits and Adjustments,” which evaluated industry practices and policy considerations associated with stormwater utility rate credits. The report noted that stormwater utility fees are intended to function as a fee for service rather than a tax, and that any credit structure should maintain a rational relationship between the level of service provided and the fees charged. The report further noted that overly broad credit policies may reduce legal defensibility and shift costs to other ratepayers if the credited activities do not meaningfully reduce system-wide utility costs.

The consultant also evaluated common credit approaches utilized in other jurisdictions, including credits for onsite detention or retention facilities, low impact development practices, green infrastructure, and rainwater harvesting. While the report acknowledged that some communities offer credits for these activities, it concluded that many stormwater utility costs remain fixed regardless of onsite mitigation measures. The report recommended that if the City were to consider credits in the future, the credits should be analytically based, limited in scope, and tied specifically to measurable reductions in utility costs. The consultant further recommended that any theoretical maximum credit would likely range between 25% and 40% and should only apply to activities that demonstrably reduce system costs or delay future capital investments.

Stormwater rate credits were also discussed during a December 7, 2022 Stormwater Advisory Committee meeting. Based upon discussions with the Advisory Committee, industry experience, and the professional opinion of the City’s consultant, a formal stormwater rate credit program was not recommended at that time. 

In addition to individual parcel runoff management, the City’s stormwater utility is responsible for broader community-wide stormwater functions and infrastructure. Even in situations where a commercial property fully infiltrates or retains stormwater onsite, the City must continue to maintain and operate the public stormwater conveyance system, including streets, curb and gutter, catch basins, pipes, and regional drainage infrastructure necessary to protect public safety and property citywide. The stormwater system also provides broader public benefits including roadway access, emergency access, flood protection, water quality improvements, and regional stormwater management during large storm events that exceed localized onsite design standards.

This work session was requested by City Council to discuss if it desires staff to proceed with evaluating stormwater fee credits for commercial customers. Per Council direction, no formal presentation is planned; however, Public Works staff will be available during the work session to answer questions.

Staff estimates that further evaluation of stormwater rate credit options would require approximately $25,000 in consultant services and approximately 200 hours of staff time.

Council may direct staff to further evaluate stormwater rate credit options during FY27, including reconvening the Stormwater Advisory Committee, or defer additional consideration to a future date.