Staff recommends that City Council conduct a public hearing and approve the proposed resolution setting storm sewer fees for FY25.

City Council passed Ordinance 24-5872 on March 25, 2024, altering how storm sewer system fees are billed.  Previously an assessment on property tax statements, these fees will be monthly charges on utility bills effective July 1, 2024.  Staff is proposing a shift in the fee calculation method from using zoning and gross square footage to impervious square footage and Equivalent Residential Unit (ERU).  This change aims to better reflect the impact on the storm system, as zoning and gross square footage often fall short in this regard.  The proposed approach offers greater fairness.  The average residential property's ERU is calculated at 3,751.22 square feet. Under the new system, each developed single-family residential property is assessed at 1.0 ERU, while duplexes are rated at 0.75 ERUs per unit, and undeveloped properties are assigned 0.75 ERUs.  For all other properties, the ERU is determined by dividing the measured impervious surface square footage by 3,751.22, expressed as a number of ERUs.  

Billings' storm sewer system, a critical $1 billion infrastructure asset, plays a role similar to that of the water and wastewater systems in serving the public. With the proposed changes in methodology and the rate schedule, Public Works can increase the level of service and tackle capital and deferred maintenance backlogs more promptly. This marks the initial year of a seven-year gradual increase in rates, facilitating proactive maintenance of the storm sewer system.  Beyond this period, it is expected that only inflationary adjustments will be necessary to sustain and operate the system.

Following previous direction from Council, staff is presenting the attached resolution for the adoption of the new storm fees and methodology for FY25.

In 2022, a stormwater advisory committee comprising Council Member Gulick, community members, and staff was established.  This committee extensively reviewed all aspects of the stormwater program and endorsed both the change in methodology and the proposed fees.  Over the period from August 2022 to March 2024, the committee convened eight times.

Moreover, staff actively engaged various boards and community groups, including the West End Task Force, Rimrock Neighborhoods, Heights Task Force, Southside Task Force, North Park Task Force, the Billings Association of Realtors, Landlords Association, and the Public Works Board.  

Three community meetings were convened on May 22, 2024, at the Water Treatment Plant, and on May 28 and 29, 2024, at the Billings Public Library.

Additionally, staff presented the stormwater program at the following Council and Council Committee meetings:

Council Work Session	June 21, 2021
Council Budget and Finance Committee	July 12, 2023
Council Budget and Finance Committee	August 16, 2023
Council Work Session	October 2, 2023
Council Budget and Finance Committee	May 15, 2024
Council Work Session	May 20, 2024

City Council must hold a public hearing and then may:

• Approve the recommended resolution; or,
• Approve an amended resolution; or
• Not approve a resolution. If Council does not approve a resolution, an amended resolution to establish storm sewer fees will need to be considered at a future City Council meeting to establish rates for fiscal year 2025.

The proposed storm sewer fees will increase the average residential property's monthly fee from $4.97 to $6.68, generating approximately $7,380,000 for the storm sewer fund in FY25. This is an increase from the prior year of $1,680,000. Due to the change in methodology, the effect on individual properties will vary.