Opinion: Bloomington should consider a different approach to stormwater revenue

At its regular meeting on Wednesday, Feb. 20, the Bloomington City Council will consider “adjusting stormwater fees.” It’s the second reading of a change to the city’s ordinance on the “stormwater utility.”

Manhole rain
The manhole cover near Indiana Avenue and 6th Street on Feb. 7, 2019.

Of course, a “fee adjustment” generally means an increase of the fee.

And Bloomington’s proposed adjustment is a more than doubling of the monthly fee paid by single-family residential (SFR) customers—implemented in two phases over six months. The first bump, to $4.32 per month, would go into effect about four months from now, on July 1, 2019. Six months after that, on Jan. 1, 2020, the rate would go up to $5.95 per month.

More than a decade and a half has gone by since the rate was increased. (It was Ordinance 03-24, enacted in 2003, that put the current rate into effect, according to the city’s online municipal code.)

Even as a recent arrival in Bloomington, I recognize that the city’s stormwater infrastructure needs some improvement. On Feb. 7, when around 3 inches of rain fell, I walked from 6th Street near the courthouse square to the Indiana University Credit Union near the IU football stadium.

My umbrella kept my head dry. But the torrents cascading over sidewalks and streets meant that in some places I had to wade through a foot of water to get where I was going. It’s apparent that I survived. No need to re-name some Bloomington thoroughfare “Dave’s Defeat Street.”

Anyhow, I lived in Michigan for 20 years. So my thinking on stormwater rates is influenced by that state’s regulatory environment. While that environment does not translate legally to Indiana, the concepts are still useful.

First, what Bloomington calls a stormwater “fee” would count as a “tax” in Michigan. In a decision made 20 years ago (Bolt v. City of Lansing, 459 Mich. 152 1998) the Michigan Supreme Court ruled that to qualify as a “fee” instead of a “tax,” the fee had to pass a three-pronged test:

  1. A user fee has to serve a regulatory purpose not a revenue-raising purpose;
  2. The amount of the fee has to be proportionate to the cost of the service;
  3. The fee has to be basically voluntary in character.

Bloomington’s single-family residential customers all pay the same stormwater fee. That means Bloomington homeowners (maybe hypothetical people) who have engineered a rainwater collection system to prevent all the rain that falls on their land from draining elsewhere, will still pay the same as a homeowner who has impervious surface covering their entire property.

So Bloomington’s “stormwater fee” fails point (2) of the test. I can imagine Michiganders calling Bloomington’s stormwater fee a “rainwater tax.”

The difference between a fee and a tax is a big deal in Michigan, because under the state’s constitution, local taxes cannot be increased—and new taxes cannot be levied—without a vote of the people.

Back to Bloomington. As applied to non-SFR users, Bloomington’s stormwater “fee” looks more like a Michigan fee than a Michigan tax—because it’s calibrated to the amount of runoff the user generates. From the city code:

All other customers shall be charged based upon the amount of runoff generated by the customer. The amount of runoff subject to the stormwater utility rate shall be determined by a calculation based upon the following formula, minus any credits, as approved by the utilities service board: [Runoff generated by nonsingle-family residential customer]  [Runoff generated by the average single-family residential customer multiplied times $2.70]

That means non-SFR users are encouraged by the fee structure to reduce runoff. But SFR users are not similarly incentivized.

How could SFR users be charged based on their use of the stormwater utility? Here’s one approach: Tie SFR rates to the amount of impervious surface on the parcel. The technology for measuring impervious surface—infrared images taken from a city-wide flyover—is straightforward. That’s how the stormwater rates in Ann Arbor, Michigan, are determined.

In Ann Arbor, the stormwater rate can be further reduced if a homeowner installs rain barrels. The fee can be completely eliminated if a homeowner can demonstrate that their rainwater detention prevents all runoff (from a 100-year rain) from leaving the property.

These kinds of incentives for SFR users seem to fit with the idea of making Bloomington a sustainable and resilient community in the face of the looming, devastating impact of climate change.

Aspirational talk about community resilience is something I’ve heard often from Bloomington councilmembers when I watch their meetings—even in the short while I’ve lived here. So I hope their best idea for generating the clearly needed additional revenue for stormwater infrastructure is not just to follow the administration’s suggestion to double the tax rate.

I hope the city council and the administration will start considering a runoff-based approach to stormwater rates for SFR users, even if the rate increase is approved at the Feb. 20 meeting.

 

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