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Offices in Illinois, Iowa, Minnesota, and Wisconsin 2901 International Lane, Suite 300, Madison, WI 53704-3133 (608) 242-7779 (800) 446-0679 FAX: (608) 242-5664 WEB ADDRESS: www.msa-ps.com C:\D\Middleton\SWU\MEMO_Progress_101906.doc 1 MEMO To: Water Resources Management Commission From: Ann Dansart Subject: ‘Mini’ Stormwater Utility Feasibility Study Date: October 19, 2006 Introduction As part of the City of Middleton stormwater master planning project, MSA’s scope of work includes a work task to conduct a small investigation into the feasibility of creating a stormwater utility for the City. This investigation is summarized in this memo. Stormwater Program Funding Under the current system of funding the City’s stormwater program through property taxes, residential homeowners pay for approximately 67 percent of the stormwater management costs while owners of nonresidential property pay for 33 percent of the program. Under a stormwater utility, charges would shift to property owners that generate more stormwater runoff. Specifically, residential property owners would pay for only 31 percent of the stormwater management program, while non-residential and tax-exempt users will fund 55 and 14 percent, respectively, as illustrated in figure 1. FIGURE 1: CITY OF MIDDLETON STORMWATER PROGRAM FUNDING Property Tax System (Property Value) Residential 67% Non-Res 33% Stormwater Utility (Impervious Area) Residential 31% Non- Residential 55% Exempt (City) 6% Exempt (Other) 8% ---PAGE BREAK--- Offices in Illinois, Iowa, Minnesota, and Wisconsin 2901 International Lane, Suite 300, Madison, WI 53704-3133 (608) 242-7779 (800) 446-0679 FAX: (608) 242-5664 WEB ADDRESS: www.msa-ps.com C:\D\Middleton\SWU\MEMO_Progress_101906.doc 2 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Lake Delton West Allis Middleton Wauwatosa Sheboygan Appleton St. Francis Cudahy Oshkosh Eau Claire Butler Neenah Glendale Janesville Bellevue Grand Chute Sun Prairie Garner's Creek Fitchburg New Berlin Greenville ERU Size (SQ FT) Estimated City of Middleton ERU The shift in the burden of cost under a stormwater utility verses a stormwater program funded by property tax occurs because a stormwater utility, like a water utility, generates revenue through user fees based on the level of service each customer receives rather than on property value. In a stormwater utility, the “meter” for measuring “use” is impervious area. ERU Determination In Wisconsin, the most commonly used approach for determining stormwater utility charges is the equivalent residential unit (ERU) method. An ERU is the average amount of impervious area associated with single- family homes, duplexes, and multifamily units. The data used to determine the Middleton ERU size is summarized in Table 1. The estimated Middleton ERU size under a stormwater utility is 2,121 square feet. This is below the average ERU size for Wisconsin municipalities, roughly 3,000 square feet, as illustrated in Figure 2. TABLE 1. RESIDENTIAL UNIT IMPERVIOUS AREA SUMMARY Type of Residential Unit Average Impervious Area Per Unit (sq. ft.) Approximate Number of Units Citywide Single-Family 3,144 3,369 Duplexes 1,980 490 Multi-Family 1,072 3,222 Weighted Average = 2,121 Total Living Units = 7,081 FIGURE 2. WISCONSIN STORMWATER UTILITY ERU SIZE COMPARISON ---PAGE BREAK--- Offices in Illinois, Iowa, Minnesota, and Wisconsin 2901 International Lane, Suite 300, Madison, WI 53704-3133 (608) 242-7779 (800) 446-0679 FAX: (608) 242-5664 WEB ADDRESS: www.msa-ps.com C:\D\Middleton\SWU\MEMO_Progress_101906.doc 3 Of the over 3,300 single-family residential parcels in the City, a sample of 157 parcels was randomly selected to determine that the average area of impervious surface on single-family parcels is 3,144 square feet (see Figure 3 for the sample distribution). All 245 parcels with duplexes and flats were digitized to determine the average area of impervious surface per residential unit to be 1,980 (see Figure Finally, the 113 multifamily parcels across the City (number of dwelling units ranged widely from 3 to 192 units per parcel) were digitized and measured to obtain an average of 1,304 square feet of impervious surface per multifamily unit. FIGURE 3. SINGLE FAMILY RESIDENTIAL PARCEL IMPERVIOUS AREA DISTRIBUTION 0 5 10 15 20 25 [PHONE REDACTED]-1249 1250-1499 1500-1749 1750-1999 2000-2249 2250-2499 2500-2749 2750-2999 3000-3249 3250-3499 3500-3749 3750-3999 4000-4249 4250-4499 4500-4749 4750-4999 5000-5249 5250-5499 5500-5749 5750-5999 6000-6249 6250-6499 6500-6749 6750-7000 Parcel Impervious Area (sq. ft.) Number of Parcels (n=157) FIGURE 4. TWO-UNIT RESIDENTIAL PARCEL IMPERVIOUS AREA DISTRIBUTION 0 10 20 30 40 50 60 [PHONE REDACTED]-1249 1250-1499 1500-1749 1750-1999 2000-2249 2250-2499 2500-2749 2750-2999 3000-3249 3250-3499 3500-3749 3750-3999 4000-4249 4250-4499 4500-4749 4750-4999 5000-5249 5250-5499 5500-5749 5750-5999 6000-6249 6250-6499 6500-6749 6750-7000 Impervious Area per Unit (sq. ft.) Number of Parcels (n=490) ---PAGE BREAK--- Offices in Illinois, Iowa, Minnesota, and Wisconsin 2901 International Lane, Suite 300, Madison, WI 53704-3133 (608) 242-7779 (800) 446-0679 FAX: (608) 242-5664 WEB ADDRESS: www.msa-ps.com C:\D\Middleton\SWU\MEMO_Progress_101906.doc 4 $0 $20 $40 $60 $80 $100 $120 Lake Delton Janesville River Falls Oshkosh Glendale Madison Eau Claire Wauwatosa Bellevue Cudahy Grand Chute St. Francis West Allis Fitchburg Neenah Greenville New Berlin Sun Prairie Butler Appleton Milwaukee Garner's Creek Annual Charge Per ERU ERU Count Based on MSA’s analysis of recent aerial photos, parcel data, and assumed ratios of impervious surface for nonresidential properties, there are a total of 24,420 ERUs in the City, broken down by parcel type as shown in Table 2. For all developed commercial parcels, an assumption of 85% impervious surface was used. For manufacturing parcels, 72% impervious surface was assumed. For most developed tax-exempt parcels, 60% impervious surface was assumed. Exceptions to this include developed parcels at the airport and at Orchid Heights Park, for which 15% impervious surface was assumed. It is important to note that if a stormwater utility is established, detailed measurements of impervious surface on nonresidential parcels will replace these estimates and result in slight changes to the number of ERUs across the City. TABLE 2: IMPERVIOUS AREA BY PARCEL TYPE SUMMARY Parcel Type Impervious Surface (Acres) # ERUs Residential 363 7,111 Non-Residential 381 11,701 Tax Exempt (City) 261 3,064 Tax Exempt (Other) 156 1,837 Vacant 831 200 Total 1,991 23,913 Estimation of Charge The charge per billing unit in a stormwater utility is determined by dividing the total stormwater program budget by the total number of ERUs in the community. Residential units are charged one billing unit each, and non- residential units are assigned a number of ERUs based on their impervious area. For example, if the size of one ERU in Middleton is 2,121 square feet, the owner of a commercial parcel with 8,888 square feet of impervious surface would be charged for four 4 ERUs. Of Wisconsin municipalities with stormwater utilities, the charge per ERU ranges widely from $12 to $96, with the average being approximately $54 (see Figure In Table 3, a range of charges and their associated annual revenues is provided for consideration. FIGURE 5: WISCONSIN STORMWATER UTILITY RATES ---PAGE BREAK--- Offices in Illinois, Iowa, Minnesota, and Wisconsin 2901 International Lane, Suite 300, Madison, WI 53704-3133 (608) 242-7779 (800) 446-0679 FAX: (608) 242-5664 WEB ADDRESS: www.msa-ps.com C:\D\Middleton\SWU\MEMO_Progress_101906.doc 5 TABLE 3: RANGE OF CHARGES FOR CONSIDERATION Annual Charge per ERU Total Revenue $20 $ 464,442 $35 $ 812,774 $50 $ 1,161,106 $65 $ 1,509,438 $80 $ 1,857,769 11/17/06 Addendum: Budget and Rate Charge Stormwater management activities are frequently dispersed among different municipal departments, and involve the part-time efforts of staff on many different wage levels. In Middleton, the majority of stormwater management activities fall under the Department of Public Works and the Department of Public Lands. On November 1st, 2006, Ann Dansart of MSA met with Gary Huth and Toby Ginder to discuss the City of Middleton’s annual budget for stormwater management. Based on estimated annual costs of labor, equipment, design, and construction, the annual budget for stormwater management in the City of Middleton is approximately $977,575 (see attachment for details). This annual budget would require a charge per ERU of $40.88.