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Tribune renews ‘rain tax’ investigation

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-Seeks new answers following stormwater fee increase

Specifically The Tribune has asked the city to furnish a copy of the complete general ledger for the city’s stormwater services department.

The renewed investigation has been triggered partly by an increase in the city’s basic residential stormwater fee and partly in order to update figures the city supplied to the Tribune when it examined this topic in a series of four articles published in August and September, 2013.

Asheville’s stormwater fee is levied on all city property owners and is based on “equivalent residential units” (ERU’s) of the “impervious surface” of a given property – paved or covered areas that generate water runoff when it rains. This would include roofs, driveways, patios and similar structures. When it first calculated the basic stormwater fee amount, city officials said they took “the average of all the averages” in terms of square feet of impervious surface per family per residential unit – and came up with a monthly charge of $2.34, or $28.08 per year.

This year, however, the city announced that it was raising rates because “the City of Asheville has experienced an increase in significant rainfall events,” necessitating “an increase in “stormwater maintenance, engineering analysis and construction improvements.” Accordingly, the city has adopted a new tiered fee system. Tier I, comprising properties having from 225 to 2000 ERU’s, now pays a monthly fee of $2.50, which comes out to $30.00 per year or an increase of 9.6 per cent. This would include small dwellings and structures. Tier II, which includes properties with from 2001 to 4000 ERU’s, taking in mid- to-large size dwellings and smaller businesses, saw their fees go from the $2.34 figure to an even $4.00 monthly ($48.00 yearly) for an increase of 58 per cent, more than half again as much as in previous years. Tier III, which embraces all properties over 4001 ERU’s, pays a flat rate 0f $5.50 or $66.00 per year, whether their actual ERU’s are 4002 or 40,002.

The city, on its website, says it formulated the new fee structure “with the assistance of a consultant.” It does not indicate whether taxpayers could expect a fee rollback if there is a decrease in “significant rainfall events” or whether the fee would be suspended altogether in the event of a prolonged drought.

The new rates were adopted July 1 and went into effect on September 1.

The stormwater fee, often referred to as “the rain tax,” was adopted by the City of Asheville in September, 2006, when the city created the stormwater services department in order, it said, to comply with the Federal Clean Water Act, which was passed by Congress more than 40 years ago. In the late 1980’s, this act morphed into an arrangement called the Clean Water State Revolving Fund (CWSRF), a federal “partnership arrangement” which in fact placed most of the responsibility for water policing on state governments.

In turn most state governments, including North Carolina’s, played kick-the-can-down-the-road and tossed implementation of the CWSRF’s provisions into the laps of towns and cities.

At first, North Carolina only required cities with populations of more than 100,000 to enact a stormwater tax. It was not until 2005-06 that this requirement reached the next tier – cities of between 50,000 and 100,000 people — which embraced a dozen other North Carolina municipalities, including Asheville.

The city generally responds to the frequently-asked question, “Where did this stormwater fee come from” with the stock answer, “It’s a federal mandate.” However, the only “federal mandate” driving Asheville’s stormwater program is/was the decades-old CWA, with its broad goals and provisions. The boots-on-the-ground methodology for financing and maintaining a stormwater program was created and is carried out entirely by the City of Asheville.

In August of 2010 the city repealed Section 7 of its Unified Development Ordinance (UDO) under which stormwater activities had been operating and replaced it with a new Section 7, which created the position of Stormwater Administrator, currently occupied by McCray Coates. And whereas such stormwater compliance duties as the city carried out had previously been under the general umbrella of the UDO as administered by the Department of Public Works, the city now had, in effect, an entire new department with its own chain of command, agenda and budget.

A six-year analysis last year showed that salaries made up approximately 38% of the stormwater department’s budget. A category titled “other direct” includes expenditures for “all operating costs in the Stormwater Fund except for personnel expenses … it’s for things like materials, contracted services, professional services, fleet maintenance, fuel, street cut charges, tipping fees, etc.,” Coates stated at the time. That item also averages about 38% of the total budget. When construction costs are broken out separately, they average about 3%. The remainder, which historically has ranged between 19 and 21 per cent, goes into a reserve fund, at an average of $660,000 per year.

According to an explanatory note accompanying the 2011 budget figures – the latest figures supplied last year by the city to the Tribune –“standards for enterprise funds suggest that the Stormwater Fund should have about $500,000 in reserves,” but last year Coates acknowledged the reserve fund’s current balance was $1.4 million, nearly triple the amount “suggested.” And although the budget for last fiscal year anticipated “a significant increase in capital spending,” the budget notes also mentioned the department was contemplating borrowing $430,000 for the purchase of several new pieces of capital equipment, including a backhoe.

Coates later confirmed that the city had in fact borrowed the money to purchase the equipment, adding that by bundling several pieces of equipment into a single loan, the city was able to obtain “a very favorable interest rate.” He did not explain how a going into debt at a favorable interest rate trumped paying cash for the equipment, which would have still left $970,000 – almost double the recommended amount – in the reserve fund.

City head of communications and public engagement officer Dawa Hitch said she was forwarding the Tribune’s request for information to public information officer Brian Postelle. Postelle had not responded by press time.

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