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‘Federal mandate’ or city shell game?

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Will city’s proposed overhaul of UDO mean further “rain tax” increases?

The stormwater fee, collected bimonthly as a part of each customer’s water bill, is based on the estimated amount of “impervious surface” on the customer’s property. The rationale is that such surfaces cause water runoff, which must be dealt with in order to prevent flooding, neutralize pollutants and safeguard water quality in streams and rivers.

The basis for computing the tax is a unit of measurement called an “equivalence residential unit” (ERU) which is “a numerical value associated with the average household size of single-family dwelling units.” The formula for calculating these units is not known, but originally it translated into an average residential assessment of $4.68 per billing cycle. But at the beginning of the current fiscal year last July 1, the city amended the UDO to allow a change in its method of computing the tax, establishing a flat, tiered ERU rate according to property square footage. Under the new system, the basic residential stormwater fee was raised from $4.68 to an even $5.00, an increase which the city anticipates will bring in an additional $1.9 million in stormwater fees this fiscal year.

UDO watchers now wonder whether the contemplated overhaul of the UDO, whose rules and regulations extend into every area of city governance, will include further tinkering with the stormwater tax itself and the activities it finances.

From its adoption, the city’s stormwater fee has come under heavy scrutiny. Rain has been around since the world began. There has been stormwater runoff in cities as long as there have been cities, and ways of dealing with it are almost as old (parts of Crete’s sewerage system are still in active use after 3,000 years). And the City of Asheville, as such, has existed since 1795. How came it to pass, then, that in 2005 the city established – and began collecting a tax to pay for – an entire separate department to perform work and manage projects once considered a part of the overall function of what used to be called “the water works”? Did federal and state laws, as the city maintains, demand its creation? How much money do stormwater fees bring in? And, above all, exactly how is this money spent?

The city’s automatic response to the first question is that stormwater taxes were created by “Federal mandate” and that Asheville is merely carrying out policy imposed on it by the United States government edict that requires cities with a population of between 50,000 and 100,000 to adopt measures to monitor and maintain water quality according to national standards.

But in fact, the only “federal mandate” driving Asheville’s stormwater program is the decades-old Clean Water Act, which only laid down broad goals and guidelines for water protection. 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-cat and tossed implementation of the CWSRF’s provisions into the laps of towns and cities. So the boots-on-the-ground methodology for financing and maintaining its stormwater program was created and is carried out entirely by the City of Asheville.

Thus, in August of 2010, the city repealed Section 7 of the present 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, who came to be known as the city’s “Water Czar”). 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.

According to most recent figures supplied to the Tribune by the city, anticipated revenue for the stormwater department this fiscal year amount to $3.65 million.

A six-year analysis conducted by the Tribune last year showed that salaries make 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 said at the time. That item accounts for another 38% of the total budget. When construction costs were broken out separately, they averaged about 3%. The remainder, which historically has ranged between 19% – 21%, goes into a reserve fund, at an average of $660,000 per year.

Coates explained that the reserve fund “is for stormwater project over-runs and unexpected emergency stormwater related projects such as we have experienced this year. It is also a one-time source for capital improvements, we have planned to gradually draw down the fund balance over the next few years by using the money to help fund additional stormwater projects.”

At that time the stormwater reserve fund had risen to about $1.4 million, nearly triple the $500,000 suggested by the state as a prudent set-aside amount. Yet when the city decided it needed approximately $430,000 to purchase new capital equipment, it took out a loan for the purpose.

Coates confirmed that the city had in fact borrowed the money to purchase the equipment. He said 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.

(To be continued.)

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