Money down the drain? (Part 2)

My last blog post was about combined sewer overflows  (CSOs) and how in Portland,  Maine,  millions of gallons of stormwater and raw sewage combined can flow into our rivers and bays after a heavy rain.

In this blog post,  I’ll talk about some of the ways in which municipalities can “fix” CSOs, and in particular,  I’ll talk about Portland’s new stormwater fee and some of its economic implications.
Municipalities have essentially three choices they can use to control CSOs: containment, separation, and “green solutions”. Containment is, as is name suggests, simply “containing” the combined sewage until a better time to treat it. It is essentially increasing the capacity of the system before it overflows –  not “fixing” the CSO, just making it so it’s not needed so often.  This is a relatively low cost option,  although still pretty expensive. If you live in Portland,  you might remember when Back Cove Boulevard was closed for so long.  They were installing these huge storage tanks (conduits) to contain the raw sewage/stormwater cocktail from a heavy rain  until it could be sent to the treatment plant. The one installed in Back Cove has a capacity of 3.5 million gallons – enough to prevent sewage entering the cove in a relatively heavy rainfall,  but there is some speculation that it might not be enough to completely eliminate discharges in some of the intense rains we saw last spring and fall.

Separation involves actually “fixing” the CSO – separating the pipes so that even in a heavy rain, sewage goes to the treatment plant,  while stormwater goes to the ocean/river.  This could be done in new development,  perhaps,  but in a place like Portland,  it would be exceedingly expensive. Effective,  for sure,  but expensive.

“Green solutions” include things like: paving with porous pavement rather than pavement that’s completely impervious (instead of simply running off, rainwater trickles through and is typically filtered by a layer of gravel below,  before seeping into the ground);  rain gardens, which are grasses, plants, and flowers that “like to get their feet wet” in low lying areas,  so that runoff gets filtered before entering any waterways,  and other structures,  like “wet ponds” that retain runoff before releasing it.  A great local example might be the Wishcamper Center at the University of Southern Maine, or,  the beautiful “yardscaping” on the Back Cove trail or at Capisic Pond.

Rain garden near Back Cove.  Photo printed in the Portland Press Herald, http:// http://www.pressherald.com/2010/07/04/rain-garden-gives-city-a-green-way-to-stop-flow-of-pollution-_2010-07-04/

These can be expensive options as well,  and wouldn’t be able to be easily ramped up to the scale necessary,  but they have added benefits that are not easily measured: improved flood control, increased groundwater recharge,  habitat and food provision for birds, bees,  and other creatures (berries, flowers,  and seed bearing fruits could be easily integrated into the design), as well as pure aesthetic appreciation.

Portland has chosen to address its CSO issues by a combination of these solutions, with an emphasis on storage. This is reasonable from a financial perspective,  although I personally would like to see more green infrastructure. As always,  the problem is how to pay for it.

Portland has chosen to go with a stormwater fee,  based on the amount of impervious surface a property has.  The more impervious surface (driveways and other paved areas, as well as roofs), the greater the total bill.  (If you live in Portland, you can look up your bill here: http:// http://www.cleangrowthcleanwater.com/calculator.)  Properties with less than 400 square feet of impervious surface are exempt,  and then the fee is levied on increments of 1,200 square feet.  The fee is not levied on public sidewalks or paths,  either.

Now,  most economic policies can be evaluated on the basis of efficiency and equity,  and in this case,  I would add,  ease of implementation and impact on the community. Let’s look at efficiency first.  In this case,  that means “does the fee achieve its goal in a cost-effective manner?”  Here,  I think the question to ask is,  well,  what are its goals? If the goal is to reduce the amount of stormwater runoff from your property,  then I, frankly,  would say no. Let’s take a look at how the fee is structured. It’s based on increments of 1,200 square feet (the first “tier” is 400 to 1,799 square feet).  If I have a property that has, say 1,849 square feet, and I have a dilapidated shed with about 50 square feet of roof surface, then I might be tempted to tear it down to get myself into the lower tier.  But unless you can easily get your property down into the lower tier,  you have no incentive to reduce the amount of impervious surface area that you have. (Except even that example doesn’t work,  because when the city is estimating your impervious surface,  they round to the nearest 1,200 square feet. It would take some serious work to get yourself into the lower tier.) 

You can apply for credits,  which is great: if you install a rain garden or detention pond on your property,  you can apply for and hopefully get a credit. Most homeowners probably won’t take advantage of this,  but some larger commercial entities with large parking lots might. So the fee doesn’t give homeowners much of an incentive to reduce the runoff from their property, which a truly effective fee would. (It would be great if they gave you a credit for having a rain barrel, but that gets into ease of implementation – what if you had one but it wasn’t hooked up? Would the city have to go around to make sure you were actually using it? Not likely.)

Moreover,  a perfectly targeted stormwater fee would not only measure the amount of impervious surface,  but also look at the slope of your property, the velocity of discharge,  etc. That doesn’t make a lot of sense from an implementation point of view.

However,  if the goal of the fee is to pay for the improvements to the system in a relatively cost-effective and equitable manner,  then yes,  I would say the fee is efficient.

Let’s look at equity, now.  If a tax, rather than a fee, were implemented,  then any tax-exempt organization would be, well, exempt. That would include universities and religious organizations,  many of which have large impervious surfaces. Also, taxes would go into the municipality’s general fund,  for which there’s usually a lot of competition and changing priorities.  Revenue from the stormwater fee would be dedicated to improving CSOs and reducing stormwater flows. The fee is also (moderately) progressive: though it’s not explicitly tied to income, one would assume that the amount of impervious surface on a property is correlated with income,  although perhaps not exactly. http:// http://www.stormh2o.com/SW/Articles/The_Stormwater_Utility_Will_It_Work_in_Your_Commun_212.aspx

Finally,  let’s consider the impact on the larger community. One of the objections that’s been raised is that this is just another fee that will make Portland uncompetitive. I find that argument pretty unconvincing. Study after study has shown that among factors that influence firms’ location decisions, a well-educated and highly skilled labor force is among the highest,  whereas environmental compliance costs – even taxes – are among the lowest.  In today’s economy,  where a skilled workforce is less and less tied to a particular industral locale, jobs tend to follow workers,  rather than the other way around.   And since Portland consistently ranks among the top cities in which to live, a stormwater fee is unlikely to influence firms’ decisions. Moreover,  most New England cities are dealing with the same issues, which means that Portland is not losing a comparative advantage,  relative to other, similar – sized towns. After all,  dealing with CSOs is a federal law,  not just a local one. In comparison to other town’s stormwater fees,  Portland’s is pretty comparable (www.crwa.org/…_/Stormwater/Municipal_SFM_Case_Studies_Repo.pdf). 

The “uncompetitive” argument also implies that if Portland didn’t implement this fee,  nothing would be done. That’s not the case,  though. Portland needs to do something about its CSOs,  not out of any misplaced “green” notions,  but because of a consent decree with the EPA over 20 years ago. So,  it’s disingenuous to say that the fee is an added cost levied by an overzealous City council. Blame the EPA if you want,  but Portland would have to do something about its CSOs even if it didn’t implement this fee. The alternative is a tax (drawbacks already mentioned), or perhaps a bond (which might affect the City’s rating), or doing nothing (Portland was already fined for something similar not too long ago).

Finally,  consider the impact of the construction and other activity that dealing with the CSO issue will bring about. A study by the University of Maryland Environmental Finance Center, funded by the National Fish and Wildlife Foundation, found that “[c]ivil engineering, landscape architecture, environmental engineering, construction, nurseries and horticulturists, cistern manufacturers and others are among those likely to see increased demand” from all the activity. Smart companies may actually benefit from the increased business – and be able to capitalize on being part of a “green” solution.