Will New Hampshire Soon See Its First Stormwater Utility?

The information contained in this article is not intended as legal advice and may no longer be accurate due to changes in the law. Consult NHMA's legal services or your municipal attorney.

Fifteen years after New Hampshire state law allowed towns and cities to form their own stormwater utilities, not a single municipality has successfully enacted one.

The funding mechanism is becoming more attractive for many communities as they grapple with aging infrastructure and climate change-induced rainfall, flooding, and sea-level rise. But it’s been an uphill battle in the state to see the formation of a stormwater utility. The city of Dover could be the first, if its city council votes to formally adopt an ordinance currently in the draft phase.

Property owners typically pay for stormwater systems via their property taxes. If a municipality forms a stormwater utility, that infrastructure is no longer funded through general funds, and instead becomes its own fee, just as residents and business owners pay for water, sewer, or trash.

Under a stormwater utility model, property owners pay based on the amount of impervious surface on their land, such as paved roads, parking lots, roofs, and other surfaces that water cannot easily penetrate. In that sense, municipal planners argue, it’s a more equitable mechanism to fund stormwater infrastructure.

An industrial warehouse or office park surrounded by asphalt would pay more for stormwater than a single-family home on a one-acre wooded lot, for example.

“(Currently), it’s especially disproportionate between single-family residences and commercial properties,” said Gretchen Young, environmental projects manager for the city of Dover. “If you break it up, single-family residences are paying about 55 percent of the bill, but they really only account for 25 percent of impervious area. (A utility) has a lot of appeal to the commercial developers because there’s a lot of discrepancy between them, too.”

Over the last five years, Dover’s stormwater budget has increased by nearly 40 percent, largely due to more stringent regulatory requirements.

Concord, Manchester, Portsmouth, and Nashua have also explored via feasibility studies and municipal planning processes the possibility of forming stormwater utilities, which have been adopted by upwards of 30 communities in other New England states.

But no New Hampshire municipality has brought one to fruition. Residents who oppose stormwater utilities often call it a “rain tax,” arguing that property owners are being taxed based on how much it rains, something they have no control over.

But one thing municipal officials particularly like about stormwater utilities is that they can be constructed to drive incentives – property owners can see their fee adjusted based on how they’re managing their impervious surfaces.

Steve Landry, supervisor of staff and programs at the New Hampshire Department of Environmental Services’ Watershed Assistance Section, thinks interest in stormwater utilities would grow in the state if one city or town made the leap.

“I think we need a community in New Hampshire to take the first step,” Landry said. “It’s going to be a little rough at the start, but as the education and outreach spreads that there’s a way to work within the system and reduce fees, everybody would win at the end of the day because there would be better water quality and less volume for our aging infrastructure.”

What is a stormwater utility?

The state of New Hampshire first permitted stormwater utilities under a law passed in 2008. The statute defines a stormwater utility as “a special assessment district established to generate funding specifically for stormwater management.” That could mean flood erosion control, water quality management, ecological preservation, and annual pollutant load contained in stormwater discharge.

A 2017 report by the Piscataqua Region Estuaries Partnership said stormwater utilities can provide “a stable revenue source to support long-term operation and implementation of a municipal stormwater.” Utilities often require that those with the most impervious surfaces pay their fair share, while simultaneously incentivizing reduction of stormwater volumes, PREP said.

New Hampshire has a significantly aging infrastructure and is susceptible to flooding. And yet no community has a “dedicated financial mechanism” to address sea-level rise, climate change, and more intense storms as they relate to stormwater, Landry said.

There are stormwater utilities in operation across 41 states. In New England, the first was created in 1998, in Chicopee, Massachusetts. Since then, more than 30 other communities in the region have followed. All of the utilities look different: fees structures range, and so do the incentives.

A feasibility study done by the city of Concord in 2020 looked at other New England communities as examples. Many offer a credit system for properties that implement and maintain stormwater management techniques, while some offer credits for elderly residents or people who participate in education programs.

The fee structure used by the Greater Augusta Utility District in Maine consists of a flat fee for residential properties and a fee for commercial and other non-residential properties based on the amount of impervious surface. The city of Burlington, Vermont, has different monthly fees for single-family, duplex, and triplex residences, while charging $2.47 per 1,000 square-feet of impervious surface for all other properties. The single-family fee totals around $79.20 annually.

Northampton, Massachusetts, offers a rain barrel discount program incentive, one-time credits to residents for rain gardens or porous driveways, and senior and low-income credits.

Stormwater utilities can be a tough sell, Landry noted, because people often view it as “another tax,” though it’s something they’re usually already paying for as part of their property taxes. Following the comprehensive study done in Concord, the idea didn’t gain much traction and has since been “shelved.” That’s happened elsewhere in the state, too.

The tax sentiment has been evident on a Dover community Facebook page recently, where ahead of a May public information session on a future stormwater utility, a person posted, “Prepare yourself, the city is inching closer to reaching into your wallet with a rain tax.”

A 2013 report by the Environmental Protection Agency examined the role of public outreach and stakeholder engagement in stormwater funding decisions around New England and included Dover’s first attempt at a utility in 2011 in anticipation of more stringent requirements from its federal MS4 permit – a set of stormwater conditions applicable to 60 communities in New Hampshire, 44 of which must comply. The proposal was rejected by the city council following public opposition.

“The specific factors that municipal decision-makers must take into account – such as citizen or business opposition, the policy environment, anti-tax sentiments, chronic flooding, and other issues – will differ from town to town,” the EPA report stated. “Therefore, the specific design of any public outreach and stakeholder engagement strategy must be tailored to uniquely address these factors and related stakeholder concerns.”

Though none have formed in the state, the Department of Environmental Services actively educates about stormwater utilities. Landry believes that’s what needs to keep happening for the general public to gain more awareness.

“There has been long-standing damage done to our stormwater infrastructure, delayed repairs, and the can keeps getting kicked down the road,” he said. “This provides the ability for communities to upgrade that aging drainage and at the same time provide flood protection and resilience. Whatever you want to call it, climate shift, climate change, it’s here.”

‘Continued system flooding’

Dover started looking at the potential of a stormwater utility more than a decade ago, when municipal officials became concerned about financial responsibilities associated with changing MS4 permit. The National Pollutant Discharge Elimination System permit requires certain communities to develop and implement a comprehensive stormwater management plan.

Last month, Dover published a “story map” for property owners providing a visual history of how the city came to begin developing a stormwater and flood resiliency utility.

Young, environmental projects manager for the city, said the process wasn’t well-publicized throughout, leading to negative public attention at the end and a dissenting vote by the city council.

As Dover still awaited the revised MS4 permit, it learned it would be subject to the EPA’s new Great Bay Total Nitrogen General Permit, to regulate nitrogen levels in the Great Bay watershed.

This all cued up Dover for its second attempt at establishing a stormwater and flood resiliency utility, a process that’s ongoing. In February 2022, the city council declared its intent to form one via an ordinance.

“Dover is celebrating our 400th anniversary this year, it’s old infrastructure,” Young said. “It is definitely part of the conversation more so than it was 12 years ago. We are seeing continued system flooding because of rainstorms – rainstorms we know are getting more intense.”

Young said stormwater infrastructure isn’t something residents and business owners really see, “so you don’t think about it.” But studies done by the city found that 25 percent of stormwater infrastructure in the urban core is at medium to high risk of likely failure. The city identified 24 critical facilities and transportation assets worth over $78 million in high flood risk areas alone, and stormwater runoff has also contributed to the impairment of Willand Pond and the Bellamy, Cocheco, Salmon Falls, and Piscataqua Rivers.

Meanwhile, the city has accumulated at least $5 million in deferred stormwater projects due to insufficient funding, and costs are expected to rise because of increasing federal and state regulatory requirements.

“Not a good report card,” Young said.

According to estimates from city officials, the average Dover homeowner is paying approximately $213 per year in property taxes to fund the combined annual stormwater operating and capital improvement budget of approximately $3.5 million.

The proposed stormwater and flood resilience utility fee, spread over a broader spectrum of properties, “would reduce the average homeowner’s share to fund the same stormwater budget to $110 to $120 per year, depending on the final fee structure.”

Young said there will “absolutely be ways to reduce your fee based on how you’re managing your impervious surfaces” under a stormwater utility model. But even that messaging doesn’t necessarily win over citizens or tax-exempt properties that would suddenly become part of the utility.

While communities in other New England states have successfully implemented stormwater utilities, New Hampshire is a “different regulatory world,” Young said, where people feel strongly about their property rights.

This story is reprinted with permission from Creative Commons license CC BY-NC-ND 4.0. Original article posted June 9, 2023 to New Hampshire Bulletin (Will New Hampshire soon see its first stormwater utility?  – New Hampshire Bulletin).

Author is Hadley Barndollar.  Barndollar covers climate, energy, environment, and the opioid crisis for the New Hampshire Bulletin. Previously, she was the New England regional reporter for the USA TODAY Network and was named Reporter of the Year by the New England Newspaper and Press Association. Email: hbarndollar@newhampshirebulletin.com