Peachtree City Stormwater Utility: What am I paying for, and why should I have to pay more?
You may have heard that Peachtree City is looking at borrowing about $7 million for the city’s stormwater system. The mayor and City Council will be considering a bond issue through the Peachtree City Public Facilities Authority at their meeting on Feb. 7, so this is a good opportunity to review the program, why it was enacted, what it does, and why the additional funds are being requested.
Stormwater runoff is any rain that doesn’t soak into the ground and runs across the surface (or through a pipe) to area streams and lakes. The primary contributor to stormwater runoff is development — buildings, parking lots, streets, sidewalks, and cart paths — anything that changes the natural slope of land and the plants that formerly grew there that filtered and slowed stormwater.
In 1993, the Federal Clean Water Act required communities with 100,000 people or more to meet new requirements in managing stormwater runoff. In 2003, those requirements extended to smaller communities, with populations between 10,000 and 100,000.
The new federal requirements are expensive, and that expense is ultimately paid by individual property owners and taxpayers. Peachtree City implemented a Stormwater Utility to identify a separate funding source for the new requirements.
Peachtree City created its Stormwater Utility in 2006. Peachtree City has always required that developers install stormwater infrastructure as they built local neighborhoods and commercial sites. The city then managed and maintained this infrastructure through the Public Works Department.
However, as new federal requirements were being imposed in 2003, some of Peachtree City’s infrastructure was reaching the end of its useful life and starting to fall apart — an issue the city had not previously faced — at the same time that more stringent requirements were being imposed by federal law.
From the late 1990s through 2003, Peachtree City budgeted about $50,000 dollars per year for pipe replacement and materials to maintain the stormwater system. However, heavy storms in 2004 and 2005 revealed some major failures that had to be addressed quickly.
In 2005, the city spent $500,000 in tax dollars on emergency stormwater repairs, although only $50,000 had been budgeted. That meant $450,000 had to come from reserves or other programs or projects. The city realized there were at least $9 million more in necessary drainage repairs to meet the new federal standards.
One option was to continue paying for these repairs and the new maintenance requirements through a property tax increase. However, property taxes are based on the value of a property, which does not necessarily correspond to how much that property impacts stormwater runoff. It also does not address tax-exempt properties, like churches and schools, which have very large buildings and parking areas that contribute significant stormwater runoff to the system.
Instead, Peachtree City created the Stormwater Utility and began charging property owners a fee based on the total amount of impervious surface on their properties. The city issued $3.6 million in 20-year bonds at that time to fund the program.
The first six years of operation have resulted in a complete inventory of the stormwater system, establishing a regular maintenance schedule, and completing several major repair projects.
In 2009, Peachtree City completed the mandatory initial survey of the 60-plus miles of stormwater pipe in the city. That inspection revealed that over 95 percent of the system was made out of corrugated metal pipe (CMP). At that time, 42 percent of the system was over 25 years of age, and the corrugated metal pipe has a life expectancy of 25 years.
Hopefully, residents have reviewed the annual newsletter that the Stormwater Utility mails each spring, which details the projects completed each year. Progress includes a complete inventory of the system, a defined crew for stormwater maintenance, updated flood studies for the city, identification of critical infrastructure for future capital needs, and implementation of long-term water quality monitoring.
At this point, roughly $750,000 of the original bonds remains available for projects designed and scheduled for completion this year.
As a result of the work done over the past six years, the city remains in full compliance with federal law.
As noted earlier, in 2006, the city knew of at least $9 million in needed drainage repairs, but only issued $3.6 million in bonds. The reason for this was the city could not complete all the projects at once, so the amount of the loan (the bonds) was reduced to what could be accomplished. There was no point in paying interest on money that simply could not be used.
In the intervening years, the required inventory of the stormwater system has uncovered more problems that need to be addressed, bringing the current estimated cost for most critical capital projects at $7,452,000.
To move forward and remain in compliance, staff is proposing that the city issue $10.5 million in bonds to fund the next phase of capital projects over the next three years to remain in compliance with federal law. The total bond issue will also include refinancing the remaining $2.6 million in debt from the first bond issue to obtain a lower interest rate and lower annual debt service payments.
The current estimated project cost for the next bond is over $7,452,000 and includes the following projects:
• Rockspray Pond rehabilitation — $911,000.
• BCS Pond stilling basin repairs — $120,000.
• Kedron ponds (2) rehabilitation — $1,200,000.
• Golfview Drive drain system replacement — $1,294,000.
• Harbor Loop drain system replacement — $1,800,000.
• Pipe lining Woodsdale/Lenox Road — $450,000.
• Pipe lining Program/misc. projects — $1,500,000.
Rate structure and rate increase
When the new bonds are issued, Peachtree City’s Stormwater Utility will go from a $3.6 million debt to a $10 million debt, with $3 million refinancing the remaining balance of the original bond at a lower interest rate and a savings of over $200,000 per year on that portion of the debt.
Under the city’s Stormwater Utility, the average annual residential bill has been $47.40, and the fees are used to pay the annual debt service and to fund the ongoing maintenance of the stormwater system.
With the new bond, staff is requesting a rate increase to cover the annual payments. Stormwater Utility customers currently pay $0.86 for every 1,000 square feet of impervious surface on a property. The new proposed rate per 1,000 square feet is $1.50.
Staff is also proposing that the city add a surcharge to each bill for the public streets that taxpayers collectively own. Currently, property tax payments fund the $300,000 per year payment that the city of Peachtree City General Fund must make to the Peachtree City Stormwater Utility Fund.
As a result, the proposed new Single-Family Residential (SFR) and Attached Residential (AR) rates would be:
SFR Tier I Annual Bill
Proposed, $76.68. Current, $32.28.
SFR Tier II Annual Bill
Proposed, $112.69. Current, $47.40.
SFR Tier III Annual Bill
Proposed, $171.24. Current, $72.00.
AR Tier I Annual Bill
Proposed, $52.68. Current, $22.20.
Because the rate increase is significant, staff is also proposing that the utility go from the current billing cycle of once per year to a twice per year billing.
Property owners have opportunities to reduce their annual bill. Those with large lots that are mostly undeveloped can apply for a discount. Participating in programs litter removal programs like the Adopt-A-Mile or Adopt-A-Path can also qualify property owners for a credit. In addition, the city plans to add a credit for the use of rain barrels as part of the new proposal.
Hazards of delay
One option the city can certainly consider is waiting a year or two to move forward with the next bond issue and the corresponding projects. However, delaying projects has its own hazards.
• With an economic turnaround, interest rates will eventually go back up, costing the city more to borrow the funds for capital repairs.
The system itself will continue to age and erode, even with routine maintenance. Delaying repairs can cause system failures, including:
• Pipe and road collapse — When older pipes go under roadways, a collapse will require emergency replacement and repairs, and the roadway will be closed until complete (controlled pipe replacement can reduce the amount of time the road is closed. If the eroding pipe can be relined before it fails, road closure can sometimes be completely avoided.
• Upstream flooding — Undersized pipes or a blockage in the stormwater system (whether it is a pipe under a roadway or a drainage ditch), can cause rainwater to back and flood areas upstream. In Peachtree City, the stormwater system runs throughout our natural and developed areas and abuts private property city-wide. Flooding that impacts private property is ultimately the responsibility of the city, and the taxpayers.
• Downstream flooding — Many of Peachtree City’s stormwater control elements are ponds that slow or hold stormwater for a controlled release downstream via a dam and spillway. Failure of a dam can result in flooding of private property downstream, which is also the responsibility of the city and taxpayers.
• Drinking water contamination — Stormwater can carry whatever is in its path. This includes dirt and sand on stream banks that are over-burdened. It also includes automobile fluids that drip on roads, parking lots, and our paths. Peachtree City’s stormwater system includes a lot of naturally vegetated area that helps to filter out these types of impurities before the stormwater reaches our lakes, Kedron, Peachtree, and McIntosh, which are all sources of drinking water for our community.
No one likes to pay new taxes or fees, or to see those fees increase. Unfortunately, the costs of maintaining a stormwater system will never go away. However, the goal of Peachtree City’s Stormwater Utility is to achieve a stable rate to fund ongoing maintenance to avoid emergency capital projects.
Unfortunately, that means addressing those emergency capital projects that already exist. Moving forward, the Stormwater Utility can help to ensure that all new construction strictly follows the city’s standards and that consistent, long-term maintenance of the drainage systems (both new and those that are rehabilitated) prevents the emergency projects we are continuing to address up front.
The utility will also work to:
• Remain in compliance with federal standards.
• Continue monitoring water quality trends in the city’s streams, lakes, and ponds.
• Rehabilitate the most critical stormwater control facilities over the next five years.
• Implement a more aggressive pipe inspection program (5-year schedule).
• Implement a proactive capital rehabilitation program.
• Continually update and prioritize issues as they are discovered.
Feb. 7 council vote
There will be a presentation to the mayor and City Council on the proposed bond and rate changes at the Feb. 7, 2013, City Council meeting, before council votes on the item.
More detail is also available in the meeting packet at www.peachtree-city.org/councilagenda. The public is welcome to attend the meeting, and can view it live or on demand at www.peachtree-city.org/video.
[Betsy Tyler is the Public Information Officer/City Clerk of Peachtree City, Ga.]