Fee flap: city charts stormwater fee winners, losers

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September 19, 2005 // UPDATED 1:58 pm - April 26, 2007
By: Scott Russell
Scott Russell

Some property classes see bills triple or quadruple; apartment owners benefit

The city's new stormwater fee brought in $290,000 more than anticipated in its first quarter of operation, about 4 percent above budget, according to the city's first hard data. However, the program's administrator said he still expects the city to break even as promised.

Karl Westermeyer, a Public Works engineer who manages the program, said the surplus would dissipate as city-approved bill corrections and stormwater credits kick in.

The city began the new stormwater utility bill in March. It drew immediate criticism, mostly from owners of duplexes, churches and other institutions that saw bills increase.

A new city analysis confirms those spikes. It compared what property owners paid in 2004 under the old rate formula to what they would have paid in 2004 if the new rate formula had been in place. It should reflect 2005 changes.

That analysis said:

- The average multifamily residence (duplexes and triplexes) would have paid $6 more a month in 2004 under the new system; those who paid more would have seen stormwater and sanitary sewer bills rise an average 46 percent. (The stormwater and sanitary sewer fees are one part of the utility bill, which includes solid waste and water charges.)

- The average industrial property would have paid $198 more a month; those who were net losers saw bills quadruple.

- Schools, churches and other institutions would have paid an average of $122.20 more a month; net losers' bills nearly tripled.

At the same time, several groups are "winners," including multifamily apartments and mixed-use commercial/residential developments. The average single-family homeowner should see a $1.20 monthly reduction this year.

The winners are generally those properties that had higher water use and relatively less hard surface (including many apartments and car washes); those paying more are properties with relatively more hard surface and less water use (such as parking lots and warehouses.)

Property owners' utility bills once had a single charge for stormwater and sanitary sewer, based on water use. The new system has two charges. Sanitary sewer fees are still based on water use, but a separate stormwater fee is based on a property's estimated hard surface, which generates runoff.

Proponents of the change said it wasn't fair to charge property owners for storm drains based on water use. For instance, under the old system, parking lots that used no water paid nothing for storm sewers but generated significant stormwater runoff that those sewers handled.

However, some critics have said it was a back door way for the city to raise

more money. City leaders said the new system was supposed to be fairer, not raise more money.

Overall, from April to June, the city received $590,589 more in storm and sanitary sewer charges than it did during the same 2004 period (adjusted for a scheduled rate increase).

Westermeyer said the billing change was responsible for $290,000 of the $590,589. The remaining $300,000-plus resulted from higher water use (and therefore higher sanitary sewer fees.)

Over a year, the $290,000 quarterly increase would represent a 4 percent annual fee increase.

However, the $290,000 surplus will not last, Westermeyer predicted. Property owners have asked the city to adjust their bills, disputing the city's measurement of property size or the hard-surface estimate.

As of Aug. 11, the city had received 774 adjustment requests and granted 696, or 90 percent, Westermeyer said in an August interview. Further, property owners can request stormwater credits for everything from rain gardens to stormwater retention ponds.

Because of a backlog, the city staff has only begun to review the initial 300 credit applications, he said. It is starting with the easy applications, such as a single-family home with a rain garden. They are getting approved at an 85 to 90 percent rate. These credits will also cut into to future revenue.

Pending credit applications could reduce the city's revenue, such as the Soo Line's application for stormwater retention pond credits or the Minneapolis Park and Recreation Board's credit for the lakes and Minnehaha Creek, which serve as the stormwater runoff repository.

City Councilmember Sandy Colvin Roy (12th Ward), chair of the Transportation and Public Works Committee overseeing the new policy, said annual reviews would ensure the system is revenue-neutral.

"It is a lot like birthing," she said. "It is painful, but something good will come out of it."

Westermeyer said he expected to work through the growing pains in the next six months.

For more information see www.ci.minneapolis.mn.us/stormwater/. For billing questions, call the billing office at 673-1114.