Take a hike: What states are doing to support more green stormwater infrastructure through planning and funding
Many municipalities are looking to modernize their approach to managing stormwater and take advantage of new funding made possible by the historic investment in clean water infrastructure through the 2021 Infrastructure Investment and Jobs Act (IIJA), also known as the Bipartisan Infrastructure Law (BIL). But many communities are not fully prepared to do this. In order to address local concerns of flooding, impaired waterbodies, lack of shade, or extreme heat, they need help with a few key elements.
One could think of this preparation as you might think of preparing to go on an extended hike in a new location. Before setting out, you will want to have a good map. An asset inventory of your stormwater infrastructure and problem areas is critical for making the numerous decisions that will be necessary at upcoming forks in the trail. You will definitely want good rain gear tech that keeps the rain out, but does not envelop you in your own private sauna. Site-specific designs for green stormwater infrastructure (GSI) that fit the constraints of a neighborhood allow a community to realize that same balance. Adequate food and water are critical to make sure you not only finish your hike, but enjoy the process. A dedicated source of revenue from a local stormwater utility can provide steady funding that allows a community to plan for their journey. And lastly, you will likely want good company on your hike. Engaging with your community ensures that the stormwater journey will be remembered with photos from scenic vistas and not by tales of privation or discord.
This blog highlights how states can support - and are supporting - municipalities with two types of planning needs related to GSI: asset planning and creating a reliable local revenue source through stormwater utilities.
The historic investment in clean water infrastructure made through BIL provides opportunities to expand the use of GSI. Yet, in large part, an expansion of GSI projects has not happened yet in most states. Not only did BIL provide $12.7 billion as general supplemental funds to the Clean Water State Revolving Funds (CWSRFs), it also mandated that 49% of these funds be provided as grants or forgivable loans (“principal forgiveness”) to state-defined disadvantaged communities. In order for states to direct a significant portion of these new federal resources towards GSI projects and towards areas that could benefit from them, significant preparatory work is required.
Projects suitable for CWSRF loans are not the smaller-scale demonstration projects that constituted the first generation of GSI installations. Applications for the larger and low-interest financing that the CWSRF provides are more likely to be for a series of projects that work in concert to address stormwater runoff from a larger area. Identifying the proper locations and practices that can maximize storage and are amenable to the stakeholders in the particular area takes a concerted outreach, planning, and design effort. In many municipalities, a geographic information system (GIS)-based asset inventory of stormwater infrastructure has not been completed, making selection and design of GSI projects challenging. In these cases, a stormwater infrastructure inventory and master plan is the first step in understanding what exists and what should be retrofitted.
In comparison, most wastewater treatment projects (WWTP) of the sort regularly funded by CWSRF consist of well-known technology upgrades. Given that utilities have been anticipating these upgrades and may have designs on the shelf, these frequently are “shovel ready projects” ready for funding. This is not to say that these WWTP upgrades are not important, but rather, without similar planning support, many GSI projects cannot take advantage of CWSRF funding. Some states realize this and are providing additional support so that these projects are on a level playing field in terms of project development.
Another major impediment to municipalities taking advantage of the low-interest loans provided through the CWSRF is the lack of a dedicated revenue stream to pay for these projects. Without a local revenue stream dedicated to stormwater management, taking out loans for GSI means that general revenue funds must be obligated over the long term. For most municipalities, this is not a desirable arrangement. A stormwater utility, through which fees (adjusted to a property's impervious footprint) can be routinely collected to manage the community’s stormwater needs, can provide a reliable revenue stream.
A forward-thinking municipality that wishes to create a stormwater utility must complete a few steps in order to bring this option to their political leaders. First, the municipality must have an inventory of their stormwater infrastructure, an estimate of the needed repairs, and an estimate of annual maintenance costs to keep this infrastructure in working order. This background work does not happen automatically and frequently requires the hiring of consultants to complete some aspects of this work. This background work is critical for a municipality to bring this idea to the community for their support.
States are in very different places in terms of supporting this work. Below is a sample of states that are making efforts to address stormwater needs by providing support for planning and technical assistance.
State leaders in municipal support
Planning work is unheralded and is often hard to fund. Funding directed towards implementation is generally preferable to funders, regardless if the source is private or public. But in the case of green stormwater infrastructure, a lack of funding for planning clearly inhibits the development of future projects and the development of the administrative and financial infrastructure needed to carry them out. Many states allow for planning loans, but put the onus on the municipality to bear the full costs of the planning work by taking out a loan to fund it. These terms disincentivize municipalities from undertaking approaches that might be new or untested in their community, such as GSI. A few states are taking steps to ease this important first stage of GSI projects and doing it in slightly different ways. The following approaches show how states can respond to a need from their municipalities and utilities to properly plan for success.
States using CWSRF related funding to support GSI planning efforts
Oregon: The Oregon Department of Environmental Quality (ODEQ) is maximizing the flexibility of their CWSRF funds in this regard. Oregon creates a “Planning Loan” category along with “Nonpoint Source Design and/or Construction Loans” and “Point Source Design and/or Construction Loans.” Planning projects must address water quality concerns, but can include the following outcomes:
Biological evaluations
Environmental assessments
Wastewater and stormwater master plans
Forest management plans
Nonpoint source pollution plans
Planning for GSI is fully subsidized up to $100,000. While planning loans require audited financial statements, they are eligible for 100% principal forgiveness (PF) up to $100,000 per municipality/utility per year. Principal forgiveness is determined upon whether the project addresses one of the following criteria: Affordability, Rate Payer Hardship, or Green/Sustainability projects which are defined as “Projects that: Incorporate environmentally innovative and/or green infrastructure practices.” This dollar amount allows many small municipalities to develop a stormwater asset plan or other baseline planning documents that identify to what extent GSI could address their particular problems.
As of the most recent application round (December 2023), ODEQ received ten applications for planning loans, including one for municipal stormwater planning and one for source water protection (eight were for wastewater treatment plant planning efforts). Although this one round does not indicate a groundswell of interest from municipalities for stormwater planning, it is important to note that the agency only recently revised their rules related to awarding PF in May of 2023. The changes allowed the program to provide principal forgiveness for any planning loan that meets the eligibility criteria for principal forgiveness listed above.
Importantly, when these planning efforts are completed, the resultant projects can be placed on the Project Priority List. Based upon their ranking, they can then be awarded construction loans. In terms of green stormwater infrastructure, ODEQ provides advantageous terms for GSI projects, awarding 50% Principal Forgiveness up to $2 million per municipality. Additionally, ODEQ can direct a portion of EPA’s Overflow and Stormwater Grant (OSG) funding to some projects for components that reduce stormwater.
Oregon is clearly supporting green stormwater projects with its available federal funding. Favorable terms for funding to support local GSI projects are communicated through concise fact sheets that let municipalities understand what terms they can expect before undertaking planning efforts.
Delaware: The state is offering up to $50,000 (with a 1:1 match) to prepare surface water projects for funding through the Water Pollution Control Revolving Fund, Delaware’s name for the state’s CWSRF program. “The available funding can be used to assist with surface water planning in general, and for specific project planning and designs necessary to submit a loan application to the Water Pollution Control Revolving Fund for funding consideration.” This Surface Water Matching Planning Grant is funded through the interest earned from CWSRF loans. These funds are placed in a non-federal administrative account, a portion of which can be used to fund these grants. This is an allowable programmatic action for any state administering CWSRF funds, and has the benefit of creating a pot of funds that do not need to meet the federal requirements for CWSRF.
These grants have been very useful to municipalities wishing to better manage their stormwater. Several communities have used these grants to identify and map their stormwater infrastructure in electronic formats that allow for modern management of this infrastructure. Three have used the grants to develop the necessary information (as noted above) which allowed them ultimately to develop a stormwater utility. Two other municipalities are currently working through the same process. The development of a stormwater utility puts these Delaware communities in a solid place to take advantage of CWSRF loans in the future, should they choose to. These small $50,000 grants have played an important role in helping communities address stormwater in a comprehensive manner in keeping with the importance of the work.
States using ARPA, state budget appropriations, and 319 funding sources to support GSI planning efforts
North Carolina: This state is supporting green infrastructure and stormwater planning (as well as construction) through the creation of a separate program, rather than using its CWSRF. The Local Assistance For Stormwater Infrastructure Investments program (LASII) was resourced with $100.5 million from the American Rescue Plan Act (ARPA). State ARPA funds were allocated for the program in 2021 and must be used by December 31, 2026. To ensure the continuity of the program beyond the ARPA funds, the state legislature has appropriated $16 million from state general revenues for the next two state fiscal years (2024-25, 2025-26). This program was created to help address both flooding and water quality issues (quantity and quality) that many municipalities in the state were facing. “Our towns are flooding” is a refrain they heard on many occasions.
This program offers generous planning loans for activities that include stormwater planning (i.e., general municipal stormwater plans) as well as planning for the development and adoption of a stormwater utility. Up to $400,000 is available as a grant (no cost share required) per municipality for planning activities. This robust support for both upfront planning work and the development of local revenue for future needs is forward thinking. Additionally, North Carolina slightly prioritizes nature-based solutions in the project ranking criteria for the LASII program.
Municipalities in North Carolina have taken the state up on their generous offer. To date, the state has awarded 110 planning grants, with five of those being for the assessment/creation of a stormwater utility. In addition to this planning support, North Carolina has funded the construction of numerous stormwater projects through LASII. Construction awards are similarly generous: the construction grants require no match and can be awarded up to $5 million per municipality (or $7.5 million if shared between two municipalities).
New Hampshire: Although no stormwater utilities have yet been established in New Hampshire, the state’s 319 nonpoint source program offers grants for this purpose. Four municipalities to date have received grants to “determine the feasibility of stormwater utilities as a funding source for their municipal stormwater programs. Feasibility studies help a municipality determine if pursuing a stormwater utility approach to funding is appropriate.” The state has publicized useful information for communities to consider when they are thinking about developing a dedicated source of funding to address stormwater pollution and localized flooding.
New Jersey: The State of New Jersey’s Division of Watershed Protection and Management made $2 million available in grants to municipalities to assist them in developing stormwater utilities. Termed “Technical Assistance for Stormwater Feasibility Study,” these grants allowed municipalities, counties, county sewage authorities, or county improvement authority to receive service from an approved list of consultants for this work. The funding came from ARPA and followed the signing of the 2019 Clean Stormwater and Flood Reduction Act which allowed for the creation of stormwater utilities at the local level. Eight municipal utility authorities (consisting of 14 communities in total) were awarded grants and are currently working to determine the appropriate and equitable rate structures. Priority was given to overburdened communities, proposals that would serve the largest populations, communities that took a regional approach, and communities that had already begun a feasibility study for this purpose. The state agency also provides step-by-step guidance on establishing stormwater utilities on its website. In the wake of Tropical Storm Ida in 2021 and also more frequent flooding stemming from climate change, the state has taken a proactive approach to supplying municipalities with the resources they need to develop dedicated funding to address stormwater challenges.
States using a mix of funding sources to support GSI planning efforts
Connecticut: This state has taken a concerted approach towards supporting the development of stormwater utilities. The Southeast Connecticut Council of Governments, with a $67,000 grant from the Connecticut Institute for Resilience and Climate Adaptation (CIRCA), has initiated a stormwater utility pilot project. Four municipalities participated in the program (completed in early 2023), which involved an assessment of likely costs, investigation of fee structures, the identification of roles for various agencies, and development of draft ordinances that would establish such a utility.
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The states mentioned above are preparing for their stormwater hike with a variety of strategies to support municipalities. This planning is particularly important for adopting newer approaches such as GSI, which can be an important component for solving water quality and flooding issues, but requires thoughtful and engaged planning to identify how and where. It requires a modern inventory of assets and a master plan for upgrades and maintenance. In most situations, it requires a dedicated revenue source. These six state programs show how green infrastructure and stormwater planning can be supported with different levels and sources of funding. Although BIL’s historic investment in infrastructure represents a unique near term opportunity, these states are planning for the longer term by providing support for planning that will increase the likelihood of this work continuing beyond ARPA and BIL federal funding.