Stormwater Rate Structure: Tiered vs. ERU
Currently, stormwater infrastructure in Nashville is paid for by a portion of sewer fees charged to Metro Water Service customers. The Clean Water Infrastructure Program proposed by Mayor Karl Dean’s administration creates a new fee for stormwater that will be charged to all property owners in Davidson County with the exception of those in the six satellite cities. This is a more equitable method of funding the stormwater system because all properties that contribute to stormwater runoff, including those without a water meter (such as parking lots), will contribute to the cost of managing it.
Tiered Rate Structure
The proposed rate structure for the stormwater fee is based on a tiered approach. Meaning, residential and non-residential properties fall into a rate category based on the square footage of impervious surface on the property:
| Residential Stormwater Rates | |
|---|---|
| Square Feet | Monthly Rate |
| 0-400 | $0.00 |
| 400-2,000 | $1.50 |
| 2,000- 6,000 | $3.00 |
| >6,000 | $4.50 |
| Non-Residential Stormwater Rates | |
|---|---|
| Square Feet | Monthly Rate |
| 0-400 | $0.00 |
| 400-6,000 | $10.00 |
| 6,000-12,800 | $20.00 |
| 12,800-51,200 | $40.00 |
| 51,200-300,000 | $100.00 |
| 300,000-1 million | $200.00 |
| > 1 million | $400.00 |
Equivalent Residential Unit (ERU) Rate Structure
Another approach for charging stormwater fees is based on ERUs, or Equivalent Residential Units. An ERU is defined as the median size of impervious square footage on residential properties in a community. In Nashville and Davidson County it has been determined that 1 ERU = 3,200 square feet of impervious surface. This approach then assigns a rate amount to each ERU and stormwater fees are applied accordingly.
Recommendations of the Stormwater Business Plan
Legislation was passed by the Metro Council in July 2007 that required Metro Water Services to develop a Stormwater Business Plan. The Stormwater Business Plan presented to the Council in February 2008 recommended a stormwater rate structure that combined the tiered and ERU methods. Non-residential properties would be charged a monthly rate of $4.98 per ERU, rounded up to the next whole ERU, and residential properties would be charged one of three category rates based on ERUs:
| Non-Residential Stormwater Rates | |
|---|---|
| Square Feet | Monthly Rate |
| <3,200 | $4.98 |
| 3,200-6,400 | $9.96 |
| 6,400-9,600 | $14.94 |
| 9,600-12,800 | $19.92 |
| 12,800-16,000 | $24.90 |
| 51,200* | $79.68 |
| 300,800* | $468.12 |
| 1,001,600* | $1558.74 |
*For comparison to the proposed rate structure in CWIP.
| Residential Stormwater Rates | |
|---|---|
| Square Feet | Monthly Rate |
| <2,000 | $2.49 (or 0.5 ERUs) |
| 2,000-6,000 | $4.98 (or 1 ERUs) |
| >6,000 | $7.47 (or 1.5 ERUs) |
Approach to Stormwater Rates in Clean Water Infrastructure Program
The goal in developing the Clean Water Infrastructure Program was to propose the lowest rate increases possible to provide the necessary funds for capital improvement projects to Nashville’s water, sewer and stormwater systems. This goal was made a priority especially in the case of stormwater since it would require imposing a new fee on ratepayers during a tough economic time.
Residential
Mayor Dean’s administration decided to adopt the tiered approach for residential stormwater rates recommended in the Stormwater Business Plan, but with more categories and starting with a lower base rate. The residential rate structure in the Clean Water Infrastructure Program ensures no residential property owner will pay more than $4.50 per month for stormwater, which is less than the rate of $4.98 for 1 ERU in the Stormwater Business Plan:
| Stormwater Business Plan Recommendation for Residential Stormwater Rates | CWIP Proposal for Residential Stormwater Rates | |||
|---|---|---|---|---|
| Square Feet | Monthly Rate | Square Feet | Monthly Rate | |
| <2,000 | $2.49 (or 0.5 ERUs) | 0-400 | $0.00 | |
| 2,000-6,000 | $4.98 (or 1 ERUs) | 400-2,000 | $1.50 | |
| >6,000 | $7.47 (or 1.5 ERUs) | 2,000- 6,000 | $3.00 | |
| >6,000 | $4.50 | |||
Non-Residential
A similar tiered approach was applied to non-residential stormwater rates. By doing this, small non-residential properties, such as those belonging to small businesses and churches, pay a comparable rate to that under the ERU method. At the same time, medium- to large-sized properties, including many that belong to nonprofits, churches and educational institutions, are not burdened by an excessive fee.
| Stormwater Business Plan Recommendation for Non-Residential Stormwater Rates | CWIP Proposal for Non-Residential Stormwater Rates | |||
|---|---|---|---|---|
| Square Feet | Monthly Rate | Square Feet | Monthly Rate | |
| <3,200 | $4.98 | 0-400 | $0.00 | |
| 3,200-6,400 | $9.96 | 400-6,000 | $10.00 | |
| 6,400-9,600 | $14.94 | 6,000-12,800 | $20.00 | |
| 9,600-12,800 | $19.92 | 12,800-51,200 | $40.00 | |
| 12,800-16,000 | $24.90 | 51,200-300,000 | $100.00 | |
| 51,200* | $79.68 | 300,000-1 million | $200.00 | |
| 300,800* | $468.12 | > 1 million | $400.00 | |
| 1,001,600* | $1558.74 | |||
*For comparison to the proposed rate structure in CWIP.
This approach to non-residential stormwater rates also ensures that no category of property size is responsible for providing more than its fair share of stormwater revenue:
| Impervious Area | % of Revenue | % of Parcels |
|---|---|---|
| 400-6,000 | 6.7% | 28.2% |
| 6,000-12,800 | 10.3% | 21.6% |
| 12,800-51,200 | 30% | 31.5% |
| 51,200-300,000 | 37.2% | 15.6% |
| 300,000-1 million | 12.6% | 2.6% |
| > 1 million | 3.2% | 0.3% |
Questions which are not addressed through this web site, please email Sonia Harvat.