Jeff Hughes is the Director of the Environmental Finance Center.
Remember the good ‘ole days when a billion dollar price tag for addressing a local environmental problem was relatively rare? Those days appear to be gone and much to the dismay of local governments, the billion-dollar threshold seems to be quite common. Addressing nutrient management in the Falls Lake Area of Central North Carolina is one of the latest entries into the billion-dollar club.
Depending on which study, analysis or guess one looks at, the cost of restoring and maintaining the water quality of Falls Lake could be right at $1.5 Billion or significantly higher. Much of the media attention relative to the challenges of meeting the Falls Water Supply Nutrient Management Strategy (“Falls Lake Rules”) has focused on the high costs that will be incurred by larger urban areas such as Durham, but this challenge also touches smaller and more rural communities such as those in Granville County.
Under the rules, Granville County and other local governments will receive jurisdiction load reduction requirements next year. Local governments will be faced with the dual challenge of evaluating and selecting technical options for reducing nutrients and figuring out how to pay for their implementation.
For many, the how to pay question will be the most difficult part. The silver lining (or maybe brass lining…) is that local governments in North Carolina have a diverse set of finance and governance options for implementing nutrient reduction strategies. With this set of choices, comes the responsibility for selecting the most appropriate (or as some would say “least worst” or “least painful”) way of writing the check. As the stakes increase, so often does the incentive for innovation and evidence of this has already started to appear in the Falls Lake Watershed in the form of a first of it’s kind stormwater utility partnership in NC.
NC has approximately fifty local government stormwater utilities throughout the state and this number was increased by four this summer when Granville County, the Town of Butner, and the City of Creedmoor decided to start their own utilities. (To see an EFC dashboard of financial information for stormwater utilities prepared last year visit here). The utilities in Granville County were notable for several reasons, not the least important being that they are some of the smallest communities to create stormwater utilities in the state. The utilities along with the Person County Government (they considered but opted not to create a stormwater utility) decided to share resources and services to reduce their operating costs and facilitate inter local cooperation. The utilities will even share the same utility director. To see a presentation on the partnership from last year’s Stormwater and Green Infrastructure Finance Workshop click here.
Taking into consideration the characteristics of their service areas, some of the utilities also developed different fee systems from a typical urban stormwater utility. For example, fee calculations take into consideration both impervious area and overall property area, not just impervious area as is common in most urban utilities. Inter-local environmental finance partnerships can be quite difficult and there are far more examples of great partnership ideas that have struggled to get off the ground than there are fully functioning partnerships like the Granville County Stormwater Partnership.
It is interesting, but not surprising, that many of the most ambitious environmental partnerships in the state can trace their creation to a particular daunting environmental challenge. For example, one of the state’s largest water partnerships, the Neuse Regional Water and Sewer Association was born from an initiative to address the fallout following years of over withdrawal from an aquifer. Some of these solutions may involve the creation of new entities and partnerships, but others may simply be navigating a new path relying on existing tools. There are no shortages of options and they include many options in addition to stormwater utilities. To see an analysis of revenue options for addressing water quality visit here. As the environmental problems facing NC get increasingly complex and expensive to address, the necessity for local governments to formulate new creative solutions will increase as well.