Paying for Stormwater Management: What Are the Options?

This paper is part of the IMFG Perspectives Papers series. For a full list of papers, please visit http://bit.ly/2ylAa2D.Stormwater management infrastructure controls the quality and quantity of stormwater that reaches water bodies and protects the health, safety, and sustainability of public and natural environments. This paper evaluates the financial tools available to fund stormwater infrastructure (property taxes, development charges or cash-in-lieu payments, grants, borrowing, and user charges), and proposes user charges as the most appropriate. User charges are fees earmarked to specific projects or services. They are based on a benefits-received principle, and are considered a fair form of revenue, because the beneficiaries of a service are directly charged for their consumption of that service. Further, user charges are a dedicated and stable funding source based on clear objectives related to the city’s stormwater infrastructure needs. None of the alternative funding tools offers the same combination of stable and predictable revenues and fair pricing. The paper also describes how the City of Mississauga is currently implementing a user charge dedicated to stormwater management, with billing introduced in early 2016.Institute on Municipal Finance and Governanc