Philadelphia looks to reduce CSOs by funding green infrastructure
Across the U.S., cities are spending billions to meet increasingly stringent federal mandates for Clean Water Act compliance. These mandates, which require cities to reduce the size and frequency of combined sewer overflows (CSOs) in combined sewer areas and/or reduce the loading of pollutants to impaired water bodies in separate sewer areas, are not new, but some of the approaches cities are taking to achieve compliance are.
In the area of CSO control, the emerging trend is toward green infrastructure (GI)—decentralized networks of small storm water management practices such as green roofs, rain gardens and porous pavement—in favor of or in addition to the conventional “grey” infrastructure approach, which uses large centralized facilities such as tunnels to provide in-system storage for wet weather flows. Although GI may not work for every city, many cities, even those with established grey infrastructure plans, now are looking at GI as a potential way to cut compliance costs and accrue other city-wide benefits not possible with a grey approach.
The Philadelphia Water Department (PWD) is looking to green infrastructure as the primary tool for CSO control. PWD’s CSO long-term control plan update, “Green City, Clean Waters,” outlines a $2 billion investment over 25 years to reduce CSOs, much of it focused on using GI practices to manage some 9,000 acres of impervious surfaces within the city’s combined sewer area.
While much of the investment in GI in Philadelphia will be publically funded, the decentralized nature of a GI approach means that these practices also can be incorporated into a variety of private property settings—strip malls, warehousing sites, corporate campuses, churches and universities. To help stimulate private investment in GI, PWD established a storm water credit program, which significantly discounts storm water charges (up to 80%) for property owners who manage storm water on their properties using PWD-approved practices. Additionally, PWD, in cooperation with the Pennsylvania Industrial Development Corp., established a companion Stormwater Management Incentives Program (SMIP), which provides direct grant assistance to property owners for GI-practice design and construction.
To help customers understand storm water crediting options, PWD offers a free-of-charge design assistance program through which customers receive a “storm water audit” that includes concept designs for incorporating GI practices, such as rain gardens, into their properties, and a financial analysis that helps customers understand how quickly the initial investment will pay itself off in the form of lower storm water charges. The program includes two components: a targeted program that proactively engages large property owners that have seen significant increases in storm water charges as PWD switched from meter-based to parcel-based storm water billing in 2009, and a “walk-in” program that provides customer-initiated assistance, primarily to smaller customers. In both instances, the idea is to educate the customer about the credit incentive program and provide customers with the information to make a business decision concerning investment in a credit-generating practice.
Through the initial phases of the design assistance program, rates of customer adoption have been fairly low, with only a handful of the approximately 130 customers enrolled in the design assistance program choosing to move forward with GI projects. While there are a host of reasons for this, including customers’ financial circumstances, level of familiarity with the program and access to capital, the relatively high cost of retrofits, even in ideal conditions, compared with the value of the avoided storm water charges is probably the biggest reason that customers chose not to invest in GI projects. GI retrofits have cash-flow payback periods that are commonly in excess of 10 years and are rarely less than five years.
Sweetening the Deal
In response to low rates of customer participation, PWD continues to work with customers to find ways to further incentivize investment. A big part of this effort has been the adoption of SMIP, which provides additional grant assistance to customers with cost-effective projects. The program allows PWD to directly cost share with customers while still leveraging some private investment.
SMIP shows great promise in increasing the level of activity in private GI retrofits. In 2012, the first year of the program, PWD received more than 40 SMIP grant applications, including several from customers enrolled in the design assistance program, and was able to provide funding for a number of projects. All of the projects funded were significantly less costly per unit drainage area managed than the costs PWD typically incurs for building similar projects in the public right-of-way (e.g., green streets projects). While a customer financial contribution is not required for a SMIP grant, many customers have chosen to co-fund projects to increase their chances of receiving funding.
In addition to SMIP funding, PWD has been exploring a number of other alternatives to spur private investment through regional approaches. In a regional approach, a number of property owners work together to fund and build credit-generating GI practices that manage storm water from multiple properties. There are a number of models through which regional management could work. For instance, property owners along a commercial corridor could pool their resources to build a green streets project in the public right-of-way, rather than building a series of individual GI practices on their own properties. This approach could reduce costs by taking advantage of economies of scale while incurring an overall corridor enhancement benefit and opening up additional sources of public funding.
Another model could involve customers working together to earn credit by building storm water practices on one or more vacant properties to manage runoff from surrounding streets. This approach could reduce costs by increasing the scale of the project (i.e., one large project versus several small projects), but also by locating the project in a less constrained setting. As with a green streets project, vacant land projects have important neighborhood enhancement benefits that indirectly benefit customers.
While incentive programs and strategies continue to evolve in Philadelphia and elsewhere, it is increasingly clear that private storm water retrofits can play an important role in helping municipalities meet federal mandates. The challenge continues to be finding the right combination of incentive programs that make private investment in retrofits a good business decision for customers. In Philadelphia, at least, a number of promising solutions are taking shape.