The Price of a Utility

March 27, 2012

The question, what would you do differently if you had to do it again? isn’t an easy one for Carol Border to answer.

That’s because Border, the safety and training supervisor for the City of Davenport, IA, Public Works Department, knows that the city’s elected and appointed officials did what they were supposed to do when the idea of forming a municipal stormwater utility began to gain momentum. They invited citizens and the business community into the process early and encouraged them to help design a system to address current stormwater concerns and prepare the community for future development.

What they got in return was swift and fierce opposition that has led to vows to defeat the six aldermen who voted in March 2005 to create the utility. Days after the 6-4 vote, city officials continued to receive angry calls with a consistent “we’re going to vote you out” theme. Even a local veterans’ organization was reportedly distributing materials identifying elected officials and city staff members who should be fired.

DavenportOne, the community’s chamber of commerce and economic development organization, supported the fee in concept but had substantial concerns about the utility as it was ultimately presented to the public. Members of the organization, Border contends, did not view the proposed utility as an opportunity to improve the community’s infrastructure and, in the process, to expand development opportunities. Instead, some of the organization’s members who were part of the city’s stormwater advisory committee dubbed the proposed fee a “rain tax,” and the public picked up that banner.

The mood became so heated at one community meeting, Border recalls, that an angry citizen complained, “Rain is from God. How can you tax rain? I’ll bet you don’t even believe in God.”

It was a sharp reversal in public sentiment for a community whose voters had recently approved a tax levy for a new library, passed a bond issue to construct a new county jail, and voted to raise local funds to match the State of Iowa’s investment in a new tourist-friendly project called the River Renaissance. When city leaders approved an increase in garbage fees the response was “nary a peep,” according to Border. “There were some complaints, but we didn’t ask for input. We just did it because we had no other choice but to fund the service without using property tax increases.”

She continues, “I’ve been thinking, Why the opposition? Here was our attempt at transparent government. We have other fees, so I don’t think the difficulty was with fees for services. I think it’s what happens if someone gets up a big lobby against the city council and brings the community out before they understand everything.”

Alderman Bill Lynn, who opposed the stormwater utility, offers a contrasting view to Border’s.

“The council has a lack of credibility with the public. We hire consultants and go through the motion to convince people we’ve done this stuff, but a lot of people who attended those public meetings were not happy with the answers. They felt they weren’t given straight answers,” notes Lynn, who teaches economics at St. Ambrose University in Davenport. “And, to be honest, I found a lot of inconsistencies in what was being said. That didn’t help the situation at all. We didn’t sell this to the public well at all. We didn’t convince them we needed this. To sell something, you’ve got to be inclusive. You’ve got to get people behind you and make them think you’re at least considering their views, and that didn’t happen.”

Meanwhile, skeptical citizens filled hours of airtime on local talk radio, complaining about the proposed fee and the city officials who supported it. Public sentiment was so intense that one councilman received 300 calls against the fee and utility–about 20% of the number of people who typically vote in a ward election.

Sharp differences of opinion arose among the city’s elected officials. The city’s newspaper, Quad-City Times, chronicled a running dispute in which Alderman Jamie Howard called on Lynn to apologize for suggesting that there was no federal mandate driving the push for a stormwater utility and fees.

Lynn recalls that it was a local talk show host who interviewed an EPA official who said the federal agency had not mandated the fee. “That evolved into “˜There was no mandate,'” he explains.

Alderman Tom Engelmann, a supporter of the utility, served on the technical advisory committee that teamed with a consultant to work through details such as billing and on the stormwater advisory committee that included neighborhood and business groups and members of the general public.

“I think things got controversial because we have a few folks on the city council who are basically anti-government. They fed every bit of misinformation and amplified it. They created misinformation of their own. And it was controversial because you’re hitting people with a fee, hitting them in the pocketbook,” Engelmann explains.

Divisions deepened, Engelmann contends, because DavenportOne retained a consultant who did not possess necessary expertise in the stormwater utility field. That consultant “might have known a little, but he didn’t know the whole picture.” As a result, Engelmann asserts, some members of the business community based their opposition on faulty information.

Kathy Evert, DavenportOne senior vice president for chamber of commerce and economic development, points out that the organization took a formal position to support the stormwater utility. “We had business members involved in the committee. Large and small businesses both were engaged and involved, and they took it very seriously,” Evert states. “They tried to learn the issues and figure out what would work best. Business people wanted more details from city officials. We are still looking forward to working with the city to develop a more complete policy beyond the establishment of a fee.”

Evert points out that concerns remained even after the utility was approved because major companies operating under their own National Pollutant Discharge Elimination System (NPDES) permits were still unclear as to how the utility would regulate them. Questions, she says, included “What regulatory manual are they going to have to follow? How aggressive are the city inspectors going to be? What will the fines be? How will these aspects impact our business climate? Those industries with NPDES plans are already inspected by the state, so why does it make sense for the city to do another inspection? How much disruption and cost will that create for local businesses? We need to work through these questions with the city.”

Businesses and nonprofits were also awaiting word on what they would need to do to be eligible for fee credits. “We are still looking forward to the point when the city has properties measured. This is necessary for businesses to better understand what their fees will be,” Evert indicates. “For many of our members, the fees will range between $500 and $75,000 per year, every year, from now on. It’s a substantial expense. Businesses are very willing to do their civic duty, but they do prefer to know a lot of detail about how their taxes and fees will be utilized.”

Yet, a question that had been answered early was particularly troubling to businesses and homeowners. Some people who supported the fee in concept opposed the way it would be allocated.

“Our position called for a larger share of the fee to be directed toward capital improvements because our members have historically supported making infrastructure improvements, and we want to support improvements in neighborhoods where flooding is an issue,” Evert says. “We’re not clear about how much will be accomplished in this regard, or how quickly, based on the adopted allocation.”

Lynn concurs, noting that only $0.30 of the monthly $2.50 fee to homeowners will be devoted to capital improvements. “The city’s consultant came up with $2.3 million as the [annual] cost for operations, and that seemed excessive to me. It still seems excessive. An independent consultant came up with an estimate of $300,000 and [the EPA] came up with the same number, so all of that really created some havoc and a lot of problems,” Lynn says. “If we had used a lot more of that fee for capital improvements, it would have helped a lot. [Other city officials] kept talking about a stormwater utility, which people realized is just a name. I said, “˜Why not set up a private company with the fees, and they could contract with anyone to get the work done at the best price?’ Of course, that didn’t go anywhere.”

Concerns over the operations-to-capital-improvements ratio were exacerbated by a comparison to neighboring Bettendorf, which equally divides its $1.50 monthly fee between operations and capital projects.

Engelmann, however, counters that any colleague who cited the allocation in voting against the utility was employing “bogus and political” rationales.

“I would have preferred a higher capital component, yes, but there are a certain number of things the permit requires you to do, and this is how we’re going to do it,” he says. “The fee also allowed us to approve a budget without a tax increase and to shift some employees who are doing part of these jobs right now.”

Although everyone interviewed for this article cited the city’s budgetary constraints as a significant issue, Engelmann underscored the fact that the City of Davenport’s property tax levy is already as high as state law allows. That fact forces the city to seek other funding streams.

“We’ve been at the limit for 15 years or so,” he says. “The problem is our [state-mandated] property tax rollback, which goes back 30 years. It ties residential property to agricultural land, which is taxed by production instead of value. With crop prices down, ag land taxes are down, and that pulls down the tax value of residential property. The rollback has increased 6% in five years; it’s at 47% of assessed value.”

He describes the rollback as a “systemic problem” where state and federal mandates have handcuffed municipal officials. “We have too many state legislators who believe in [Americans for Tax Reform President] Grover Norquist’s theory of “˜starving the beast.’ Even if people at the local level don’t believe in it, they’re going to do it to us anyway,” Engelmann says. “With the rollback, we’re at the point where we’re going to have to start lopping off large numbers of employees or raising fees. That’s the only place we have some freedom to act.”

A History of Floods and Politics
Davenport is no stranger to flooding; that familiarity is the product of its proximity to the Mississippi River. As the city’s official Web site notes, “Davenport is bounded on the southerly side by the mighty Mississippi River and is one of the few locations that the river runs in an easterly westerly direction. Davenport rises vertically over 200 feet from the shores of the Mississippi.”

The city’s bluffs may afford stunning vistas of the river valley, but a significant part of the downtown is on low ground and susceptible to the whims of the river. The Great Flood of 1993 caused more than $100 million in damage in this eastern Iowa community that is largest of the Quad Cities; the other three are Bettendorf, IA; Rock Island, IL; and Moline, IL. The aftermath of a 2001 flood created intense political controversy when the Bush administration proposed an end to federal aid to property owners who had been repeatedly compensated for flooding losses.

Joe Allbaugh, who was then director of the Federal Emergency Management Agency, said Davenport should be required, at a minimum, to construct a downtown floodwall to keep the Mississippi River in its banks and out of the city. “The question is, How many times does the American taxpayer have to step in and take care of [Davenport’s flood damage], which could easily be prevented?” Allbaugh said at the time.

Phil Yerington, a Democrat who was then mayor of Davenport, said Allbaugh’s remarks were “an insult” to the city and its residents. “You can’t punish people for living along a river,” he said, noting that city officials would oppose the construction of a floodwall because it would “spoil a river view that attracts tourists.”

That sentiment remains just as strong today. Davenport’s stormwater utility will not address problems that are a direct result of the river’s spring rites of flooding. Rather, the system will focus its resources on the more mundane flooding problems created by two creeks, Black Hawk and Duck, which empty into the Mississippi River.

Incorporated in 1839 as a special charter city in the Territory of Iowa, Davenport’s infrastructure issues are similar to those of other old communities.

“Our storm sewers and sanitary sewers in the older parts of the city were built so long ago that city leaders of the time couldn’t have foreseen the future development of the city or the large areas of impervious surface and the subsequent stormwater runoff,” Border explains. “A lot of the system was designed for two-year rain events of those days.”

The city’s 66 square miles contained an estimated 1 million feet of storm sewer pipes. A 1999 capital stormwater needs report by city engineers concluded that the system was in need of at least $18 million in repairs, upgrades, and expansions. That study’s author, consultant James Montgomery, recommended the construction of a water detention system in the city’s northwest corner to open the area for further development. And other pressing needs exist.

The City of Davenport, with a payroll of 815 full-time and 107 part-time employees, had begun an ambitious program in 1990 to buy out homes in the Duck Creek and Black Hawk Creek floodplains, but had never provided adequate funding to complete it. Meanwhile, homes in the Garden Addition are protected from the Mississippi River by an earthen berm, but that structure produces its own set of problems.

“They’re in a little bowl. So, if the river is high and Black Hawk Creek backs up, or if Black Hawk Creek floods on its own, the stormwater just pours in there and stays,” Border says. “That’s an area where we’ve bought a number of houses.”

Ironically, the public has never complained about the expenditure of taxpayer money to purchase homes in flood-prone areas, Border notes. Acceptance of funding for the home buyout program turned to anger with the mid-2004 proposal to create a stormwater utility.

As municipal officials outlined their case on the official Web site, “The City of Davenport is purposing to utilize the stormwater utility as a funding source to address historical community flooding problems caused by inadequate drainage system capacity and increased imperviousness and to buy land and build regional detention basins to prevent increasing the flash flooding on all of the city’s creeks.

“The City is required to create stormwater pollution prevention and management programs as part of the National Pollutant Discharge Elimination System (NPDES) permit. These programs are not currently funded by the City.”

The site also lists and briefly explains NPDES Phase II’s six minimum control measures: public education and outreach, public involvement and participation, illicit discharge detection and eliminiation, construction-site stormwater runoff control, post-construction stormwater management, and pollution prevention/good housekeeping practices.

All the Right Moves?
With the Montgomery study in hand, Border says, the city already had a clear sense of the projects that required attention. City officials aligned the project with the city’s overall mission statement. The municipal team had a public awareness plan that identified issues to be communicated to the public and a strategy for that communications process. A stormwater task force, which included representatives of local businesses and business organizations, was formed. Public meetings were scheduled, publicized, and held to ensure a community dialogue took place.

Border, who has worked on water-quality issues for more than 25 years and wrote the city’s NPDES Phase II permit application, notes that the city’s stormwater efforts have benefited from cooperation with local schools and several local environmental groups, including Partners of Scott County Watersheds, River Action Inc., Keep Scott County Beautiful, organizers of the annual 1,300-volunteer Xstream Cleanup, and many local residents.

“We have a lot of partnerships that have quietly supported funding both the water-quality and -quantity issues of the stormwater management program, but I think people were afraid to stand up for fear of having rocks thrown at them,” she observes. “We’ve gotten a lot of good press on the great things these groups are doing in the watershed, but I think many people don’t seem to connect the projects to stormwater.”

Conversely, Lynn points out some churches that were “rabidly opposed wouldn’t say anything publicly, either.”

Referring to one environmental group that quietly supported the utility plan, Lynn adds, “It would seem to me if you were going to sell this idea to the public, you’d start a lot earlier and get groups like that behind you. It gets back to the fact that we didn’t get people behind us.”

Lynn, who has a 30-year background teaching economics “so I don’t take anything for granted,” also pressed his colleagues and city staff about the lack of zero-based budgeting within the Public Works Department. “I’m sure those questions didn’t help their cause,” he acknowledges.

He believes people might have been more accepting of the idea if city officials had opted to roll the stormwater fee into monthly sanitary sewer billing. “I think that would have played better, and I think we could have done it. The city staff said we could do it. The sewer bill doesn’t necessarily reflect the amount of stormwater runoff.”

Engelmann disagrees with that approach. “Iowa state law requires you to spend a fee only for that service. Sanitary sewer and stormwater services are different enough that you can’t use one fee for the other service,” he notes. “Even though we have a lot of people who think we’re going to spend those monies somewhere else, I believe you have to have that [restriction] in state law.”

Advice for Other Communities
If there is agreement, it is that the process should have begun earlier. Engelmann laments that the issue “got caught up in election-year politics.”

Border advises, “Locally, we are the last of the Quad Cities to try to implement stormwater runoff fees. For other cities that are considering a fee approach to stormwater management, I think it’s crucial to have people on your stormwater advisory committee who understand open meetings laws and municipal government and who are really committed to working with you to develop a program with, if not something for everyone, elements that address the community’s common good. If you have even one person who decides he doesn’t want to pay a fee of any amount and plans to fight against it, that can create an uproar with serious consequences.”

She offers, “It is just as crucial to choose the right facilitator to work with the advisory group. If the facilitator doesn’t build trust and allows any one person on the committee to grab control of the meeting, it becomes difficult to reach consensus. Our committee did reach consensus on several key points but not on the funding necessary, and early on our credibility went out the door when people said we claimed the fee was mandated. We never said that, but the statement became one of those urban myths and hurt us.”

Although the city’s stormwater management activities have enjoyed strong support from various environmentally friendly groups, those traditional allies weren’t particularly vocal during the controversy. And it remains to be seen if those groups or individual members will take a higher political profile in the event that elected officials who backed the utility decide to seek re-election.

And, despite the city’s efforts to reach out to constituents, Border says she can’t help but wonder “what would have happened if we’d started a year earlier, emphasizing our goals for stormwater management and the mandates of our MS4 [municipal separate storm sewer system] permit.

“We’ve held [regular] water-quality meetings with our volunteer groups, and at those meetings we often think we’re preaching to the choir. So maybe if we’d had better outreach outside the choir with more easily understandable information, fewer people would have doubted what the city staff was telling them,” Border says.

She continues, “It was too much all at once for some citizens and the business community to understand the concept of stormwater runoff, pollution prevention, and the need for a funding source–the utility. And when we said “˜stormwater management,’ a lot of people would just focus on the management part. They’d say, “˜Why do you need all that money for management?’ They thought everyone on our staff was going to get a big, fat raise. They weren’t making the connection that the money isn’t going to managers: It’s going to manage resources, manage the stormwater.”

Border’s disappointment lingers in the face of critics’ doubts about the urgency for action. “They keep questioning why we need to do anything since we don’t have any streams on the impaired waterways list. My answer is, “˜Yes, we do have to do something to avoid ending up on the list. I used to play in Duck Creek as a kid. I caught minnows and crawfish there, and every kid should have that right. We have bike paths along that entire route. It seems the people who came out just didn’t want to hear anything about maintaining our streams, but those streams are our natural resources. We’re bound by law to protect the waters of the state, and it’s just the right thing to do.”

Meanwhile, as winter turned to spring on the banks of the mighty Mississippi, the phone lines were still lighting up on WOC Radio’s Jim Fisher Show. Lynn predicted the issue would continue to smolder through the November 2005 municipal elections and beyond.

“Every few cycles, voters clean house in Davenport. They just get rid of everyone on the council. People are thinking, “˜As soon as we get rid of some of these council people, we’ll repeal this thing.’ So it’s not going to go away until then.”

Evert also foresees the possibility of a political backlash. While noting that voter irritation could wane during the summer months, she adds, “They’ll get their first bill just before the election. Things may calm down, but those who haven’t been engaged in this discussion will also become engaged then in a different way.”

Engelmann believes events could unfold differently. “There were a lot of people who came down and spoke against it. There were a few who supported it. I did receive phone calls from people who supported it. They understand there are things we need to do that we’re going to have to start and this is how you pay for it,” he says.