OCEAN CITY – A yearlong study on Ocean City’s failing stormwater infrastructure resulted this week in a recommendation made to the Mayor and City Council to establish a stormwater utility fee in order to fund necessary repairs.
In September 2010, the Environmental Finance Center (EFC) at the University of Maryland was contracted by Ocean City to conduct a stormwater financing feasibility study. The goal of the study is to provide a recommendation on how the town might implement a long-term strategy for financing stormwater management.
According to University of Maryland Environmental Finance Center Director Joanne Throwe’s presentation, imminent funding needs identified include 50 backlogged projects in repairing storm drains, joint leaks, replace outfalls, pipes and catch basins, which cost between $1,000 and $50,000 each. In addition, it addresses major infrastructure replacement of corrugated metal pipe, which will cost approximately $6 million.
Throwe said what makes Ocean City so unique in terms of stormwater is it’s highly developed urban setting with 79 percent impervious cover, a relatively small year-round population, which is approximately 7,000 residents but has an infrastructure that attempts to support between 170,000 and 240,000 visitors on a given summer weekend.
In the last year, the study has reviewed information provided by various sources. Information was collected on Ocean City’s stormwater management needs and current stormwater activities, other taxes and fees charged to Ocean City businesses and residents, budget allocations, and the monetary costs of improving the stormwater program.
“We looked at a series of funding options in what would be best,” Throwe said. “When comes down to it, it has to be fair, and it has to be equitable, and the most important thing is it has to be sustainable. It has to be long term.”
Based on the study, Ocean City will need to spend close to $12 million in stormwater expenses over the next 10 years for repairs and improvements to the stormwater system.
According to the study’s summary, a stormwater utility fee allows for the assessment of the amount of impervious surface contributing to the stormwater problem on a per property basis. Since 79 percent of the town is covered in impervious surface it is appropriate to charge properties that contribute significant runoff more and properties that contribute insignificant runoff less.
“Ocean City’s uniqueness made this a little bit difficult because of all the condos, the townhomes, the commercial buildings, there were so many different nuances that we had to take into consideration,” Throwe said.
The recommendation included a rate structure based upon Equivalent Residential Unit (ERU) where the residential fee is based on the assumption that an average property has about 2,500 square feet of impervious surface, therefore, all properties are will be billed for one ERU per year set at $35, or $2.92 a month. The revenue projected from residential properties is around $983,000 a year.
The non-residential fee will be based directly on the amount of impervious surface on a property capped at 25 ERUs per property. With each ERU costing $35 a year, revenue from non-residential properties is projected to be around $230,000 a year.
Council Secretary Lloyd Martin had no interest in raising another tax since Maryland is already in the works of raising the flush tax from $30 to $60, and by 2015 to $90 in means to place funds towards the cleanup of the Chesapeake Bay.
“I think before we open up a fund or infrastructure fee we need to look at the State of Maryland,” he said. “If they are going to raise those fees, we need to get our flush tax money back to Ocean City and back to the coastal bays.”
Mayor Rick Meehan said there needs to be some kind of parallel between condos and hotel units. He pointed out that the ERU formula would have a 200-unit hotel paying far less than a 200-unit condominium building.
“It is unfair,” City Engineer Terry McGean said. “I think there are ways we could remedy it to make it fair, and if you all want to move forward with this we would certainly do that.”
Council President Jim Hall agreed with the mayor.
“This is a tax any way you cut it,” he said. “If we are going to be fair then let’s be fair. I do support this but this is going to need a little more head scratching.”
Councilwoman Margaret Pillas said she would like to see some action sooner than later.
“Ocean City could be on the forefront with something like this and get the rest of the state to join us,” she said.
Meehan concluded the discussion by saying there was no immediate action needed.
“I think we have given you some indication on possible action that we want to take,” he said. “If you go back and take a look at the fee structure, I agree, we are not looking for a new tax but we would at least like to see the best and fairest way that could be developed for future discussions and implementing this is something we will put on for budget discussions. So hopefully we can begin to address this a little more aggressively as we move forward into 2013.”