McMinnville staff present phased stormwater utility fee plan to cover deferred maintenance and state mandates

McMinnville city staff and consultants told the City Council at a work session that the city should create a stormwater utility fee to pay for decades of deferred maintenance and growing regulatory costs, and offered a phased proposal that starts with about $2 million in annual revenue and moves to roughly $4 million after three years.

The recommendation matters because staff said much of the city’s storm system has not been maintained proactively and that mounting regulatory obligations — including likely expansion of the MS4 (municipal separate storm sewer) permit program — will require new, dedicated funding. The project advisory committee (the “pack”) unanimously recommended the council adopt a stormwater utility fee and a multi-year implementation plan.

City presentation and committee recommendation Geoff Hunsucker of Public Works presented the pack’s work and the staff recommendation. “The deferred maintenance is about 75% of the cost,” Hunsucker said, summing the rationale for a new fund. He and consultants from Raftelis and Galardi Rothstein Group explained that a utility model charges customers based on impervious surface — the main driver of stormwater runoff — rather than property value, a change staff called more equitable.

The pack’s written recommendation, adopted unanimously by the advisory group, asks the council to: adopt a stormwater utility fee; set a minimum annual revenue target of $2,000,000 in the first phase and an interim target of $4,000,000 after three years; build a three‑month operating reserve over the same three‑year timeline; and complete an updated stormwater master plan during the phasing period.

Rates, billing design and exemptions Staff and consultants described how they converted the revenue targets into per‑unit charges. The plan defines one equivalent residential unit (ERU) as 3,500 square feet of impervious area (the statistical median derived from the city’s sample). Using that ERU, staff estimated a monthly charge per ERU of roughly $9 under the minimum service level and about $15 under the interim level, with the actual household bill depending on which tier a property falls into under the residential tiering scheme.

Consultant Christina Conchilla said the team measured impervious area directly for a statistical sample and used regression modeling to assign single‑family homes to tiers. “Initially, when we measured the equivalent residential unit sample, it was 400… since that time… we have measured 600 single family residential properties,” Conchilla said, and reported that the preferred 15%/70%/15% tiering option predicted parcel tiers correctly about 85.5% of the time.

Under the preferred tiering, smaller single‑family parcels would pay roughly 0.7 ERU, median homes about 1.0 ERU and the largest homes about 1.6 ERUs; council members saw example annual ranges and said they expected typical homeowner bills to be in the roughly $100–$300 per year range cited by one councilor during the session. Non‑single‑family properties (multi‑family, commercial, industrial, institutional) would be billed on measured impervious area and charged by ERU multiples.

Policy recommendations and exceptions The pack also proposed several policy choices for the council to consider: defer applying a 6% franchise fee to the new utility for three years (allowing the utility to build reserves) and then begin a franchise transfer; consider a dedicated transfer of some franchise revenue to the street fund as a separate council decision; exempt city properties and McMinnville Water & Light accounts from stormwater billing (consistent with current practice for some utilities); and integrate stormwater charges into McMinnville Water & Light monthly billing.

Staff proposed specific customer protections and administrative rules: a minimum commercial/multifamily billing threshold of 500 square feet of impervious area, rounding bills to whole ERUs, a formal appeals/abatement process for customers who believe their assigned tier or measurement is incorrect, and a phased implementation to give businesses and large customers time to incorporate the charge into budgets.

Discounts and private systems The advisory group recommended a 35% discount for properties that already hold DEQ stormwater permits and operate detention/treatment on site (examples cited include Cascade Steel and the airport). The pack did not recommend a general discount for private HOA systems or other private detention systems at this time because staff said the city’s inventory and data on privately managed systems are incomplete; the pack recommended the master plan address private systems and data collection.

Regulatory timing and risk City staff warned that the regulatory environment may bring an MS4-type permit to the McMinnville urbanized area. James Lofton, the city engineer, told the council: “We’ve literally already been told by them that McMinnville is the next one on the list.” Staff said that some permit expansions being discussed would apply to urbanized areas of about 50,000 people and that McMinnville’s urbanized area is near that threshold.

Costs, staffing and next steps The pack and staff estimated the cost to operate and administer a utility, including hiring dedicated stormwater operations staff. Staff said the operations team envisioned is roughly a supervisor plus about three additional field positions (3–4 FTEs) once the utility reaches an interim level; the packet shows an annual operations and staffing cost in the several‑hundred‑thousand dollar range (the presentation cited roughly $569,000 annually as the operations line in the minimum service model that includes salaries and benefits). Street sweeping, catch basin cleaning and other recurring maintenance activities would be funded by the utility rather than the general or gas‑tax funds.

Staff also described capital funding expectations tied to the master plan. The pack recommended funding a capital contingency (three months of operating costs) built over three years; the committee’s initial reserve schedule showed $250,000 in the first year and $150,000 in subsequent years, building to roughly $650,000 by the end of the third year under the example funding approach discussed in the meeting. Staff said the stormwater master plan is a high priority and estimated it could take two to three years to complete once started; staff also said implementation of billing and administration through McMinnville Water & Light would take roughly six months.

What the council must decide At the end of the presentation staff said they had completed the work requested by the council and that further action requires council direction. Staff recommended adopting a stormwater utility fee and returning with drafts of an ordinance and implementation details if the council directs staff to proceed. There was no formal council vote at the work session; the meeting ended with staff asking the council for direction to prepare ordinance language and an implementation schedule.

Credits and sources Presentation and recommendations were delivered by Geoff Hunsucker (Public Works), James Lofton (City Engineer), Christina Conchilla (Raftelis, consultant) and Deb Galardi (Galardi Rothstein Group, consultant). Claudia (City Recorder) noted two emails from community members about the topic were added to the packet and would be part of the official record.

Ending note Staff said the ordinance and specific billing rules (appeals, administrative processes, exact ERU rates) would come back to council for approval and that implementation would be phased to allow customers time to plan.