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Funding for Stormwater Projects: It's Time to Diversify

FNI conducted a stormwater funding survey of Texas municipalities and found that more than 60 percent of participants relied completely on one funding source for their stormwater projects. Particularly in today’s economy, this kind of funding dependence can severely limit a municipality’s efforts to protect its citizens from stormwater flooding. Diversifying funding sources helps enable communities to continue diligent monitoring, provide regular maintance and improve their systems while weathering the storm of the current economic climate.

What Are the Options?
Municipal stormwater funding sources can include:

Stormwater Utility Fees – Stormwater utility fees are authorized by Texas law (Local Government Code 552.041 through 552.054 and 580.003 ) and are prevalent throughout the state. Utility fees can be a steady revenue source to fund municipal stormwater management programs. Many municipalities use stormwater utility fees to pay for Phase I/II MS4 compliance programs, capital improvement projects, staff, equipment and related expenses. Texas law mandates that utility fee revenues be spent only on stormwater-related activities, which provides citizens the confidence that revenues will be allocated appropriately.

Grants – Grants are provided by a number of state and federal agencies and can be a great source of capital for stormwater management plans and projects. The Texas Water Development Board (TWDB) and the Texas Division of Emergency Management (TDEM) sponsor some of the most commonly used grants in Texas. Each of these agencies is responsible for grants that can be used for stormwater studies and projects. Most of the grants provide 50 to 75 percent of a project’s cost with the local entity providing the balance. Grant availability varies throughout the year and funds are awarded based on approval of an entity’s application – each grant has its own criteria that must be met.

Stormwater Impact Fees – Similar to other impact fees, stormwater impact fees present an opportunity for municipalities to obtain financial support from developers to fund necessary capital improvements related to the impacts of new development. Though not widely used throughout the state, stormwater impact fees are also authorized by Texas law [Local Government Code 395.011 through 395.025 authorizes stormwater (drainage)] and required to be allocated for stormwater-related activities. In FNI’s experience, impact fees are best suited for largely undeveloped areas with few existing flooding problems that are expected to develop in the near future.

Low-Interest Loans and Bonds – Pursuing low-interest loans and bonds can also be a valuable endeavor in supporting your stormwater projects.

Combine Sources to Maximize Funding Support
It is often beneficial to combine more than one source of funding to maximize your financial support, such as using revenue generated from a stormwater utility as the local matching dollars for a grant-funded project. Combinations such as this allow a municipality to implement a project without drawing from already-tight financial resources.

Call FNI for More Information
Need assistance? FNI is ready to help you navigate the funding procurement process. Please visit and contact us for more information. We look forward to hearing from you!

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