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Finance center presents new strategies to commissioners to fund water improvement plan


Staff writer

Calvert County’s watershed implementation plan may not cost the projected $1.3 billion, according to an environmental finance report, but the reduced cost is contingent on the state allowing the county some flexibility in how it meets the state’s goals.

During Tuesday’s Calvert County Board of County Commissioners’ meeting, staff from the University of Maryland Environmental Finance Center presented a draft report of the Calvert County Watershed Implementation Plan costs, strategy and financing. Environmental finance center senior research associate Daniel Nees and Main Street Economics owner and operator Robert Wieland presented the report.

The estimated total cost in the report is $5,616,436, including $3.8 million for best management practices and $717,744 for stormwater administration.

“I am actually happy to say, you can get $1.2 billion out of your head. It’s not going to be needed. It’s not going to be necessary, in our opinion,” Nees told the commissioners.

As part of the state’s compliance with the federal Clean Water Act, Maryland implemented the Watershed Implementation Plans, known as Phase 1. Through that, the state requires the counties to develop county Watershed Implementation Plans, known as Phase 2, based on the state’s targets for total maximum daily loads of nutrients and sediment entering the Chesapeake Bay.

Calvert County’s WIP, estimated to cost $1.3 billion, was determined to be impossible to fund; thus, the county’s draft WIP was never adopted, according to a staff memo.

The environmental finance center received a grant to conduct a fiscal analysis of the county’s WIP to try to develop a less costly strategy to meet the state’s set target loading rates.

“The first issue that I got out of your report is that we need to do a better job of capturing what we’re spending and what we’re getting for what we’re spending,” Commissioner Susan Shaw (R) said. The second issue she noticed, she said, is designating other environmental efforts, such as the new Leadership in Energy & Environmental Design certified College of Southern Maryland Prince Frederick campus building, toward the county’s WIP.

Nees said counting efforts like that would require clarification from the state. And, if the efforts are voluntary or beyond the state requirements, then it could probably be counted, “but if it’s just complying with the laws then it’s already accounted for in the WIP.”

The draft report, Nees said, is “full of estimates from our own experiences and we — by definition — we know those estimates are wrong because estimates are wrong.” He said the report was delivered to county departments for review of the estimates and those departments and agencies will report back to the finance center. From there, Nees said the finance center and the county departments will discuss and change the estimates before presenting the final report to the commissioners.

According to the presentation, the existing $1.3 billion cost estimate for the county’s WIP appears to be “dramatically over-estimated.” The key to bringing that price down, Nees said, is flexibility and focusing on performance.

“The main thing that Robert showed is that flexibility at the local level is essential,” Nees said. “If it is mandated about what you have to do and where you have to do it, it will get very expensive. But if the counties and local governments are allowed flexibility in solving the problem in a way that provides the most value to them and in the most efficient way possible, the cost will come dramatically down.”

Nees said the center assumed a majority of the $1.3 billion cost was capital costs. He said the company took that number and spread that out over 30 years at a 5 percent interest rate, resulting in $51 million per year for 30 years — a payment Nees recognized “isn’t likely going to happen” in Calvert County.

Using a baseline cost of $51 million for best management practices, the analysis was able to show that if the state’s model was used in a different way, and using the state’s numbers, the cost was reduced to $19.8 million.

If the county were to invest and allocate money in areas that provide the greatest reduction in loads for the county, the cost was further reduced to $3.8 million.

The next step, Nees said, was to go through the county’s budget to see where the county is already spending money on water quality issues. He said he thinks this is where the center will receive the most input from county staff about the estimates.

“Just to kind of show you scale,” Nees said, “if you were going to have a program that would deal in this, if you were going to invest the $3.8 million, [then $717,744 in stormwater administration] would be necessary to do that.”

The existing estimated cost for stormwater administration is $1,031,813.

To pay the estimated $5.6 million bill, the finance center recommended the county establish a stormwater enterprise program. Enterprise funds are used to support any activity for which a fee is charged to external users for goods or services. The county currently has four enterprise programs: the Water and Sewer Fund, the Solid Waste and Recycling Fund, the Chesapeake Hills Golf Course Fund and the Calvert Marine Museum.

“The No. 1 thing that an enterprise program does, it would consolidate your stormwater budget into a single budgetary line item, and right now, that’s not the case in Calvert County,” Nees said. “You do a lot of stormwater work, but it happens across multiple agencies … and giving it budgetary authority … you would create a lot of efficiency with how these programs run and operate.”

The finance center also recommended the county begin transitioning to a performance-based financing system, which means the county would pay for “reductions on the ground as opposed to paying for practices.”

At the close of his presentation, Nees reminded the commissioners: “We make recommendations that are going to require [participation] from the Maryland Department of the Environment to give you guys the ability to do what we say — there are some things that we recommend now that you are not able to do, technically.”

Commissioner Evan Slaughenhoupt (R) said the center’s estimate “begs for money that we currently do not have in our budget. … So, I’m sitting here saying, ‘Well, you know, it’s OK for us at this level to push back on the state on things.’ … I am very comfortable that we continue on the same path that we are at the rate we are.”