Alternative Financing for Municipal Stormwater Management Programs

Mike Gregory, Ray Tufgar and Steve Sedgwick


Municipal stormwater management (SWM) programs represent significant public investments that are largely funded through property taxes in Canada. Stormwater revenue drawn from taxes must compete with many other municipal services and is often inadequate to provide an acceptable level of service demanded by the community. In addition to meeting current needs, municipalities must also finance future program revenue requirements (e.g. to renew/replace aging infrastructure, comply with new stormwater regulations, or to operate/maintain additional facilities due to new development). Competing demands for limited tax funds will force municipalities to pursue alternative financing mechanisms in order to provide a financially sustainable and self-supporting SWM program.

A stormwater rate that is based on each property’s contribution to runoff quantity and quality offers a logical and legally defensible method for allocating municipal SWM program costs. The rate approach offers unique advantages over other municipal SWM program financing options and provides more budgeting flexibility than property tax or development-related funding. Stormwater rate revenue is generated in a more fair and equitable manner than property tax, which is based on assessed property value, and development charges, which are based on total number of dwelling units or land area. Stormwater rates are a relatively new concept in Canada, but have been successfully implemented in hundreds of municipalities throughout the United States.

Recent case studies in Ontario and Alberta are used to highlight the issues and approaches for developing a stormwater rate as a sustainable financing option for Canadian municipalities.

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