Search for the Elusive 35%:Search for the Elusive 35%:A Sponsor DilemmaA Sponsor Dilemma

James W. Featherston, Agricultural EconomistUSDA-NRCSTemple, Texas

11th National Watershed Conference

May 17-20, 2009

Wichita, Kansas

Rehabilitation ProgramRehabilitation Program

The Small Watershed Rehabilitation Amendments of 2000 (Section 313, Public Law 106-472) provides the authority for rehabilitation. It amends PL 83-566 "Watershed Protection and Flood Prevention Act" to add authority for rehabilitation

Authority Provides:Authority Provides:

Technical assistance in planning

Technical assistance in application

Federal cost share - 65%

Sponsors cost share - 35% (part of cost share can be

in-kind)

Hazard Classification - TexasHazard Classification - Texas(as of 2008)(as of 2008)

248 dams originally designed as low or significant, reclassified as high hazard

10 dams have been rehabilitated 238 remaining Total Cost - $334 million Sponsors Cost - $116 million

Issues and ConcernsIssues and Concerns

Public safety and health Failing components of dam Sediment storage - 50 yr. minimum Urban development below or near dams Upgrades to current safety and performance

criteria Increasing costs for upgrades

How Do You Eat an Elephant?How Do You Eat an Elephant?

Answer: One Bite at a Time!Answer: One Bite at a Time!

What do Elephants have to What do Elephants have to do with Aging Dams?do with Aging Dams?

Answer: Appetite and Cost!Answer: Appetite and Cost!

When dining on elephant au jus, one must consider their: Appetite for elephant (white or dark meat ?)

Ability to pay the bill

AppetiteAppetite

Appetite is based on memories: Because of other entrees on the menu, people

haven’t had elephant in a long time and they’ve forgotten how it tastes.

Because of dams located upstream doing their job over the years, people haven’t been affected by major floods in a long time and they’ve forgotten how frequent floods used to occur.

Result? Public apathy (“Why fix something that isn’t broke?”)

CostCost

Insufficient Funds: Because of increasing costs of processing elephant

meat into a dining delicacy, people can’t afford it anymore and simply ignore it.

Because of increasing costs of upgrading aging dams to current criteria to ensure a continuation of protection for people and property downstream, sponsors can’t afford rehabilitating the dams on their own.

Result? Costs keep going up while dams keep aging.

““The Dilemma”The Dilemma”(Or How Can Sponsors Come Up With (Or How Can Sponsors Come Up With

Their 35%?)Their 35%?)Several ways:

Tax Bonds combined with Development Fees Utilize Local Tax Base

County Government Water Control and Improvement District

Alternate Source of Funds

Two Things to Remember: There are other means to address the 35%. And, what works for one may not work for another.

Tax Bonds Combined With Tax Bonds Combined With Development FeesDevelopment Fees

City of McKinney County seat of Collin County (adjacent to Dallas

County) Unprecedented growth during last 20 years 18 dams within City limits or ETJ First Rehab project in Texas (East Fork Above

Lavon Site 3C) Although other Sponsors are involved, City

provides 100% of Sponsor’s share (35% of Rehab project cost)

Tax Bonds Combined With Tax Bonds Combined With Development FeesDevelopment Fees

Voter-approved tax bonds and developers’ fees fund the Voter-approved tax bonds and developers’ fees fund the Sponsor’s share of the Rehab project.Sponsor’s share of the Rehab project.

Example:Example: Estimated Rehab cost is $800,000Estimated Rehab cost is $800,000 Total drainage area above dam – 1,000 acresTotal drainage area above dam – 1,000 acres Estimated Rehab cost per acre is $800Estimated Rehab cost per acre is $800 Developer’s share is 50% of affected acreageDeveloper’s share is 50% of affected acreage If 50 acres is developed above dam, developer’s share is If 50 acres is developed above dam, developer’s share is

$800/acre x 50 acres x 50% = $20,000$800/acre x 50 acres x 50% = $20,000 Balance of sponsor’s share is provided by issuance of Balance of sponsor’s share is provided by issuance of

bondsbonds

Tax Bonds Combined With Tax Bonds Combined With Development FeesDevelopment Fees

Pros: Cost is spread over many beneficiaries of project Additional tax levied is minimal per capita Local tax burden of rehabilitation is reduced Frees up local taxes for other uses Promotes pride of property ownership Allows Sponsor more input into land development

Cons: Option only available where Sponsor has control or

jurisdiction of drainage area of dam Fees must be paid before developer can begin construction Lack of developable land could hinder fee assessment

Utilize Local Tax Base:Utilize Local Tax Base:County GovernmentCounty Government

Bexar County and San Antonio River Authority (SARA) San Antonio is County seat of Bexar County (south central

Texas) SARA formed in 1937 by Texas legislature SARA operates and maintains 27 dams in Bexar County Three dams have been rehabilitated (Martinez Creek

Watershed Sites 4, 5, and 6A) Although not an official watershed sponsor, Bexar County

provides bulk of Sponsor’s share; SARA provides remainder (primarily in-kind services and landrights)

Utilize Local Tax Base:Utilize Local Tax Base:County GovernmentCounty Government

Pros: Support of county government allows greater

publicity of project Sponsor’s (SARA) direct cost is reduced Dependable source of funding (Bexar County) In-kind services reduce cash outlay of project

Cons: Non-beneficiaries are assessed cost of project Negative majority vote by commissioners court

could delay or cancel project

Utilize Local Tax Base:Utilize Local Tax Base:Water Control and Improvement DistrictWater Control and Improvement District

Bell County Water Control and Improvement District (WCID) No. 6 WCID – a political subdivision of the state of Texas WCID is a taxing entity (properties located within

WCID) Bell County WCID No. 6 operates and maintains 13

dams (Nolan Creek Watershed) in Bell County In 2007 Site 15 was rehabilitated; sponsor share was

$400,000 (cash and in-kind services)

Utilize Local Tax Base:Utilize Local Tax Base: Water Control and Improvement District Water Control and Improvement District

Pros: Cost is spread over many beneficiaries, thus

minimizing per capita cost Dependable source of funding

Cons: Non-beneficiaries (ones not located downstream) are

assessed cost of project Due to small size of WCID, tax increases could be

realized to cover sponsor cost of project

Alternate Source of FundingAlternate Source of Funding

Potential Sources: State Government Consumer Organizations Producer Organizations Non-Profit Organizations

Alternate Source of Funding:Alternate Source of Funding:Example – State GovernmentExample – State Government

Pros: Alternate source becomes a stakeholder, potentially providing

more media exposure Usually dependable source of funding Legislation could direct funding specifically for Rehab

Cons: State government must have representative willing to sponsor

legislation If limited funds, two possible outcomes:

Projects are ranked, resulting in only a few getting funded Funds are distributed to all sponsors with rehab needs, resulting in

insufficient funds per project Funding could dry up quickly, especially during a down

economy

Proactive Prevention:Proactive Prevention:“Nip it in the Bud!”“Nip it in the Bud!”

What is proactive prevention? Most dams built it rural

areas (low hazard) As population increases,

urban area encroaches Sponsors have options to

discourage downstream development, thus keeping dams classified as low hazard

Proactive Prevention:Proactive Prevention:“Nip it in the Bud!”“Nip it in the Bud!”

Navarro Soil and Water Conservation District No. 514Navarro Soil and Water Conservation District No. 514 Due to proximity to Dallas, Navarro County has Due to proximity to Dallas, Navarro County has

experienced rapid growth in recent yearsexperienced rapid growth in recent years Since 1954, total of 111 flood control structures built Since 1954, total of 111 flood control structures built

in Navarro Countyin Navarro County To date, only 2 have been reclassified as high hazardTo date, only 2 have been reclassified as high hazard

How does Navarro SWCD No. 514 keep people How does Navarro SWCD No. 514 keep people from living downstream of dams?from living downstream of dams?

Proactive Prevention:Proactive Prevention:“Nip it in the Bud!”“Nip it in the Bud!”

Excellent relations between SWCD and CountyExcellent relations between SWCD and County County judge and commissioners attend at least one County judge and commissioners attend at least one

SWCD meeting annuallySWCD meeting annually SWCD employee meets with newly elected SWCD employee meets with newly elected

commissioners and explains purpose of watershed commissioners and explains purpose of watershed projects and local sponsorsprojects and local sponsors

Tours are sponsored by SWCD for county officialsTours are sponsored by SWCD for county officials SWCD and County have contracted with an A&E SWCD and County have contracted with an A&E

firm to perform breach flood plain mappingfirm to perform breach flood plain mapping County has agreed not to issue 911 address if new County has agreed not to issue 911 address if new

building would be located within breach area of a building would be located within breach area of a damdam

ConclusionConclusion

238 dams in Texas need to be upgraded.238 dams in Texas need to be upgraded.

Estimated Sponsors’ Cost - $116 millionEstimated Sponsors’ Cost - $116 million

Funding is often elusive. Task is daunting.Funding is often elusive. Task is daunting.

So is eating an elephant.So is eating an elephant.

But, it can be done!But, it can be done!