Managing Stormwater and Developers' Decisions

On August 10th, 2011, the Funders’ Network for Smart Growth and Livable Communities, the Environmental Grantmakers Association, and Stormwater Funders Group held a webinar regarding stormwater regulations and low impact development (LID), and how the relating economic aspects may influence developers’ decisions. The idea, especially given trying economic times, is that costly redevelopment programs in urban areas can potentially drive developers into pristine areas, which lack the constrictions of pre-existing infrastructure, allowing them a higher level of access, control, and freedom. While environmental conscious redevelopment in cities is noble, the expansion of development outward from cities would cancel out the gains made by urban sustainability initiatives.

There are few regulations for controlling non-point polluted runoff, and the EPA is currently developing new rules that would yield stricter stormwater standards. As one of the few regulatory tools organizations have to work with, the Clean Water Act is rather insufficient with respect to urban runoff. However, as a one-size-fits-all solution the Act limits flexibility, one characteristic vital to (re)development which is not only site-specific but also incorporates a variety of other factors, from transportation infrastructure to zoning and finance rules, making each situation unique. These local factors often times tilt the playing field towards new development rather than redevelopment. Thus, given potentially stronger regulations and economic incentives, one question that this webinar sought to answer was, “how do you get the [urban] areas cleaned up without inadvertently increasing new development?”

A combination of strict standards and green infrastructure seems to hold the key, but without data to back it up, any environmental advocate’s arguments are unsubstantiated. Thus, ECONorthwest conducted a study seeking to answer the research question, “would more stringent stormwater regulations have the unintended consequence of shifting development to ‘greenfield’ sites from already-disturbed redevelopment and infill sites?” The results of the study conducted hold several vital conclusions, and remind us how imperative it for like-minded groups to organize so that they may take on the challenge of shaping regulations and incentives.

Among the findings presented by ECONorthwest’s Senior Economist Ed MacMullan was the observation that developers were not abandoning their redevelopment projects because of stronger stormwater standards. Compliance with stormwater regulations is one of many economic and regulatory factors that developers take into account. In fact, green development, especially in urban areas, may actually be more profitable (in addition to being more sustainable) because of its ability to influence buyers’ desires. Green amenities such as rooftop gardens or LEED-certified buildings generally let both developers and the engineers charge a premium for their products, encouraging more sustainable redevelopment by developers. Further, it has been noted that these economic factors may complement the current regulatory weaknesses.

The major take-away message is that “cost-effective responses to stronger stormwater standards require a more collaborative approach.” As materials and technologies become more widely available and less costly, there is a market incentive for redevelopment. Funders may work with organizations to educate engineers on LID and the relevant permitting processes, as it is still perceived as somewhat new and economically risky in many areas. Fast-track permitting seems to be the most common incentive, while direct subsidies would also offset costs and make LID even more palatable to developers. Therefore, it is also important to support those who seek to work with government agencies in order to streamline – but not detract from – the permitting process. Proper regulation coupled with market incentives has the ability to drive redevelopment and low-impact development, and if done correctly, it can significant reduce our impact on the environment.