Madame Chair:

On behalf of the Home Builders Association of Virginia(HBAV), I want to thank the Soil and Water Conservation Board for the opportunity to comment on the proposed stormwater management regulations (4 VAC 50-60 et seq.). HBAV has been an active participant in this regulatory process from the beginning, and looks forward to working with the Department of Conservation and Recreation as the regulation works its way through these final processes. HBAV is committed to being a partner in protecting the Chesapeake Bay and Virginia’s other watersheds.

The new proposed regulatory regime contemplated in Soil and Water Conservation Board’s proposed stormwater regulations generated significant concern among the development community and the greater business community. The regulations’ new technical quality and quantity standards create an undue burden on new development and redevelopment with only minimal benefits provided to the overall environment.

The regulations have been crafted to address nutrient pollution contained in runoff from urban development into the Chesapeake Bay, and the technical criteria are based solely upon the goals outlined in Virginia’s Tributary Strategies. HBAV, the development industry, the greater business community, and many in the environmental community have some significant concerns with both the methodology behind the creation of the new technical requirements, and the costs and efficiencies related to those proposed standards.

Despite our long participation, there are a number of problems still contained in the regulation as proposed. This letter will address those problems individually culminating with the overall request that Part II of the regulation (the technical criteria) be rejected by the Board in favor of a pollutant management program that is both more efficient and more effective in protecting the Chesapeake Bay.

HBAV asserts that the application of a water quality standard based on Chesapeake Bay models is inappropriate for statewide application. The Chesapeake Bay watershed in Virginia covers less than 60% of Virginia’s acreage. The other 40% or more drains to the "southern rivers." HBAV does not feel it is appropriate to base standards for those rivers on problems occurring in the Chesapeake Bay. In no other situation is a waste load allocation applied statewide in order to address a specific problem. For that reason, HBAV feels that any new statewide standard should be based on statewide data, and problems unique to the Chesapeake Bay should be addressed through the Chesapeake Bay Preservation Act.

Part II of the proposed regulation (4 VAC 50-60-20 et seq.) is the result of a simple math equation based on the Virginia Tributary Strategies. The Tributary Strategies were created in 2004 as a guideline on how the state can reduce its phosphorous contribution to the Chesapeake Bay based on the allotment assigned by the Chesapeake Bay Program. The goals set forth in the Tributary Strategies never went through any official regulatory process and are based on admittedly flawed data. Furthermore, the data used to calculate current phosphorous loadings from urban runoff are flawed as they incorporate runoff from mining activities, which are permitted individually, and do not give credit for phosphorous reductions from current urban Best Management Practices (BMPs) as evidenced in the 305b report submitted to EPA in 2008.

The .28 standard was derived from target phosphorous loads from undeveloped land, primarily agricultural and forest land. These targets are not current performance levels, but unscientific goals that have been incorporated into the Virginia Tributary Strategies. Even full on-site compliance with the new standard does not even begin to scratch the surface of the Commonwealth’s remedial water quality needs. In fact on-site compliance with the .28 standard is actually counterproductive as the incremental improvements will cost the development industry millions of dollars annually, diverting crucial resources away from the real problem. Those resources could be used to help remove current problems in the Chesapeake Bay Watershed.

The reduction in incremental phosphorous increases from new development runoff targets only one percent of the total watershed annually. It does not look retrospectively at the current contributors to the pollutant problems in the Chesapeake Bay which are agriculture, point-source contributors and legacy urban development. Legacy Urban Development is that development that occurred prior to the implementation of stormwater management criteria that began in the late 1980s east of Interstate 95 in Virginia. Under the proposed regulation phosphorous pollution flowing into the Chesapeake Bay will continue to increase, but the cost of the incremental phosphorous removal from new development and redevelopment will cripple the development industry and the Virginias economy.

In evaluating the costs of the proposed stormwater management regulations, a lot of information has been generated with regard to the cost and practicability of designing to the water quality standards, but very little has been said with regard to the water quantity standard. To date, through all of the examples tested only a very few have been able to meet the water quantity standard. Most projects will not meet the quantity standards. The regulation also makes the assumption that the default design standard is to match the peak flow rate of forest land in good condition, HBAV feels that this should be a last resort approach in circumstances where streams are already badly eroded. In the proposed regulation the burden is placed on the permittee to show that the stream is not unstable. HBAV believes that the burden should be on the permitting authority to show that the stream is unstable before requiring a return to forested conditions.

Being competitive in a global market is important now more than ever. Likewise environmentally friendly development that incorporates clustering, high density and sustainability are equally more important than ever. The proposed stormwater regulation will move the Commonwealth in a direction that is contradictory to both. While both Virginia Tech’s analysis and the Department of Planning and Budget analysis were unable to pinpoint the exact cost of the proposed regulation, the development industry has been able to demonstrate a range of unanticipated costs associated with the regulation.

At the time of the publication of the two economic impact analyses referenced above, information was unavailable as to the true cost of implementation of the proposed regulation. While Drs. Stephenson and Beamer were able to use the information at hand to calculate a price per pound of phosphorous for BMP construction, it should be noted that this cost is reported as the annualized over the life of the BMP in the analysis. The bulk of the cost of construction of a stormwater BMP is incurred at the time of construction paid by the purchaser of the land or building. Annualizing the cost of the construction of the BMP diffuses the appearance of the impact on the economy at the time of construction. Those costs, which are significantly higher than the annualized costs, are borne all at once by the purchaser and in many cases make projects infeasible. Moreover, there are significant maintenance and inspection costs to be borne by homeowners and localities.

Additionally, Dr. Stephenson notes in his analysis that no consideration could be given at the time to the foregone value of the land used for the construction of the required BMPs under the proposed regulations. After further review and application of the new regulations, the foregone cost of the land used will also be significant and overly burdensome. Based on evaluations by engineers throughout the state, the average incremental cost of phosphorous removal under the proposed regulation will be $685,000 per pound of phosphorous. Most of the projects considered were compact mixed use, high density residential or commercial projects. These are the types of development that the Virginia Legislature and the Governor have stated definitively through the 2007 Governor’s Acts of Assembly Chapter 896 (HB3202). The cheapest alternative for compliance with the proposed regulations will be large lot development where land is the cheapest resulting in urban sprawl.

With the increased restrictions on impervious surface created by this regulation, and the requirement to mitigate runoff from pervious surfaces as well, compliance requires additional acres in residential and commercial developments. In urban core areas, that land comes with a premium price attached to it and reduces available densities as more land will be required for stormwater management facilities. This will drive the cost of housing in high density urban areas to unaffordable levels. The unintended effect of this regulation, will be to push development out to where land is cheaper and offers opportunities for large lot developments. This movement away from urban cores is in direct contradiction to the stated policies of the Virginia General Assembly and the Governor evidenced by HB 3202 passed during the 2007 Session.

HB 3202 creates a requirement for Urban Development Areas (UDA) in localities with high growth rates. The goal of the legislation is to compact future development into densely populated communities where home, work, and recreational opportunities are all within walking distance of each other. Development within a UDA under this regulation would be extremely expensive, and would likely eliminate the option for affordable housing.

While new development will struggle under the new regulations, redevelopment will possibly cease. The proposed regulations double the standard for phosphorous reduction for redevelopment from 10% to 20%. This number is based in absolutely no science whatsoever. Furthermore, redevelopment is required to meet the same on-site water quantity requirements as new development. In situations where redevelopment is occurring on nearly 100% impervious sites, it will be absolutely impossible to meet either of these standards. HBAV believes that special consideration needs to be given to redevelopment to keep in concert with the Legislative mandate that encourages redevelopment in urban cores.

Currently, the regulation contains no language for vesting. Moreover, because the existing state vesting language carves out an exception for Chesapeake Bay regulations, there is no vesting for proffered property or property with submitted preliminary plans or even property with final, approved plans. The purchase, design and development of land is an expensive and very long process. Many times design and economic analysis will begin long before applications for permits are ever submitted. In most cases development involves many meetings with local, state and federal officials through many design sessions. When this regulation goes into effect in July, 2010 there will be numerous projects that have already begun this process long before that time. Often financing for projects is obtained and conditioned upon the approval of plans throughout the development process. Changing design standard in the middle of this process can be very expensive and in many cases will void contracts and agreements. For that reason HBAV requests that the proposed regulation include significant protections for projects with submitted preliminary plans. This will provide surety to developers, engineers, local governments and financiers as projects move forward.

Phased developments often occur over a period of twenty years or more. Plans will be developed for large tracts of land, but those plans will be implemented slowly. At times the first phase of a development may have long been completed prior to the beginning of the next phase. The new regulations treat all phases of a project as one continuous land disturbing activity. Which means post-development stormwater facilities for an entire development must be designed and controlled long before most of the construction occurs. This again places a significant economic burden on developers and limits an engineer’s ability to make design changes over time to adjust to new technologies and the discovery of new hydrology patterns. HBAV asks for the flexibility to have projects approved and vested as whole projects, and to be able to permit phases individually rather than all at once.

HBAV, its members and the greater business community are proposing a logical but new approach to the Chesapeake Bay clean-up model. Recognizing that the proposed regulatory changes will be extremely costly with modest benefit, and that new development contributes to Bay pollution and must pay its fair share, HBAV’s member developed approach to reaching the tributary Strategy goals takes an innovative look at the nutrient pollution problem as a whole rather than piecemeal. Our goal with this alternative is to create better water quality in the Bay faster and more efficiently than what is proposed in the regulation.

Under the Tributary Strategies 92% of agricultural land will have a minimal suite of best management practices (BMP) applied to that land, and all Municipal Separate Stormwater System (MS4) systems have mandatory upgrades that must occur to meet water quality goals. Unfortunately, in both cases the funding to reach those goals is in short supply. In addition, farmers may then sell credits to point-source polluters from any activities over and above any Tributary Strategy BMPs creating an opportunity to reduce agricultural pollution beyond what is anticipate in the Tributary Strategies. The new model that HBAV is proposing provides the funding to reach tributary strategy goals and excel beyond them.

HBAV proposes loosening on-site nutrient runoff controls to allow for .60 pounds of phosphorous per acre per year from new development. A payment would then be made by the developer of $15,000 per pound to purchase credits from the state for an additional .15 pounds per acre, bringing nutrient pollution mitigation back to the current standard of .45 pounds per acre. For example, if a developer has a 100 acre site, under current requirements, that site can have no more than 45 pounds of phosphorous annually in its runoff. Under HBAV’s proposal that site could now have 60 pounds of phosphorous per year, but the developer would be required to pay into the Water Quality Improvement Fund (WQIF) a sum equal to the difference between 60 pounds and 45 pounds at a cost of $15,000 per pound. So that developer would write a check to the state for $225,000. This money could then be used for grants from the WQIF to implement BMPs on agricultural land, offset the cost of wastewater and separate stormwater system upgrades, or retrofit older development that has no stormwater management controls in place.

This allows for a much more efficient use of the funds from developers, and if properly applied, the statewide Tributary Strategies goal could be met by 2035. This is a broad overview of the alternative plan offered by HBAV. However, this approach has generated interest among much of the regulated community, local governments and the business community. HBAV is not asking for a wholesale adoption of this plan on its face, but is encouraging the Soil and Water Conservation Board to abandon the currently proposed technical requirements in Part II of the regulation, and reconvene a Technical Advisory Committee of stakeholders to discuss this proposal and adopt a regulation that better uses the resources available to provide a clean and safe Chesapeake Bay.

HBAV again encourages the Soil and Water Conservation Board to reject Part II of the proposed regulation only. The technical criteria contained in Part II are wrought with problems and costs that even the Department of Planning and Budget have determine "will outweigh the benefits." HBAV recommends the SWCB reconvene the Technical Advisory Committee to make sweeping changes to the technical criteria.

Best regards,

Barrett Hardiman