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FAQ: SRC Price Lock Program

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1. What is a Stormwater Retention Credit (SRC) Purchase Agreement?

An SRC Purchase Agreement allows you to sell your SRCs to the Department of Energy and Environment (DOEE). The SRC Purchase Agreement identifies the price and number of years at which SRCs can be sold to DOEE. The SRC Purchase Agreement also identifies all the rules, timeframes, and performance requirements that must be met for DOEE to make an SRC purchase. DOEE’s non-profit partner, the Center for Watershed Protection (CWP) will administer SRC Purchase Agreements on DOEE’s behalf.

2. If I receive an SRC Aggregator Startup Grant or participate in the SRC Site Evaluation Program, should I apply for the SRC Price Lock Program?

Yes, DOEE encourages this. GI concept designs developed as a part of these programs can be used for your SRC Price Lock Program Application.

3. How long is the call for applications open? How much funding is available?

SRC Price Lock applications will be accepted year-round for as long as funding is available. However, to best support ongoing project development throughout the year, DOEE plans to host biannual, 60-day open application windows for funding opportunities in the spring and fall, respectively. During these windows, applications that were previously submitted may be amended and resubmitted for consideration. DOEE will provide advance notification for each funding opportunity.

Applications submitted for review during the fall application window will be funded through an anticipated release of $1.25 million of Price Lock program funds. Applications submitted for review during the spring application window will be funded through unreserved funds that have become available from the market sale of previously “Rate-Locked” SRCs.

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4. How do I know that funding will be available for my SRCs?

Funding for the SRC Price Lock Program is held in an escrow account and is dedicated to purchasing SRCs from participants in the SRC Price Lock Program. Once an SRC Purchase Agreement is signed, DOEE will reserve the entire amount of funding necessary to purchase SRCs from that project for the length of the SRC Purchase Agreement. This ensures that the funding will be available for the project if the purchase option is executed.

If a project sells SRCs on the market instead of selling to DOEE, then DOEE’s funding for those SRCS will be made available to another project. The remaining balance for the project’s SRC will still be held for future purchases.

When you sell SRCs to DOEE, payments will be processed by CWP. If CWP is no longer DOEE’s grantee, then DOEE will assume all of CWP’s obligations including making payments or will assign these responsibilities to a new grantee.

5. How did DOEE determine prices for SRC purchases under the SRC Price Lock Program?

DOEE selected SRC purchase prices that it expects to be profitable for cost-effective GI projects. DOEE analyzed the cost to construct and maintain GI projects, using data from CWP’s own experience and from market research. This analysis included the following types of cost:

  • Field work to search for suitable locations and concept development for cost-effective green infrastructure (GI) sites
  • Surveying and geotechnical investigation
  • Engineering (including design, project management, administrative costs, and construction inspection)
  • Travel
  • Construction costs
  • DOEE permitting review fees
  • Land value (opportunity cost)
  • Maintenance costs over the purchase agreement period (calculated using a 1.91% inflation rate)
  • Administrative and other costs
  • Cost savings from RiverSmart Rewards discounts on stormwater impervious fees

6. Why does DOEE offer different purchase prices for years 1 through 6 and years 7 through 12?

DOEE offers an SRC price for the first 6 years of participation that is expected to help SRC sellers recover a significant amount of the costs of GI development and installation.

DOEE offers an SRC price for years 7 through 12 that is expected to cover GI maintenance costs. DOEE expects this price to be sufficient to incentivize maintenance, but also expects this price to create an incentive for regulated sites to purchase SRCs from the Municipal Separate Storm Sewer System (MS4) to cost-effectively comply with their stormwater obligations. Over time, DOEE expects that this low-cost compliance option will incentivize regulated sites to meet more of their stormwater obligations with SRCs from the MS4. This should result in an overall increase in demand for SRCs from the MS4, and consequently, an increase in the availability of private funding for SRC-generating GI in the MS4.

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7. Why does DOEE offer a higher purchase price for projects located in the non-tidal MS4?

Smaller streams and tributaries are more vulnerable to the harmful impacts of stormwater runoff, including pollution and soil erosion. When GI is installed in these areas, the improvements to tributaries also result in improvements to the tidal Anacostia and Potomac Rivers downstream. DOEE refers to these areas as “non-tidal” to distinguish them from areas that drain directly into the main stem of the tidal Anacostia and Potomac Rivers.

8. Why is DOEE’s SRC Price Lock Program funding restricted to GI practices within the MS4 area?

The Municipal Separate Storm Sewer System (MS4) receives runoff from about 2/3 of the District. In the MS4 area, stormwater drains directly into waterbodies via overland flow or through a storm sewer, in most cases with no treatment. This makes GI especially important in areas served by the MS4, but DOEE estimates that a GI retrofit of the entire MS4 would cost over $7 billion.

In the Combined Sewer System (CSS), which receives runoff from about 1/3 of the District, rain can cause the sewer to overflow, dumping sewage mixed with stormwater directly into our waterbodies. Large tunnels are under construction to prevent overflow from the CSS and ensure that it is treated at the Blue Plains wastewater treatment plant before it is discharged.

9. Will SRC purchase prices be adjusted over time?

SRC Purchase Agreements contain fixed prices. Once you sign an SRC Purchase Agreement, DOEE will not change the price that you receive for the SRCs generated by your project. However, DOEE may change the purchase prices offered to new participants. If the purchase prices are changed, DOEE will balance the desire to encourage participation in the program with its obligation to spend public funding wisely.

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10. What is the SRC market price?

If you choose to sell your SRCs on the market, instead of selling to DOEE, you will need to negotiate an SRC price with prospective buyers. All SRC trading prices are posted in the SRC and Offv Registry, including averages for each year and over the most recent 12 months. You can use these values to help negotiate an SRC price for your trade if you choose to sell on the market. The SRC market price is not fixed, but rather fluctuates with supply and demand.

By contrast, the prices available through the SRC Price Lock Program are fixed at the time you enter into an SRC Purchase Agreement.

11. Does the SRC Price Lock Program guarantee a specific financial return on participating projects?

No, the SRC Price Lock Program does not guarantee a specific return on participating projects. DOEE has set SRC purchase prices at a level that is expected to provide a return on investment for cost-effective projects. Actual monetary returns will depend on many factors including cost-effectiveness of the GI that is installed and whether the participant sells on the market instead of executing the option to sell to DOEE.

12. What type of entity is eligible to apply the SRC Aggregator Startup Grant Program?

Applicants may be non-profit organizations (including those with IRS 501(c)(3) or 501(c) (4) determinations), faith-based organizations, universities and educational intuitions, or private enterprises. Individuals are not eligible to apply.

13. Why can’t regulated sites that exceed the regulatory requirement participate in the SRC Price Lock Program?

DOEE’s primary goal is to incentivize GI projects on sites that are not otherwise installing GI to satisfy a regulatory requirement. Sites that trigger the District’s stormwater management regulations can participate in the SRC Price Lock Program if they install GI voluntarily outside of the regulated area. This can be cost-effective since construction resources have already been mobilized in that general area.

By contrast, these sites cannot participate by exceeding the regulatory requirement within the regulated area. In general, GI provides the greatest environmental benefit if its retention capacity is used frequently. SRCs generated by exceeding compliance at a regulated site represent the portion of that site’s retention capacity above 1.2 inches (which is the volume the site is required to provide). This capacity is empty in 90% of storms in the District.

Voluntarily installed GI practices generate SRCs from the retention capacity achieved above a pre-project baseline. As a result, SRCs from voluntary sites generally represent stormwater retained from smaller, more frequent storms, which provides the greatest environmental benefit.

14. Can I apply for the SRC Price Lock Program for GI that is already constructed?

The SRC Price Lock Program is only available to new projects. Projects that have already received approval of a SWMP are not eligible to apply. However, projects that meet all other eligibility requirements and received SWMP approval between September 12, 2016 and the SRC Price Lock Program launch will be eligible to participate.

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15. Why can’t I participate in the SRC Price Lock Program for areas that have existing GI or other BMPs?

If a site has BMPs (including GI and other BMPs), then the areas draining to those BMPs cannot be used to generate SRCs for the SRC Price Lock Program. However, other areas on the same site that do not drain into an existing BMP may be eligible.

DOEE’s goal in establishing the SRC Price Lock Program was to encourage new GI in the MS4 to capture stormwater runoff from existing impervious surfaces that are not currently draining into BMPs. There are many potential projects that have the ability to generate SRCs by increasing the size of existing GI or existing stormwater treatment BMPs. However, it is more beneficial for the District’s waterbodies for DOEE to support new GI in areas that are currently unmanaged. Additionally, many existing BMPs were built to comply with the District’s stormwater management regulations.

16. What is an “existing BMP?”

Existing BMPs include stormwater management practices and landscape features that fall into one of the following categories:

  • The feature is permitted as a BMP on a Stormwater Management Plan for the property.
  • Construction of the feature was funded (in whole or in part) through a DOEE program.
  • The feature is substantially similar to a BMP type listed in the Stormwater Management Guidebook. If it is unclear whether a site has an existing BMP that fits this category, program participants must receive a determination from CWP regarding the presence of an existing BMP. CWP’s determination may be involve an evaluation of existing stormwater management plans, review of site photographs, and visual observations.

17. What design, construction, permitting, and maintenance requirements must GI practices meet in order to be included in the SRC Price Lock Program?

Practices must meet all DOEE requirements for generating SRCs.

18. Who is included in the project team? Can one team member satisfy multiple training and experience requirements?

The project team is made up of the individuals associated with the project, including representatives of an SRC aggregator, engineers, and others associated via contract or who are otherwise retained to provide services. These individuals may be affiliated with different organizations participating in the project. The training and experience requirements to participate in these programs can be met by different members of the project team or by a single member of the project team.

19. When should I apply for the SRC Price Lock Program?

DOEE encourages participants to submit an SRC Price Lock Program application after completing a preliminary (30%) green infrastructure design, but prior to submitting a more detailed Stormwater Management Plan. This allows you to receive your SRC Purchase Agreement, containing your fixed SRC purchase price, prior to submitting a formal SWMP for DOEE review. You can also apply later in the design process.

20. After signing an SRC Purchase Agreement, what steps should I follow to construct GI projects and certify SRCs?

After signing your SRC Purchase Agreement, you should obtain DOEE approval of a Stormwater management Plan (SWMP) and then construct the SRC-generating project. Projects must meet the implementation deadlines outlined in Attachment B of the SRC Purchase Agreement, including submitting a SWMP to DOEE within 6 months of signing the SRC Purchase Agreement, receiving SWMP approval within 12 months, holding a pre-construction meeting with DOEE within 18 months, and completing construction within 24 months. DOEE and CWP may consider extensions to these deadlines in limited circumstances and on a case-by-case basis.

Once your project is built, you are eligible to generate SRCs in 3-year cycles. To avoid a lapse in SRC certification, you should schedule a maintenance inspection approximately 6 months prior to the start of your next 3-year certification period. You should submit your SRC application approximately 3 months prior to the start of your next 3-year certification period. For each application, you need a maintenance contract or plan that covers the full 3-year certification period.

For example, if a project receives its first 3 years of SRC certification on 1/1/2017, the certification period will last through 12/31/2019. The next eligible date of SRC certification is 1/1/2020. The maintenance inspection should occur between 7/1/2019 and 12/31/2019. The SRC application should be submitted between 10/1/2019 and 12/31/2019 with a maintenance contract or plan that covers 1/1/2020 through 12/31/2022.

21. Can implementation deadlines for participating projects be extended?

Participants may contact CWP to request an extension to the timetable. These requests must identify the reasons for the request, such as site-specific conditions or permit delays that are outside of the applicant’s control. DOEE and CWP will evaluate all requests on a case-by-case basis.

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22. What should I include in the annual GI inspection reports that I must submit to CWP?

Participants must submit annual inspection reports to CWP. Participants can use the forms in Appendix L of the Stormwater Management Guidebook for this maintenance inspection report.

23. When can I exercise my option to sell to DOEE, and how long do I have to do so? Must I sell all my SRCs at once, or can I sell them in multiple transactions?

After constructing the GI, you can generate SRCs in three-year cycles. For the first two SRC certification cycles, you must keep your SRCs for sale on the market for eighteen (18) months before you may exercise your option to sell SRCs to DOEE. After that time, any SRCs that have not been sold on the market may be sold to DOEE for the duration of the SRC Purchase Agreement term.

24. Am I required to sell SRCs from my GI site to DOEE if I have entered into a purchase agreement with DOEE for that site?

No, an SRC Purchase Agreement provides sellers with the option to sell SRCs from your site to DOEE, at the prices and according to the timeline specified in the contract. However, sellers can choose to sell their SRCs on the market or bank them for future use or sale rather than exercising this option.

25. How do I exercise my option to sell SRCs to DOEE? When can I expect to receive payment?

To exercise the option to sell SRCs to DOEE, you must first list your SRCs for sale on the market for eighteen (18) months (for the first two SRC certification cycles only) before you may exercise your option to sell SRCs to DOEE. After that time, you must submit the Intent to Sell SRCs form through the DOEE Surface and Groundwater System. CWP will provide payment within 30 days and submit proof of payment to DOEE. DOEE will record the SRC transfer and retire SRCs upon receiving proof of payment.

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26. What happens if CWP does not pay me for my SRCs?

If CWP fails to fulfill any of its obligations under an SRC Purchase Agreement, DOEE or its designee will assume full responsibility for these obligations, including making payments.

27. What happens if I no longer want to participate in my SRC Purchase Agreement?

The SRC Price Lock Program is structured as an opt-in program for the participant. You are under no obligation to continue participation in the program. If you no longer wish to participate, you face no penalty if you stop certifying SRCs or stop selling to DOEE. Rather, if you do not proceed according to the schedule in the SRC Purchase Agreement, and the contract is not otherwise extended by DOEE and CWP, the contract will expire.

However, when you receive SRC certification, you are responsible for providing maintenance for the 3-year certification period. You may retire the SRCs to free yourself of the maintenance obligation. If you have already sold those SRCs, you must purchase replacement SRCs to retire.

28. What happens if the SRC-generating property is sold?

With planning, changes in site ownership should not affect a site’s ability to participate in this program.

If the site owner and the SRC seller are the same entity, the SRC Purchase Agreement, including all rights and responsibilities, can be assigned to the new site owner. Alternately, the original site owner could continue to act as the SRC seller with the new site owner’s permission.

If the SRC Price Lock Program participant is not the site owner, the participant can continue to generate and sell SRCs as long as the new property owner continues to allow the participant to access the site. DOEE recommends that, prior to constructing GI, SRC Price Lock Program participants and property owners discuss terms associated with site access in the event of a change in site ownership. Conditions related to the change of site ownership could be included in a contract between a site owner and an SRC aggregating business.

Maintenance of the SRC-generating GI is required throughout the SRC certification period (up to 3 years at a time). The original SRC owner is still responsible for maintenance in the event of a change in site ownership. However, subsequent SRC certification periods may have a different person responsible for maintenance.

29. Is my project subject to the Limitations on SRC Generation by DOEE-Funded Stormwater Retention BMPs policy?

Participation in the SRC Price Lock Program does not mean that the project is considered DOEE-funded. These projects will not be subject to the limitations policy.

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