The City of Durham may soon be on the hook to spend hundreds of millions of dollars to curb pollutants that drain into Jordan Lake, but for now, thanks to a regulatory loophole that surfaced recently, a quarter of the city, including most of downtown, remains outside the protection of any water quality standards.

That means developers in the 25-square-mile no man’s land can build without adhering to even the most basic stormwater protection measures, though the Neuse River basin covers the northern half of Durham and Jordan Lake reaches into the city’s southwest cornerand both are critical yet heavily polluted water sources.

Paul Wiebke, the city’s acting stormwater manager, has sought to close the so-called “donut hole” for months, arguing that Durham could face penalties of up to $25,000 a day unless it establishes stormwater rules throughout the city.

Two deadlines to solve the problem are quickly approaching.

A North Carolina statute that takes effect April 1 mandates stormwater treatment for dense development that falls outside existing protected areas. Furthermore, Durham’s municipal stormwater permit from the Environmental Protection Agency requires citywide protections by June 30.

Wiebke warned that permitting unregulated development could eventually cost the city additional money, as the state legislature decides this year whether to implement Jordan Lake rules that could hold Durham responsible for cleaning up the impaired reservoir. A city report estimates that implementing these ruleswhich would require that the city retrofit existing development to curb excess nitrogen and algal growthcould cost as much as $680 million.

“I’d rather do it up front than do it later,” Councilwoman Diane Catotti said at a Feb. 16 City Council meeting. “What we’re doing here is costly but reasonable. I think we have no choice.”

However, a handful of developers and downtown boosters, led by Downtown Development Inc. President Bill Kalkhof, lined up to oppose the stormwater standards, saying they are a “one size fits all” approach.

“I look at this as one more nail in the coffin,” said Reid Tyler, an executive vice president for Keystone Corporation, a Morrisville-based developer. “There’s a lot of regulatory issues that we face, and it seems like there’s one more after another that’s put upon us.”

Citing Raleigh and Cary as examples, he added: “There are other municipalities that are perhaps looking at this different than Durham.”

However, Wiebke replied that the only difference between Durham and those cities is that they are subject to the Neuse River rules throughout the cityRaleigh has no choice, as it falls entirely within the river basinwhile Durham contains portions of unregulated land.

“The point we made is that the city has a portion of land in which we don’t have any requirements,” Wiebke said later in an interview. “Our proposal is to take rules we have already applied in other places and insert them in this area, so that we have more consistency.”

Tucker Bartlett, the chief operating officer for Golden Belt redeveloper Scientific Properties, said the new standards would drive growth to the suburbs and to cities with more lax regulations.

“Had Golden Belt been subject to these new rules, we would not have been able to do that development,” he said, claiming the developer would be forced to destroy historic structures to build stormwater retention ponds.

However, the citywide standards would in fact account for dense downtown development, by allowing for properties with more than 40 percent impervious surfaces to purchase off-site conservation land in lieu of on-site treatments such as stormwater ponds. Most downtown developers would be responsible for treating a small percentage of nitrogen on-site, but this could include simple buffers such as sand filters, or reductions to existing impervious surfaces including asphalt.

Within the Neuse River basin, a similar “alternate nitrogen control standard” is available to properties like Golden Belt, a former mill that now houses a mix of residential and commercial uses; the new ordinance would essentially apply these rules throughout Durham.

The council also heard objections from Patrick Byker, an attorney for Southern Durham Development, which is seeking to build a 164-acre mega-development within Jordan Lake’s critical watershed boundary.

“What is being proposed makes it very difficult, if not impossible, for projects that are in compliance with our comprehensive plan, to move forward,” Byker said, insisting that “transit-oriented” projects in particular would be hurt.

Byker, who stated he was speaking as an individual citizen and not in his role as a development lawyer, repeated the contention that stormwater retention ponds would impede high-density projects, though Catotti reminded her colleagues that downtown development would be eligible for conservation land offsets. According to Wiebke, a 1-acre lot with 90 percent impervious surfaces could satisfy this requirement by purchasing roughly 0.4 acres of conservation land, which Catotti said the city is buying at $10,000 an acre.

The City Council delayed a vote on approving the standards until March 2, with Catotti noting that the “votes weren’t there.” If adopted, the standards would give developers until March 13 to submit site plans that can be grandfathered into the old rules (or lack thereof). If approved, these site plans must receive building permits and begin construction within four years or be subject to the new standards, according to Assistant Planning Director Patrick Young.

The delayed vote essentially hands developerswho have known about the proposed standards for monthsanother few weeks to draw up site plans that avoid the water quality protections. The prospect of losing that window was, apparently, frightening to developers, and city councilors eager for downtown development.

As Byker put it: “It would be a shame to see the type of developments that we need … not be possible because of conflicting priorities.”