Stormwater Fees: Coming to your Municipality

With the incredibly wet summer that central Pennsylvania has had this year, it is perhaps appropriate that the Pennsylvania Legislature is presently debating a series of bills to modify the current statutes regarding stormwater facilities in first class townships and boroughs across the state. The proposed bills, House Bill 914 and House Bill 915, explicitly authorize first class townships and boroughs to “regulate the planning, management, implementation, construction, and maintenance of storm water facilities.” To this end, the bills also authorize these municipalities s to assess reasonable fees based on the characteristics of the properties which benefit from the stormwater management systems in place.

The Pennsylvania Municipality Authorities Act (“PMAA”) allows a stormwater authority to impose fees for maintaining stormwater facilities. A stormwater authority is a separate level of local government allowing municipalities to allocate stormwater system maintenance obligations to another body created specifically for that purpose. Heretofore, it was only following a recent amendment to the Municipality Authorities Act that stormwater authorities were recognized for the purpose of collecting stormwater fees to offset the costs of constructing and maintaining stormwater facilities.

All municipalities are required to carry out the mandates of Federal regulations governing stormwater management. For instance, they are required to establish minimum standards for stormwater system compliance under the Federal Municipal Separate Storm Sewer Systems regulations (“MS4” Regulations). Municipalities are also obligated to meet minimum compliance requirements under the Federal Water Pollution Control Act (Clean Water Act), and any other federal or state laws for implementation of stormwater maintenance. For first class townships which can afford to fund an authority on compliance, the proposed changes would explicitly authorize them to do so. As these standards can be costly for municipalities and townships in locations with older systems, the bills also authorize local boroughs, or their authorities, to assess fees to meet the demands of maintaining the systems.

An important aspect of the bills is that any stormwater fees that are imposed do not constitute a tax. Therefore, exemptions ordinarily in place for residents such as tax exempt organizations do not apply to the utility fee – all property owners are responsible for contributing based upon an established formula which is typically based on the amount of impervious surface on the property. Some municipalities do provide for credits against the fees, however, if property owners take steps to reduce their impact on stormwater facilities. Philadelphia, for instance, offers up to a 100% credit against its fee. Under the proposed bills, the municipalities must limit fees to ensure they are no greater than necessary to meet the federal and state minimum requirements for compliance. The key to the validity of a stormwater fee is ensuring that it is reasonable and uniformly imposed across property owners in the municipality.

If challenged, the reasonableness and uniformity of fees would be a question for the courts. For example, Mount Lebanon Township has already faced a legal challenge to its stormwater fee. In 2011, Mount Lebanon promulgated a fee to maintain the stormwater systems in the township. As expected, many of these fees were not well received by local property owners, and Mount Lebanon was soon faced with lawsuits over the constitutionality of its assessments from tax exempt religious organizations seeking exemption from the stormwater fee. The Court ruled in favor of the Township finding that because the Township administered the fees uniformly and as a utility fee, rather than as a tax, the ordinarily-applicable tax exemptions for religious organizations were inapplicable. Further, the fees were considered reasonable based on the township’s formula for calculating the amount.

Mount Lebanon’s court-approved fee schedule based its stormwater utility fee on an “equivalent residential unit” scale. Most municipalities are basing their stormwater fees on the “equivalent residential unit” of “ERU” formula. The township established that the average residential property contained 2,400 square feet of impervious surfaces. Therefore, those properties in the township meeting the average square footage were subject to an $8 per month utility fee. Properties with more impervious surface were assessed an increased monthly fee based on the $8 per 2,400 square footage measure. In general, this shows that the more a given property contributes to the stormwater drainage problem by having more impervious surfaces, the higher the fee assessment may be.

Townships do, however, have some leeway in determining how they want to fashion their fees. Different methods of evaluating how to charge property owners will carry different levels of expense. For instance, a fee schedule which calculates the level of runoff from an individual property will be more costly than evaluating the amount of impervious surface area on each individual property in a township. Therefore, fees are typically imposed in one of three ways: (1) as a flat rate which all property owners pay based on the amount of impervious surface on the property, (2) on all properties benefited by a specific storm water project, or (3) by establishing a storm water management district and imposing the fee on all property owners in the district. Additionally, the fees must be carefully tailored to match the township’s financial need to meet minimum federal requirements, and all of the fees collected for stormwater facilities must go toward construction or maintenance of the stormwater facilities. This can include improving existing stormwater systems by cleaning and repairing storm drains and sweeping streets, or by more general capital improvements like planting trees, building green roofs, disconnecting downspouts, installing rain gardens, and providing rain barrels.

For individual property owners subject to fees, this may mean an added expense in the future. Even though the bills are still pending in the Senate, they have already passed the House. Since the legislature passed similar legislation affecting second class townships in 2013, these bills affecting first class townships are also likely to pass with language closely tracking the 2013 legislation. Municipalities considering adding fees to maintain stormwater facilities are advised to reserve them specifically for stormwater management and to ensure their reasonableness and uniform imposition to avoid over-charging property owners.

This article was written with contribution from Sarah Rothermel, 3rd year law student at Widener Law Commonwealth.

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