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Recent Updates in Municipal Storm Water Management

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This presentation was delivered to the Pennsylvania State Association of Boroughs on August 31, 2017, and provides an overview of recent developments in Pennsylvania law regarding municipal storm water management, permissible user fee structures, and funding sources.

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Recent Updates in Municipal Storm Water Management

  1. 1. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Recent Developments in Municipal Storm Water Management August 31, 2017 PENNSYLVANIA STATE ASSOCIATION OF BOROUGHS Timothy Horstmann Adeolu Bakare Kathy Pape
  2. 2. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Recent Developments in Municipal Storm Water Management  Covered Topics:  Recent Developments in PA Law and Pending Legislation  Storm Water Fee Structure – Legal Concerns and Litigation  Funding Opportunities Through Pennvest – Finding those Extra Dollars 2
  3. 3. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Recent Developments  Recent Changes to Authorities Act  Act 68 of 2013 – amends Authorities Act to explicitly permit the creation of an authority for the purpose of “storm water planning, management and implementation” as defined by the articles of incorporation  Act 68 also gave retroactive blessing of any authority that was operating storm water controls as part of a combined water/sewer/flood control project 3
  4. 4. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Recent Developments  Recent Changes to Authorities Act  Act 123 of 2014 – amends Authorities Act to explicitly permit the imposition and collection of “reasonable and uniform rates” in connection with the performance of storm water planning, management and implementation  Rates must be “reasonable and uniform” and based in whole or in part on property characteristics, which may include installation and maintenance of best management practices approved by authority 4
  5. 5. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Recent Developments  Must I Use a Municipal Authority?  Boroughs are currently authorized to acquire, operate and maintain areas for the “infiltration, detention or retention” of storm water and for other methods of storm water management authorized by DEP  But, under current law, if you house storm water management under the Borough’s “roof”, you are limited in how you finance its operations 5
  6. 6. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Recent Developments  Why Form a Storm Water Authority?  Regionalization – if talking with other municipalities, an authority is ideal vehicle to build a multi-jurisdiction solution  (Political) Liability Isolation – transfer responsibility to implement (and pay for) plan to separate entity  Spread the cost among more properties  But Consider the Drawbacks:  Loss of municipal control  Greater litigation risk 6
  7. 7. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Recent Developments  Must I Use a Municipal Authority?  Funding of storm water expenditures under the Borough Code is currently tied to special assessment process (can only assess benefited properties)  No authority to impose a broad, flexible storm water management fee like in the Authorities Act 7
  8. 8. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Recent Developments  Pending Legislation  House Bill 914 – would explicitly authorize boroughs to enact ordinances to govern and regulate the planning, management, implementation, construction and maintenance of storm water facilities  Would authorize Boroughs to impose storm water fees  HB 914 provides further guidance than Authorities Act on the limits of the fee that may be imposed 8
  9. 9. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Recent Developments  Pending Legislation  HB 914 substantially similar to Act 62 of 2016 o Extended storm water powers to second class townships  HB 914 was part of a package of bills (913-916) tracking language of Act 62 and covered boroughs, towns, first class townships and third class cities o Bills were introduced in March and were already the subject of a markup session  HB 913-916 approved in House; awaiting action by Senate 9
  10. 10. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Recent Developments  Fee Structure under House Bill 914  Fees must: o be “reasonable and uniform” based “in whole or in part” on the characteristics of the property benefited by the facilities, systems and management plans o include “appropriate exemptions or credits” for properties that have installed and maintain facilities meeting best management practices o be used only for storm water purposes (no reallocation to Borough general fund) 10
  11. 11. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Recent Developments  Fee Structure under House Bill 914  Three Methods of Fee Assessment: o Assess all properties in the Borough o Assess all properties benefited by a specific project o Assess all properties located in a storm water management district established by the Borough 11
  12. 12. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Storm Water Fee Structure 12  Two basic rate structure options  Flat Fee – Simple per-parcel fee for all  Dual Fee – Separate fees for Non-Residential and Residential o In dual-rate situations, Residential parcels typically pay a flat fee o Non-Residential parcels may pay a higher flat fee or a fee based on the individual parcel area, as determined by Geographic Information System (“GIS”) measurements
  13. 13. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Storm Water Fee Structure 13  More detailed variants  Equivalent Residential Unit (“ERU”) o ERU = average impervious area for a single family residential parcel  Equivalent Hydraulic Unit (“EHA”) o EHA = combined impact of impervious and pervious areas o Fees based on estimated runoff flows, with a higher per-unit rate for impervious area and a lower rate for pervious area  Tiered/Development – Fees based on sliding scale from vacant/light development to heavy development
  14. 14. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com 14 Legal Concerns  Litigation over storm water fees generally concerns three issues  Statutory/Regulatory Authority to form storm water utility  Distinction between fees properly collected by the utility and taxing power limited to the state  Rate allocation to customers  Although many municipalities have created storm water utilities without litigation, some have faced significant legal challenges
  15. 15. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com 15 Legal Concerns  Statutory authority to establish storm water utility  Northeast Ohio Regional Sewer Dist. v. Bath Twp., 44 N.E.3d 246 (Ohio 2015) o Supreme Court of Ohio rejected Bath Township’s allegation that the Northeast Regional Sewer District lacked statutory authority to implement a storm water management program and collect storm water fees o The court found the governing statute defined “wastewater” to include storm water, thereby authorizing the Sewer District to regulate and assess fees for both services
  16. 16. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com 16 Legal Concerns  Fee v. Tax  City of Lewiston v. Gladu, 40 A.3d 964 (Me. 2012) o Supreme Court of Maine found the City of Lewiston’s storm water assessment charge to be a valid fee and not a tax o Court applied the following four-factor test: o Regulatory purpose or revenue generator? o Direct or indirect relationship between fee and benefit? o Voluntary or involuntary fee?  Court found credit program allowing for 100% fee reduction conferred voluntariness o Fair approximation of costs and benefits?
  17. 17. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Legal Concerns  Fee v. Tax  Jackson County v. City of Jackson, 836 N.W.2d 903 (Mich. Ct. App. 2013) o Court of Appeals of Michigan found the storm water management charge implemented by the City of Jackson met no regulatory purpose and was intended primarily to increase revenue o Court also found the charge did not reflect usage of the storm water sewer system and therefore constituted a tax for the public benefit rather than a fee for services rendered 17
  18. 18. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Legal Concerns  Rate Allocation to Customers  Mint Mgmt. v. City of Richmond, 2017 Ind. App. LEXIS 66 (Ind. Ct. App. 2017) o Court of Appeals of Indiana upheld a storm water service charge imposed by the City of Richmond on all property owners regardless of whether storm water runoff from each parcel flows into the City’s storm water system o The court determined that all parcels benefit from the City’s storm water infrastructure because the storm water infrastructure included combined sewers carrying both storm water and sanitary sewer flows18
  19. 19. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Legal Concerns  Rate Allocation to Customers  City of Key W. v. Key Golf Club Homeowners’ Ass’n, 2017 Fla. App LEXIS 7804 (Fla. Dist. Ct. App. May 31, 2017) o Court of Appeals of Florida overturned a lower court order authorizing the City of Key West to recover storm water fees from a group of customers o Court initially found that storm water runoff from customer properties did not flow through the City’s storm water system and that assessing a storm water fee to such customers would shatter the distinction between a tax and a utility fee o On rehearing, the court found in favor of a voluntary fee because properties could receive an exemption if the owners improved the property to retain all storm water19
  20. 20. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Legal Concerns 20  Lessons Learned?  To minimize potential for legal challenges to storm water fees, municipalities must: o Develop equitable fee structures based on customers’ use of storm water infrastructure o Engage in extensive customer outreach campaigns to secure public support o Educate key local leaders and media outlets on the cost drivers and ultimate purpose of storm water fees
  21. 21. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com FUNDING OPPORTUNITIES FROM THE PENNSYLVANIA INFRASTRUCTURE INVESTMENT AUTHORITY a/k/a PENNVEST 21
  22. 22. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Storm Water Projects (Flow or Quantity)  Transport  Storage  Infiltration  Best Management Practices (BMPs)  Sanitary Sewer Separation  Other Techniques Source: PA Rural Water Assn. , 2017 Annual Conference, Presentation by PennVest, March, 2017 22
  23. 23. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Non-Point Source Projects (Quality)  Ag Best Management Practices (BMPs)  Urban Run-Off  Abandoned Mine Drainage  Brownfields  Greyfields Source: PA Rural Water Assn. , 2017 Annual Conference, Presentation by PennVest, March, 2017 23
  24. 24. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Green Infrastructure Projects  Installation of porous pavement, green roofs and other approaches to managing wet weather run-off  Street tree and urban forestry programs  Installation of riparian buffers and wetlands  Downspout disconnection programs to eliminate storm water from combined sewer systems  Installation of water meters  Purchase of leak detection equipment  Energy efficiency – retrofits and upgrades to pumps and treatment processes  Installation of water efficient fixtures, fittings, equipment and appliances Source: PA Rural Water Assn. , 2017 Annual Conference, Presentation by PennVest, March, 2017 24
  25. 25. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com PennVest Funded Projects  PA Environmental Council – Ohiopyle Green Infrastructure Projects  County/Municipality: Fayette/Ohiopyle Borough  Grant Amount: $1,312,718.00  Approval Date: 7/21/2009  Type: Storm Water  Description: Installation of 22,780 square feet of pervious paving, 132 gallon rain barrels, 500 and 1,200 gallon cisterns, and 3,083 linear feet of concrete curb within Ohiopyle Borough that will reduce the storm water run off impact on the Borough's sewer system 25
  26. 26. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com PennVest Funded Projects  Delaware Valley Reg PC/PHS – Multi-Municipal Water Quality & Community Enhancing Tree Planting Project  County/Municipality: Delaware/Chester City  Grant Amount: $2,020,799.40  Total Project Cost: $2,729,324.00  Approval Date: 7/20/2011  Type: Non-point source  Program: Urban run-off  Description: Planting of 3,355 trees in seven municipalities in Southeastern Pennsylvania; two of which are financially distressed. The primary project site is the City of Chester, served with an antiquated combined sewer system. 26
  27. 27. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com PennVest Funded Projects  York County Rail Trail Authority – Northern Ext. of HRTCP Phase 2 Trail & Parking Lot  County/Municipality: York/Springettsbury Township  Grant Amount: $921,656.00  Total Project Cost: $1,160,946.00  Approval Date: 4/25/2012  Type: Non-point source  Program: Urban run-off  Description: Construction of a 2.5 mile long infiltration system along the Codorus Creek and a parking lot with infiltration system in Springettsbury Township, York County 27
  28. 28. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com PennVest Funded Projects  Sellersville Borough Water Quality Enhancing Tree Planting Project  County/Municipality: Bucks/Sellersville Borough  Loan Amount: $112,031.00  Grant Amount: $112,031.00  Term of Loan: 240 months  Total Project Cost: $314,490.00  Approval Date: 4/24/2013  Type: Non-point source  Program: Urban run-off  Description: 500 trees planted at various sites in Lake Lenape Park, a 61-acre natural area along the East Branch of the Perkiomen, located in the Borough of Sellersville. The tree plantings are designed to maximize impact on erosion and sediment reduction as well as reduce storm water run-off. 28
  29. 29. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com PennVest Funded Projects  Marklesburg Fire Water Collection and Recharge Project  County/Municipality: Huntingdon/Marklesburg Borough  Grant Amount: $331,900.00  Total Project Cost: $370,050.00  Approval Date: 10/22/2014  Type: Non-point source  Program: Urban run-off  Description: Installation of a 10,000 gallon cistern, construction of 15,300 square feet of permeable pavement and necessary appurtenances. Marklesburg Fire Company is a volunteer fire company located in Marklesburg Borough, Huntingdon County. 29
  30. 30. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com PennVest Funded Projects  Philadelphia City – Green Infrastructure Tree Plantings at Philadelphia Recreation Centers  Grant Amount: $2,354,019.00  Total Project Cost: $2,354,019.00  Approval Date: 7/20/2010  Type: Non-point source  Program: Urban Run-off  Description: Planting of 2,500 trees at 39 of the City of Philadelphia's Parks and Recreation Department's recreation centers, playgrounds, and parks, and on the residential streets adjacent to them in North Philadelphia 30
  31. 31. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com PennVest Funded Projects  Erie County Conserve District - rural road storm water improvements  County/Municipality: Erie/Conneaut Township  Grant Amount: $1,191,201.00  Total Project Cost: $1,637,505.00  Approval Date: 7/21/2009  Type: Storm Water  Description: Reconstruction of 7 dirt and gravel roadways that transverses 6 municipalities in Erie County. Estimated 110,325 square yards of road will be stabilized by using full depth stabilization. Approximately 96,000 linear feet of ditch line will be stabilized in such a manner to slow down storm water runoff. 31
  32. 32. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com PennVest Funded Projects  Mt. Carmel Municipal Authority - Butternut Box Culvert Replacement  County/Municipality: Northumberland/Mount Carmel Borough  Grant Amount: $1,350,458.00  Approval Date: 7/20/2010  Type: Storm Water  Description: Replacing 420 linear feet of storm water box culvert along Butternut Street and elimination of two combined sewer overflows within the Borough of Mount Carmel. The population impacted by this project has a household median income far below the state median household income level. Currently, the Borough does not charge a user fee for the storm water system. 32
  33. 33. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Tips on Funding  Expand Partners  Borough to Partner with a Private Entity such as Wal- Mart or another big box store or warehouse to green-up roof or parking area  Funds can be awarded to private companies but help municipalities to meet MS4 requirements  Expand Geography  Rather than pay for assets on site, fund Best Management Practices upstream  Borough may not have space to employ BMPs but adjacent areas may o Forested buffers upstream o Ag BMPs upstream 33
  34. 34. © 2017 McNees Wallace & Nurick LLC www.mcneeslaw.com Questions?  Timothy Horstmann thorstmann@mcneeslaw.com  Adeolu Bakare abakare@mcneeslaw.com  Kathy Pape kpape@mcneeslaw.com 34

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