Formation of a Stormwater Authority
On July 9, 2013, Governor Tom Corbett signed into law Act 68, which amended the Pennsylvania Municipalities Authorities Act (the “Act”) to allow local governments in Pennsylvania to form stormwater authorities. Specifically, Act 68 amended 53 P.S. § 5607, adding “stormwater management planning and projects” as purpose and power for which a municipal authority may be incorporated.
Since the passage of Act 68, stormwater authorities have gained traction in large part because of upcoming changes to the requirements of the Municipal Separate Storm Sewer (MS4) Program, which has been administered by the Pennsylvania Department of Environmental Protection (DEP) since 2003. When first implemented, the MS4 Program focused on the development of programs to facilitate voluntary reductions in stormwater discharges, not specific pollution reduction targets for municipalities. Currently, MS4s are only required to meet specific pollution targets when the MS4 is located in a watershed that discharges to an impaired body of water with a Total Maximum Daily Load (TMDL) Designation. Although there are thousands of miles of impaired waterways in Pennsylvania, only a portion of them have been assigned the TMDL Designation. As a result, compliance costs have been relatively minimal for municipalities to date.
However, changes are on the horizon. DEP has proposed modifications to the MS4 Program, which would expand its scope. These revisions will require all municipalities subject to the MS4 Program, which are located in watersheds that discharge into impaired waterways, even where no TMDL Designation exists, to meet specific pollutant load reduction targets. These changes to the MS4 Program are currently scheduled to go into effect in March 2018. In order to meet these more stringent requirements, many municipalities will need to upgrade their stormwater facilities.
Therefore, municipalities must determine the best way to finance these necessary improvements. One prominent option is the formation of a stormwater authority, as authorized by the 2013 changes to the Act. There are many advantages to the formation of a stormwater authority over a municipality simply charging a new “stormwater tax,” as is now permitted by the Second Class Township Code. Since municipal authorities in Pennsylvania charge a fee and not a tax, the fee is assessed to all property owners in the municipality, including those which are tax exempt. This helps spread the burden of the required improvements to stormwater facilities among as many individuals and entities as possible, and takes into account that tax-exempt properties, such as churches and government buildings, are often some of the largest contributors to stormwater runoff. If a municipality already has an existing authority, the authority may also have increased borrowing power as compared to the municipality, which in turn allows for a more complete and expedient transition to the stormwater facilities necessary to comply with the new MS4 Program.
There are three main steps that must be taken in order to form a stormwater authority:
- Identify All Stormwater Facilities and the Work to Be Done: This can be especially challenging, especially where stormwater facilities were originally built many decades ago, but it is imperative to identify not only those facilities in the public right-of-way, but also those that are on private property and connect to the stormwater system. It is only through this inventory of existing facilities that the municipality’s engineer can begin to devise a plan to upgrade the stormwater system to the necessary level. Once that plan is laid out, the engineer will make a determination regarding how much each property will pay in stormwater fees. This fee is based on the number of Equivalent Residential Units (ERUs) which are assigned to each property and the cost of each ERU.
- Transfer of Power to Regulate and/or Ownership of Stormwater System: The municipality must make a determination about how it would like the newly formed authority to operate. The municipality can maintain ownership of the facilities and lease the system to the authority for operation, maintenance, and setting of rates and charges, or transfer ownership of the stormwater system completely to the authority and give it the power over all aspects of the system. However, the municipality will remain the entity responsible for any non-compliance with its MS4 Program requirements in all cases.
- Acceptance of Operating Power by Newly Formed Authority: The newly formed authority must formally accept this grant of authority and/or ownership of the stormwater system. The authority must file its Articles of Incorporation (if it is a new authority) or amend its Articles (if stormwater is being added to the powers of an existing authority), and draft rules and regulations that will govern the implementation of the stormwater fee and the use of the stormwater system.
The process to form a stormwater authority is complicated and must be followed precisely. CGA Law Firm has recent, relevant experience in this area. If you have any questions regarding the formation of a stormwater authority in your municipality, please contact a member of the CGA Municipal Group at (717) 848-4900.
This article was included in the December 2017 edition of CGA Law Firm's Municipal Newsletter.