Some Pa. municipalities are turning to fees to cover rising stormwater costs, but pushback and a lawsuit threaten that revenue

This story was produced by the State College regional bureau of Spotlight PA, an independent, nonpartisan newsroom dedicated to investigative and public-service journalism for Pennsylvania. Sign up for our north-central Pa. newsletter, Talk of the Town, at spotlightpa.org/newsletters/talkofthetown.

FERGUSON TOWNSHIP — A small but growing subset of Pennsylvania municipalities are turning to stormwater fees as they face the burden of maintaining aging infrastructure that is being tested by climate change.

The model is facing pushback from farmers who employ separate mitigation practices and large property owners confronted by pricey bills. The latter group includes West Chester University, which won a judgment in state court last year that found the fee was actually a tax that nonprofits like the school don’t have to pay.

Municipal entities say the case, currently on appeal to the state Supreme Court, threatens a multimillion-dollar revenue source and their ability to keep pollution out of local waterways.

The pipes, drains, and gutters that make up stormwater systems are largely invisible to most people until something goes wrong, but they are critical to prevent flooding, property damage, and pollution.

As Pennsylvania’s stormwater infrastructure — graded a “D” by the American Society of Civil Engineers in 2022 — gets older and heavy rain becomes more frequent, maintaining deteriorating pipes and drains is getting harder and more expensive.

The state doesn’t tell municipalities how to fund stormwater management, but the vast majority pay for projects out of their general budgets. However, those dollars are subject to competing demands and are unlikely to grow without an increase in local property taxes.

About 87 of the state’s more than 2,500 municipalities have instead turned to a stormwater fee, according to Andy Yencha, a water resource educator at Penn State Extension who has helped municipalities draft plans for stormwater fees.

“Right now, it’s this nice, neat stormwater fee that can only go to stormwater, and I think it’s effective,” Yencha said.

Though the state offers funding for urban and suburban stormwater projects through the Pennsylvania Infrastructure Investment Authority and other grant programs, competition for these dollars is tough.

“People have to pay one way or another because stormwater isn’t going away,” Yencha said.

The size of the bill

Stormwater requirements depend on whether a municipality is urban or rural, its size, and other factors.

Municipalities that are considered “urbanized areas” due to their population density are required to use municipal separate storm sewer systems — commonly referred to as MS4s — which collect rain or snowmelt from roadways, parking lots, and other paved surfaces and discharge it into a nearby stream or river without being treated first.

They must also develop and implement stormwater pollution reduction plans and demonstrate improvement in water quality through detection and testing. The program also outlines guidelines for public education and other efforts to promote best practices — or risk government fines.

More than 1,000 municipalities in Pennsylvania have MS4s. Rural areas commonly rely on other policies, such as land development and stormwater management plans.

All of this costs money, so municipalities have turned to fees to fund related stormwater infrastructure, watershed protections, and pollution mitigation.

Most local governments with such a fee use the amount of impervious surfaces — such as buildings and pavement — to determine how much a property owner pays. Impervious surfaces don’t allow water to absorb into the ground, resulting in more runoff and strain on stormwater infrastructure.

The typical homeowner pays about $120 each year, or $10 a month, Yencha said.

But for farmers, the approach can result in a bill totaling in the thousands because their land usually has more buildings, roof cover, and paved areas.

The Pennsylvania Farm Bureau and the state Department of Agriculture couldn’t provide a number for how many farmers are affected by these municipal fees. But the Farm Bureau, a lobbying group that represents thousands of farmers statewide, told Spotlight PA that they’ve received an uptick in calls from members concerned about these local charges and how to handle them.

“You don’t want to raise Cain because you don’t want to sound like you don’t care about the environment,” Chris Ulrich, a farmer in Lycoming County, said of the financial burden created by stormwater regulations. “But it’s a hardship.”

Fee vs. tax

Municipalities argue that stormwater fees should apply to all properties that benefit from the projects funded, even those that are exempt from taxes.

But in practice, the Pennsylvania government has refused to pay millions of dollars in fees for the properties it owns in the commonwealth.

That includes state-owned West Chester University, which sued the borough where it’s located after receiving a roughly $130,000 bill. In a lawsuit, it claimed the fee was actually a tax and therefore didn’t apply to it as a tax-exempt organization.

In January 2023, Commonwealth Court sided with the school. Stormwater assessments are a tax, the court said, because the work funded by the revenue produces a “common benefit,” as opposed to an individual one.

The case has been appealed to the state Supreme Court, and dozens of municipalities and government groups have argued in friend-of-the-court briefs that upholding the lower court’s ruling would leave them strapped for resources to meet government mandates and maintain necessary infrastructure.

If a legal decision forces municipalities to find a new way to generate revenue for stormwater infrastructure, local governments will likely turn to raising property taxes, Yencha said.

“If it goes away, there will be a little bit of chaos, but municipalities will still find the money.”

Should the high court rule against West Chester University, and compel the state and other tax-exempt organizations to pay municipal stormwater fees, Yencha said urban and suburban property owners might see some savings. But the change would likely be more helpful for farmers, he said.

The legislature could also take action to compel the state and tax-exempt organizations to pay up. State Rep. Justin Fleming (D., Dauphin) has proposed legislation to do just that, arguing that stormwater management and waterway pollution are issues shared by communities statewide.

He told Spotlight PA that he hasn’t heard opposition from lawmakers beyond arguments surrounding whether these charges count as a fee or tax.

Relieving some of the burden

In his work with municipalities, Yencha encourages elected officials to include opportunities, like credit programs, for property owners to lower their bills by implementing best practices to control rain and snowmelt on their properties.

Combining a fee with a credit acknowledges that not every property owner relies on municipal stormwater systems or contributes the same amount of runoff, he said.

When Ferguson Township in Centre County implemented its stormwater fee two years ago, the municipality included a credit program that can help residents reduce their bills by 40% if they remove impervious surfaces from their land or implement other best management practices.

Silver Spring Township in Cumberland County offers agricultural property owners a chance to lower their stormwater bills by up to 90% under its credit program.

Many farms already embrace practices that would possibly make them eligible for credits.

Managing water and soil runoff is standard in farming to prevent erosion. Conservation efforts like cover crops, buffers around fields, and no-till farming — which means someone doesn’t turn soil before planting — can help farmers stop water from running off their property into nearby storm systems or waterways.

Though the efforts serve production and profitability on farms, they also come with environmental benefits, said Jennifer Fetter, the director of Penn State Extension’s Center for Agriculture Conservation Assistance Training.

If a credit program is too broad, municipalities run the risk of missing out on funding meant to be raised through the fee.

Yencha added that it’s probably best for municipalities to engage in this work rather than wait and see if the state government develops a standardized way to calculate stormwater fees and subsequent credit programs.

“What’s interesting about these credit options is that there are similarities amongst them, but it’s everybody figuring this out on their own, which is unfortunate in a way,” Yencha said.

SUPPORT THIS JOURNALISM and help us reinvigorate local news in north-central Pennsylvania at spotlightpa.org/donate/statecollege. Spotlight PA is funded by foundations and readers like you who are committed to accountability and public-service journalism that gets results.