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Funding Stormwater Solutions

Whether municipalities have a separate storm sewer system (MS4) or a combined system, managing stormwater can be an especially challenging and expensive issue. Communities must operate and maintain their systems, comply with regulatory requirements, and address flooding and water issues that often arise, particularly during seasons of high rainfall.

Municipalities can consider multiple options for funding their stormwater programs, including property taxes paid into their general funds.  However, many other municipal programs are supported through the community’s general fund and stormwater management may not get a large enough allocation to address the ever-increasing costs of operating and maintaining an MS4.  In addition, tax-exempt entities (governmental agencies, schools, churches, etc.) may have large impervious surfaces, such as parking lots, that generate a great deal of stormwater runoff, but these organizations do not contribute to the general fund.

Other funding options may include tap-in fees for new customers or grants specifically for stormwater management activities.  These funding methods, however, are typically one- time or time-constrained funding sources and often include a municipal funding match.  Bonds and low-interest loans like those available through the Pennsylvania Infrastructure Investment Authority (PennVEST) often will cover the design, engineering and construction of stormwater conveyance, but these loans can be very limited (i.e. only about 5% of PennVEST loans address stormwater, according to the Authority’s website.) 

In addition to being short-term funding options, sources such as tap-in fees, grants, bonds and low-interest loans are not directly linked to the stormwater impacts generated by properties and the cost of managing stormwater.

Stormwater Fee

One of the most viable options for long-term sustainable stormwater management funding is through the development of a stormwater fee, either administered through an authority or by a municipality itself. Currently only second class townships and home rule communities can establish a stormwater fee outside of an authority.  

Like other utilities—gas and electricity for example, stormwater management activities can be funded through a fee.  This type of funding solution not only provides a sustainable funding stream dedicated specifically to stormwater issues, it provides the structure for hiring a dedicated staff of stormwater experts to manage the system, it allows for long-term planning of stormwater projects and compliance strategies, and it creates a method by which equitable fees are charged according to a property’s (even tax-exempt) stormwater impact to the system.  

Calculating a Fee

There are several basic methods for calculating service fees, but the most common method used by more than 80 percent of all stormwater authorities and municipalities is called the Equivalent Residential Unit or ERU. Parcels are evaluated for the amount of impervious surface that contributes stormwater runoff into the municipal system.  To determine an ERU, a representative sample of residential properties in the municipality is evaluated to calculate the impervious footprint of a typical Single Family Residence or SFR.  This amount is called one ERU. Each residential property is generally charged one flat-rate EDU (unless that property exceeds a defined maximum impervious area; some municipalities used tiered SFR rates if they have a wide range in size of residential properties).  Non-residential properties are usually individually measured for impervious surface, which is then divided by the impervious area of a typical SFR to determine how many ERUs should be billed for the parcel.  This ensures that each property owner pays an equitable fee for stormwater management based on the property’s contribution to the stormwater system.

Local Stormwater Fees

Municipalities in Southwestern Pennsylvania have begun to either form a stormwater authority or create an ordinance allowing for the implementation of such a fee by the municipalities themselves.  If a community is interested in forming a stormwater authority, it must follow procedures outlined in the Pennsylvania Municipal Authorities Act, 53 Pa. C.S.A. 5603. Pending legislation may authorize municipalities to implement a fee without requiring the formation of an authority.  See House Bills 913-916 Summary for more information. Currently only second class townships and home rule communities can establish a stormwater fee outside of an authority.

For more information on both options, see local case studies on Borough of Dormont Stormwater Authority and Mt. Lebanon’s stormwater fee.

Additional Resources