Stormwater Utility

Stormwater Utilities in Michigan – Part 2

Written and researched by Brandon Hunt

What is the Stormwater Utility Act, what does it aim to do?

House Bill 5991, also known as the Stormwater Utility Act, was introduced to the House by Representative Michael McCready in October of 2016. It aims to address existing stormwater utility implementation law in the state, which restricts a city’s ability to adopt stormwater utilities. The ‘Stormwater Utility Act’ describes the regulatory purposes and criteria for the operation of a stormwater utility. If HB 5991 is passed, it would allow local governments to adopt stormwater utility ordinances and create stormwater management utilities to more effectively and efficiently manage and fund their stormwater infrastructure.

HB 5991 effectively addresses the shortfalls that the City of Lansing faced with implementation of its stormwater utility, as described in the Michigan Supreme Court’s 1998 Bolt decision. In Bolt v. City of Lansing, the court ruled that a stormwater service charge imposed by Lansing was unconstitutional and void on the basis that it was not a valid use fee but a tax, for which voter approval was required. The Bolt court established three criteria for distinguishing between a fee and a tax: 1) the fee must serve a regulatory purpose, 2) a user fee must be proportionate to the necessary costs, and 3) a user fee must be voluntary—property owners must be able to refuse or limit their use of the commodity or service. Lansing’s stormwater utility fee was found to be a “tax in disguise” and unconstitutional.

In 2011, the City of Jackson adopted an ordinance which established stormwater utility fee to raise funds for stormwater management. The Michigan Court of Appeals ruled this stormwater fee was also an illegal tax, and it violated all three of the Bolt case criteria. The utility fee issued 1) did not serve a regulatory purpose, 2) was not proportionate to the necessary costs, and 3) was “effectively compulsory”, and did not allow property owners to opt out of it. It also found that it violated section 31 of the Headlee Amendment in the Michigan Constitution because it had not been subject to a public vote and was repealed.

In both of these cases, Lansing and Jackson failed to recognize how their ‘fee’ was administered in the adoption of a stormwater utility fee. This is where House Bill 5991 provides cities with the criteria on how they can begin to implement stormwater utility fees without violating the law.

Where has a stormwater utility worked?

There are currently a handful of cities in Michigan which have successfully adopted a stormwater utility, including Marquette, Berkley, New Baltimore, and Ann Arbor. Nationally, there are over 1,400 cities that have adopted a stormwater utility, including major cities like Philadelphia, Portland, and Minneapolis.

For example, in Ann Arbor, a stormwater utility has been successfully implemented since 1984. Their Stormwater Incentive Program has a tiered residential quarterly fee system, based on impervious surface square footage (driveways, roofs, patios), and a flat quarterly charge for all other properties per acre. Residential property owners can “opt out” of a portion of their fee in three ways: 1) installing rain barrels to capture roof runoff; 2) implementation of a rain garden, cistern, or drywell; and 3) participating in the Washtenaw County RiverSafe Home program. Commercial property owners can opt out of their stormwater fees by: 1) participating in the Community Partners for Clean Streams program; 2) installing a stormwater management system that reduces discharge rate by 29.5%; and 3) implementation of best management practices for stormwater management such as retention ponds, green roofing, or created wetlands.

Ann Arbor provides property owners the opportunity to mitigate their fee payments while simultaneously reducing their strain on the stormwater system. Funds generated from the utility fees go towards necessary maintenance, new projects which reduce stormwater runoff, and ongoing data collection to ensure the stormwater system and utility fees are as up-to-date as possible.

How do we move forward?

West Michigan, with such proximity to our namesake lake, has a responsibility to protect its freshwater resources. While there are no plans currently in place to move forward with a Stormwater Utility in the region, we still see limitations in local communities’ ability to implement stormwater green infrastructure in West Michigan. While this issue has been controversial in the past, WMEAC supports House Bill 5991, which would allow West Michigan communities the flexibility and autonomy they need to address stormwater issues in a multi-faceted and municipally-approved manner that can be tailored to the requirements of each locale.

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