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Home My Public Portal About724762MSD stormwater fee gets supreme legal test By Jeff Tomich St. Louis Post-Dispatch May 18, 2013 It’s seven steps from Ron Cox’s patio door to the back of his lot, abutting Fishpot Creek. The walk used to be longer. That was before erosion washed away a third of his back yard, trees and a fence. Left behind was a 25-foot cliff overlooking the creek — a cliff that inched closer to his back door every time the creek swelled from heavy rain. Luckily for Cox, the Metropolitan St. Louis Sewer District spent $1 million to rebuild the creek bank and stabilize it with tons of rock to prevent further erosion. The initial work was completed in 2008 just before the remnants of Hurricane Ike turned Fishpot Creek into a raging river. MSD officials point to Fishpot Creek as an example of the kind of project needed to address stormwater runoff across its 525-square-mile service area. But it’s also the kind of project it can no longer afford, particularly west of Interstate 270, after a circuit court ruling in 2010 stripped it of its ability to charge a stormwater fee based on the amount of impervious area on properties. The so-called impervious fee was initially set at 12 cents per 100 square feet of rooftop, driveway, patio or other impervious area on each parcel, or about $3 a month for the typical residential customer. The fee would be gradually increased over seven years to 29 cents, or $7.25 a month. But only months after it was implemented, the stormwater charge was challenged in a lawsuit by William Zweig, a doctor from Chesterfield. Two other residents later joined as plaintiffs. The court agreed with their argument that the fee was actually a tax and that it violated the Hancock Amendment to Missouri’s constitution because MSD didn’t get voter approval. An appellate court upheld the ruling 2-1 last year but agreed with the lower court that MSD didn’t have to refund $90 million it had already collected. MSD goes back to court — the state’s highest court — on Tuesday in a last-ditch effort to save the stormwater fee, which it says is critical to address a growing backlog of erosion, flooding and water- quality problems. “MSD is willing, it’s in our charter, to be responsible for these issues,” said Brian Hoelscher, MSD’s executive director. “But you can’t be responsible unless you get the funding to be responsible.” Richard Hardcastle, Zweig’s attorney, said MSD was simply arguing its case to the wrong party. The issue, he said, isn’t whether there are stormwater problems to be addressed, or how much money is needed to solve them. It is how the money is raised. MSD may very well have stormwater needs, he said. But make that case to the voters and have them approve it instead of making the case to the judge. A TOUGH SELL If MSD loses again, it will have to do just that. It would mean we d need to vote and we would be going back to our stakeholders and back to our rate commission setting up a way to vote on this, Hoelscher said. No tax is popular. But a stormwater tax in particular would be a tough sell given the stagnant economy and sharp increases in sewer rates required to fund $4.7 billion in sewer improvements over the next two decades, he said. The nature of stormwater problems also makes it challenging to get a tax passed. Though everyone contributes to runoff, few are seriously affected. While it might not be obvious to everyone, stormwater runoff, or urban runoff, contributes to a laundry list of problems. Eroding creek banks eat away backyards; the lack of storm sewers or other infrastructure in areas such as Cool Valley and Lemay contribute to flooded streets, yards and basements. Rainwater and melting snow also carry sediment, pet waste and chemicals from roads, parking lots and lawns into streams, creeks and ditches. Stormwater is a huge problem, and it impacts water quality in a huge way, said Karla Wilson, manager of the Deer Creek Watershed Alliance, an initiative organized to help clean up the central county watershed. Segments of virtually all St. Louis-area creeks and rivers are already considered impaired by state and federal regulators for reasons such as excessive levels of bacteria or too little dissolved oxygen necessary to support aquatic life. Rejection of the stormwater fee meant MSD had to go back to its former funding sources a hodgepodge of different taxes put in place before the Hancock Amendment was enacted in 1980. There is also a flat fee of 24 cents per month implemented in 1988. Together, the fee and taxes raise about $26 million a year. That s about $60 million less than MSD says it needs to address an estimated $1 billion backlog of stormwater work. And that list is growing by the week. Right now, the level or lack of stormwater services you receive depends on where you live. MSD can meet regulatory requirements related to stormwater across its service area. The district can pay for maintenance of pipes, manholes, concrete channels and keep inlets free of tree limbs and debris in the city and central county where it collects more tax revenue. In parts of the county inside of I-270, it even has enough funding for a few capital projects over the next few years, such as a controversial $1 million creek bank stabilization project in Des Peres. But west of I-270, where residents pay only a 1.8-cent tax, it can’t afford even that. And any type of capital investment in new stormwater sewers to alleviate flooding or repair eroding creek banks? Forget it, Hoelscher said. “If somebody calls with a backyard erosion problem, we’ll send an engineer out and say, ‘Yes, we see it’s there.’ We’ll record the issue, and we’ll try to provide whatever advice we can,” he said. “Right now, in that area, we can’t do anything for you.” As time goes on, without an increase in funding, MSD says it will be harder to afford even basic maintenance in the city of St. Louis and parts of north St. Louis County. And “we’ll probably have trouble meeting our regulatory permit requirements,” Hoelscher said. FAIREST SOLUTION The funding solution deemed the fairest by MSD was a stormwater user charge based on impervious area. In fact, such a rate structure is the industry standard for stormwater utilities elsewhere in the country, according to a court brief filed on MSD’s behalf by the National Association of Clean Water Agencies. The impervious fee would raise $82 million annually by 2014 — an amount that MSD officials saw as striking a balance between affordability and need. There were exemptions for property owners with no improvements on their land. And properties that drained directly into a large river received a 50 percent discount. Hoelscher said the charge was seen as easy to understand and equitable. Right now, tax-exempt entities such as churches, hospitals, universities and city halls pay for other utility services. But when it comes to stormwater services, they pay only the 24-cent fee. And given years of very similar legal wrangling in the 1990s over how to charge customers for wastewater service, MSD officials suspected they might face a legal challenge on the stormwater fee. So rather than basing the charge on the size of the property, the district used aerial photography to map and measure impervious surface areas on individual properties to the nearest 100 square feet and tailored individualized bills. “We thought it was important to do that because of the history here and because of the Hancock Amendment,” Hoelscher said. “That’s why we thought we were good.” But Zweig’s attorneys say the lower courts got it right. MSD’s stormwater fee isn’t a user fee at all, just “an expedient way to apportion costs.” They say there’s no direct relationship between the amount of driveway or patio on someone’s property and the amount of stormwater “service” that MSD provides that customer. Ultimately, the Missouri Supreme Court will decide if MSD’s assumption was correct. So far, two courts have disagreed. Back in Ballwin, Cox still follows the legal fight over stormwater funding, but from a distance. He no longer worries about creek bank erosion — an issue that consumed him for several years. He wonders if his home would even be standing today if he and his neighbors hadn’t persuaded MSD to take action. Or if MSD hadn’t had the money for the project. “I was very fortunate,” he said. Stormwater fee timeline A brief timeline of events leading up to Tuesday's scheduled argument before the Missouri Supreme Court: March 2008 • MSD begins charging stormwater fee of 12 cents per 100 square feet impervious surface. July 18, 2008 • William Zweig sues MSD, claiming stormwater fee is actually a tax and violates Hancock Amendment. Two more plaintiffs are added in 2009. July 9, 2010 • Circuit Court judge rules against MSD. The court later decides MSD isn't required to refund $90 million already collected. March 27, 2012 • Appeals court upholds lower court ruling by a 2-1 vote.