19366_Authority_August

32 The Authority │ August oliCitor s C o r n e r 1000 North Front Street, Suite 401, Wormleysburg, PA 17043 717-737-7655 . 717-737-8431 (f) . info@municipalauthorities.org Following consultation with our solicitor, the views expressed herein represent our opinion on the matter based on the information currently available to us. TO: PMAA Members FROM: Steven A. Hann, Esquire, PMAA East Solicitor DATE: May 14, 2026 SUBJECT: Stormwater Fees in Pennsylvania On April 30, 2026, the Pennsylvania Supreme Court (“Supreme Court”) issued its long-awaited decision in the matter involving stormwater fees assessed by the Borough of West Chester (“Borough”). The Supreme Court held that the stormwater charge (“Stormwater Charge”) which the Borough assessed constitutes a tax from which the challenging parties are immune. The parties challenging the Stormwater Charge were the Pennsylvania State System of Higher Education (“PASSHE”) and West Chester University of Pennsylvania of PASSHE (jointly, “Respondents”). Importantly, the Respondents are components of the Commonwealth government which are generally immune from local taxation. The Supreme Court framed the issue as “whether a charge levied by a local municipality for the purpose of managing stormwater runoff constitutes a local tax or a fee for service.” Among the arguments which the Respondents posited were that the Stormwater Charge constituted a tax because the projects it funds are designed to return a general benefit and promote the welfare of all as opposed to property-specific benefits. Conversely, the Borough argued that (1) the high cost Respondents would incur without the Borough’s system in place is proof of the reasonableness of the fee and (2) the Stormwater Charge is a fee for service based on the premise that the intent of the fee is to relieve individual owners of developed property from incurring the full cost of managing their own stormwater. In the Supreme Court’s analysis of the parties’ arguments, it noted that the issue presented is a question of benefits and analyzed Pennsylvania and federal case law on what constitutes a tax. Based upon existing precedent, the Supreme Court noted that it has developed a framework for distinguishing a fee for service from other charges under a municipality’s taxing authority. The Supreme Court remarked that when a municipality is acting in its public capacity (e.g., for the public benefit) then the charge is a tax, observing that “public services are part of the ordinary duties of a municipality [and] for the general good.” In so doing, the Supreme Court affirmed the Commonwealth Court holding that the Stormwater Charge constitutes a tax from which Respondents are immune. The Supreme Court also addressed an issue of potential interest to municipal authorities, opining that “[i]t is unassailable that the level of stormwater management needed to prevent disaster is tied to the specific characteristics of each property – and this calculus cannot be limited solely to the impervious surface area.” The Supreme Court made that comment, despite noting the Borough’s argument that the relationship between stormwater runoff and the amount of impervious surface is axiomatic and well- recognized.