In connection with the program, NEORSD assessed fees on
every parcel within its service district. The fees were based upon the amount
of impervious surface located on each parcel. An impervious surface is one that
does not permit the absorption of fluids; typically, artificial structures such
as pavement covered by asphalt, concrete, brick and stone, as well as rooftops.
After NEORSD adopted its stormwater management program, it
filed a declaratory action in the Cuyahoga County Court of Common Pleas to
confirm its authority to establish the program and assess fees on property
owners located in its service area. The trial court affirmed NEORSD’s authority
to implement the stormwater management program and to assess fees on property
owners. Affected communities and several
large property owners appealed, and the Ohio Court of Appeals overturned the trial
court decision. Prior to the Court of
Appeals’ reversal, NEORSD had collected approximately $20 million in fees,
which it placed into escrow pending its appeal to the Ohio Supreme Court.
The Ohio Supreme Court addressed 2 issues in its decision:
(1) whether NEORSD’s stormwater management program is authorized by statute and
by its charter, and (2) whether the related fee structure is authorized by
statute and its charter. The court found both the plan and the fee structure to
be authorized by statute and NEORSD’s charter.
The answer to (1) hinged on the definition of “waste water”
which is defined in in R.C. 6119.011(K)
as “any storm water and any water containing sewage or industrial waste or
other pollutants or contaminants derived from the prior use of the water.” The appellees and the Court of Appeals
interpreted “waste water” to necessarily mean “water containing waste” and that
any storm water would only constitute “waste water” when it is combined with
sewage or pollutants. The Ohio Supreme
Court interpreted the statute more expansively to indicate that “waste water”
comes in two forms, “any storm water” and “any water containing sewage or
industrial waste or other pollutants or contaminants derived from the prior use
of the water.”
The latter interpretation, as determined by a majority of
the Ohio Supreme Court justices, is understandable from reading the text of the
statute but is much more expansive in its application than the narrower reading
held by the Court of Appeals, and will provide regional sewer districts with a
broader reach in their authority.
In determining the second issue regarding fee collection, the
Ohio Supreme Court held that while NEORSD currently does not own or operate the
various parts of the current stormwater-management system, a “water resource
project” includes facilities “that are to be acquired, constructed or operated”
by NEORSD. and therefore it may assess fees for this purpose under the
statute. The court left the door open
for future challenges if NEORSD fails to use the fees it collects to acquire,
construct or operate a facility that will be part of the regional
stormwater-management system.
Some of the justices on the Ohio Supreme Court raised
intriguing dissents regarding NEORSD’s fees as not being authorized by the
statute or being structure as a tax masquerading as a fee.
However, neither dissent won over a majority of the court’s
justices and NEORSD’s ability to assess fees under its stormwater management
plan remains intact.
Now that the Ohio Supreme Court has affirmed NEORSD’s
authority to implement the stormwater management plan and assess related fees,
NEORSD has indicated it will request that funds be released from the escrow so
it can begin implementing stormwater projects.
NEORSD further stated on its web site that it will take time to review
the court’s decision and establish a plan for reorganizing and re-implementing
its stormwater management plan before any fees are assessed against property
owners in the future.
This decision will, in the short term, only impact the 61
communities that are part of NEORSD’s service area. However, now that the authority to implement
such programs has been upheld by Ohio’s highest court, other regional sewer
districts in the State of Ohio may follow suit.
Commercial properties, health care facilities and multi-family
projects are some the properties that will be the hardest hit by this decision
as these types of projects typically have large areas of impervious surfaces.
These higher costs will likely be passed along to tenants in higher rents and
to customers/clients in higher prices or fees. It’s only money, right?
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