HOUSE BILL No. 4100

 

 

January 26, 2017, Introduced by Reps. McCready, Webber, Lucido and Iden and referred to the Committee on Local Government.

 

     A bill to regulate the creation of stormwater management

 

utilities by local units of government; to regulate the adoption

 

and content of stormwater utility ordinances; to provide for the

 

allocation of the costs of planning, constructing, operating,

 

maintaining, financing, and administering a stormwater system to

 

real property served by the system; to provide for the

 

establishment and collection of stormwater utility fees; to provide

 

for the reduction or elimination of fees; to provide for appeals;

 

and to prescribe the powers and duties of certain local

 

governmental officers and entities.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 


     Sec. 1. This act shall be known and may be cited as the

 

"stormwater utility act".

 

     Sec. 2. As used in this act:

 

     (a) "Fund" means a stormwater fund established pursuant to

 

section 8.

 

     (b) "Impervious area" means a surface area that is resistant

 

to permeation by surface water.

 

     (c) "Local unit of government" or "local unit" means a city,

 

village, township, or county.

 

     (d) "Operation and maintenance costs" means all costs, direct

 

and indirect, of materials, labor, professional services,

 

utilities, and other items for the management and uninterrupted

 

operation of a stormwater system in a manner for which the

 

stormwater system was designed and constructed.

 

     (e) "Property" means real property or a parcel of real

 

property, as indicated by the context.

 

     (f) "Stormwater" means that term as defined in 40 CFR

 

122.26(b)(l3).

 

     (g) "Stormwater management" means 1 or more of the following:

 

     (i) The quantitative regulation through the stormwater system

 

of the volume and rate of stormwater runoff from property.

 

Quantitative regulation includes, but is not limited to, flood

 

control.

 

     (ii) The qualitative regulation of stormwater runoff into the

 

stormwater system or of stormwater discharged from the stormwater

 

system. Qualitative regulation includes, but is not limited to,

 

stormwater treatment, pollution prevention activities, and


administration and enforcement of ordinances to reduce, eliminate,

 

or treat pollutants carried from property into the stormwater

 

system by stormwater.

 

     (iii) Notifying property owners about the stormwater

 

management program, including, but not limited to, how to obtain a

 

reduction or elimination of fees for use of the stormwater system.

 

     (h) "Stormwater management plan" or "plan" means a plan

 

described in and adopted pursuant to section 4.

 

     (i) "Stormwater management program" means aspects of

 

stormwater management undertaken by a local unit of government.

 

     (j) "Stormwater system" means those features that are located

 

or partially located within the geographic limits of a local unit

 

of government and that are designed or actively managed by the

 

local unit for collecting, storing, treating, or conveying

 

stormwater, which may include roads, streets, highways, catch

 

basins, curbs, gutters, ditches, storm and combined sewers and

 

appurtenant features, pipes, interceptors, conduits, lakes, ponds,

 

channels, swales, storm drains, county drains, canals, creeks,

 

streams, gulches, gullies, flumes, culverts, bridges, siphons,

 

retention or detention basins, treatment, screening, or

 

disinfection facilities, dams, floodwalls, levees, pumping

 

stations, and other similar facilities, and natural watercourses.

 

     (k) "Stormwater utility fee" or "fee" means a fee provided for

 

under section 5.

 

     (l) "Stormwater utility ordinance" means an ordinance

 

described in and adopted pursuant to section 3.

 

     Sec. 3. (1) A stormwater management utility shall accomplish 1


or more of the following regulatory purposes:

 

     (a) Protect against economic loss, property damage, threats to

 

public health and safety, and damage to the environment and natural

 

resources from water pollution or from flooding or other instances

 

of high volumes or rates of stormwater runoff.

 

     (b) Enable property owners to fulfill legal obligations

 

pertaining to increases in the quantity or reduction in the quality

 

of stormwater runoff resulting from voluntary choices made in the

 

manner of development of the property, including, but not limited

 

to, obligations under section 3109 of the natural resources and

 

environmental protection act, 1994 PA 451, MCL 324.3109, the

 

natural flow doctrine, and the law of trespass and nuisance.

 

     (c) Provide property owners paying stormwater utility fees

 

with proportionate benefits described in subdivision (a). These

 

benefits include reciprocal benefits to a property owner when other

 

property owners pay fees to support the stormwater system and

 

thereby fulfill their legal obligations to that property owner

 

described in subdivision (b).

 

     (2) To create a stormwater management utility, the legislative

 

body of a local unit of government shall do both of the following:

 

     (a) Adopt a stormwater management plan by resolution.

 

     (b) Adopt a stormwater utility ordinance that is consistent

 

with the adopted stormwater management plan.

 

     Sec. 4. (1) A stormwater management plan shall include all of

 

the following:

 

     (a) The time period covered by the plan.

 

     (b) The service area of the stormwater management utility. The


service area may consist of all of the territory of the local unit

 

of government, a portion of the territory of the local unit, or all

 

or a portion of the territory of 2 or more local units that jointly

 

develop the plan.

 

     (c) The type and level of stormwater management services to be

 

provided by the stormwater management utility, including system

 

reliability, level of flood protection, pollution control, and

 

structural condition of system components.

 

     (d) Projected direct and indirect costs to provide services as

 

described in the plan pursuant to subdivision (c) for the

 

stormwater management utility, including cost of planning, capital,

 

operations, maintenance, permit compliance, and asset replacement.

 

     (e) Recommendations for efficiencies to minimize costs.

 

     (f) Current and projected impervious area and, if applicable

 

under section 7(2), an inventory of impervious surfaces and parcel

 

areas for properties within the stormwater management utility's

 

service area.

 

     (g) A determination of which properties will be subject to any

 

stormwater utility fee for voluntary use of a stormwater system

 

owned and operated by the local unit of government, as required

 

under section 10(1), and the process and method that was used to

 

make that determination.

 

     (h) The method of calculating any stormwater utility fees

 

proportionate to the cost of providing the locally determined level

 

of service of stormwater management.

 

     (i) Provisions to ensure that the cost of those elements of

 

the stormwater management program directly or indirectly related to


the amount of stormwater managed will be allocated in proportion to

 

the amount of stormwater runoff from a property conveyed by the

 

stormwater system, employing methods that are relatively accurate

 

considering available technology.

 

     (j) A description of the components of the stormwater system

 

owned and operated by the local unit of government.

 

     (k) A description of how a stormwater utility fee may be

 

reduced or eliminated as provided under section 9.

 

     (2) Before preparing a stormwater management plan, a local

 

unit of government must give notice that it intends to prepare a

 

stormwater management plan. The notice shall be given by all of the

 

following means:

 

     (a) If the local unit has a website that is accessible to the

 

public free of charge, by posting on the website.

 

     (b) By publication in a newspaper of general circulation

 

within the local unit. If there is no newspaper of general

 

circulation within the local unit, notice shall be given by first-

 

class mail to all persons to whom real property taxes are assessed

 

and to the occupants of all structures within the local unit.

 

     (c) By first-class mail to the county drain commissioner or

 

water resources commissioner and to each local unit located

 

adjacent to or located, in whole or in part, within the local unit

 

preparing the plan. The notice under this subdivision shall request

 

the recipient's cooperation in and comment on the preparation of

 

the plan, including comment on jointly managing stormwater.

 

     (3) Before adopting a stormwater management plan, a local unit

 

of government must hold at least 1 public hearing on the proposed


plan. The local unit shall give notice specifying the time, place,

 

and purpose of the hearing and the place where a copy of the

 

proposed plan is available for public inspection. The notice shall

 

be given by all of the following means:

 

     (a) If the local unit has a website that is accessible to the

 

public free of charge, by posting the notice on the website at

 

least 14 days before the hearing and maintaining the posting until

 

the time of the hearing. The posting shall include a copy of the

 

proposed plan.

 

     (b) By publication in a newspaper of general circulation

 

within the local unit. If there is no such newspaper, notice shall

 

be given by first-class mail to all persons to whom real property

 

taxes are assessed and to the occupants of all structures within

 

the local unit. If the local unit has a website that is accessible

 

to the public free of charge, the notice under this subdivision

 

shall include the website address at which a copy of the proposed

 

plan is posted under subdivision (a). The notice under this

 

subdivision shall be published or deposited in the United States

 

mail at least 14 days before the date of the hearing.

 

     (c) By first-class mail to the county drain commissioner or

 

water resources commissioner and to each local unit located

 

adjacent to or located, in whole or in part, within the local unit

 

preparing the stormwater management plan. If the local unit has a

 

website that is accessible to the public free of charge, the notice

 

under this subdivision shall include the website address at which a

 

copy of the proposed plan is posted under subdivision (a). The

 

notice under this subdivision shall be deposited in the United


States mail at least 14 days before the date of the hearing.

 

     (4) A stormwater management plan may be extended or otherwise

 

amended by resolution subject to the same procedure set forth in

 

this section for the adoption of the original plan.

 

     Sec. 5. (1) A stormwater utility ordinance shall identify the

 

regulatory purposes under section 3(1) served by the ordinance.

 

     (2) A stormwater utility ordinance may provide for a

 

stormwater utility fee on property serviced by a stormwater system

 

to pay the proportionate costs of the stormwater management

 

program. A stormwater utility fee shall not include components

 

other than as described in this section and sections 6 and 7.

 

     (3) A stormwater utility ordinance shall describe the method

 

or methods used to determine any stormwater utility fee.

 

     (4) A local unit of government may develop a corresponding

 

stormwater utility fee, calculation method, or both for each

 

stormwater management utility described in the stormwater

 

management plan.

 

     (5) A stormwater utility fee shall be proportionate to the

 

direct and indirect cost to the local unit of government of

 

providing stormwater management to each property in a stormwater

 

management utility that uses the stormwater system that is not

 

financed by revenue received by the local unit of government from

 

any other source.

 

     (6) A stormwater utility ordinance may define rate categories

 

for classes of properties for which the proportionate cost of

 

providing service is similar.

 

     Sec. 6. (1) A stormwater management utility may assess a 1-


time stormwater utility fee for connection to the stormwater system

 

of newly developed or modified property benefited by the stormwater

 

system. The purpose of the fee is to finance the capital costs to

 

the local unit of government of elements of the public stormwater

 

system needed to serve that property and not otherwise financed by

 

the property developer or by revenue received by the local unit of

 

government from any other source.

 

     (2) A stormwater utility fee under subsection (1) shall be

 

computed based on the newly developed or modified property's

 

proportionate share of the local unit of government's cost to

 

expand the stormwater system to manage the additional stormwater

 

from that property, including, if appropriate, the newly developed

 

or modified property's proportionate share of the local unit of

 

government's existing capital investment in the stormwater system.

 

This proportionate share shall be calculated consistent with the

 

method used by the local unit of government under section 7

 

considering the available data at the time of the property's

 

development or modification.

 

     Sec. 7. (1) A stormwater management utility may assess a

 

stormwater utility fee for the use of a stormwater system.

 

     (2) The method for determining a stormwater utility fee under

 

subsection (1) shall be based on the quantity or quality, or both,

 

of stormwater runoff from each property or category of property.

 

     (3) A stormwater utility fee or portion thereof charged to a

 

property for those elements of the stormwater management program

 

whose cost is attributable to the quantity of stormwater runoff

 

from each individual property or category of properties shall be


calculated, consistent with stormwater management plan provisions

 

under section 4(1)(i), using 1 or more methods generally accepted

 

by licensed professional engineers or regional or national

 

professional groups associated with stormwater experts, including,

 

but not limited to, the following methods:

 

     (a) Impervious area, based solely on the impervious area of

 

the property.

 

     (b) Equivalent residential unit or equivalent service unit,

 

based on the impervious area of the property in comparison to the

 

typical impervious area associated with single-family residential

 

properties within the service area of the stormwater management

 

utility.

 

     (c) Intensity of development, based on the total area of the

 

property multiplied by a rate category. A rate category shall apply

 

to properties with statistically similar stormwater-runoff-

 

generating characteristics. The stormwater utility fee shall be

 

proportionate to the percentage of the property's impervious area

 

to its total area.

 

     (d) Equivalent hydraulic area, calculated as follows:

 

     (i) Multiply the impervious area of the property by a

 

stormwater runoff factor.

 

     (ii) Multiply the pervious area of the property by a

 

stormwater runoff factor.

 

     (iii) Add the products under subparagraphs (i) and (ii).

 

     (e) Other billing methodologies that can be demonstrated to

 

provide an equitable distribution of costs in proportion to the

 

property's use of the stormwater system.


     (4) A stormwater utility fee or portion thereof charged to a

 

property for those elements of the stormwater management program

 

whose cost is attributable to the quality of stormwater managed and

 

is not covered by other revenue shall be proportionate to the cost

 

of those elements of the stormwater management program.

 

     Sec. 8. (1) A stormwater utility ordinance that establishes a

 

stormwater utility fee shall establish a stormwater fund. All

 

stormwater utility fees collected by the local unit of government

 

shall be deposited into the fund. The treasurer of the local unit

 

of government may receive money or other assets from any other

 

source for deposit into the fund. Money in the fund shall be

 

invested pursuant to 1943 PA 20, MCL 129.91 to 129.97a. The

 

treasurer shall credit to the fund interest and earnings from fund

 

investments. Money in the fund at the close of the fiscal year

 

shall remain in the fund and shall not lapse to the general fund of

 

the local unit.

 

     (2) The treasurer of the local unit of government shall expend

 

money from the fund, upon appropriation, only for the regulatory

 

purpose of defraying any of the following stormwater management

 

program costs:

 

     (a) Operation, maintenance, planning, engineering,

 

acquisition, construction, installation, improvement, or

 

enlargement of a stormwater system, including financing and debt

 

service costs and indirect and overhead costs that are fairly

 

chargeable to such activities under applicable generally accepted

 

accounting principles and the uniform budgeting and accounting act,

 

1968 PA 2, MCL 141.421 to 141.440a.


     (b) Administration of the stormwater management program.

 

     (c) Development of a stormwater management plan.

 

     (d) Providing user education related to the stormwater

 

management plan or required by federal or state regulations or

 

required by permits issued to the local unit of government by

 

federal or state regulatory bodies.

 

     (3) If the local unit of government has a website that is

 

accessible to the public free of charge, the local unit shall post

 

on its website the most recent audit report for the fund under the

 

uniform budgeting and accounting act, 1968 PA 2, MCL 141.421 to

 

141.440a.

 

     Sec. 9. (1) Subject to subsection (2), a stormwater utility

 

ordinance that imposes a stormwater utility fee shall provide for

 

the reduction or elimination of the stormwater utility fee for a

 

property if modifications or improvements made to the property

 

reduce the rate or volume of or eliminate runoff of or pollutant

 

loadings in excess of natural levels of stormwater entering the

 

stormwater system. The property owner has the burden of

 

demonstrating that the stormwater utility fee reduction or

 

elimination is justified, using methods that are reasonably

 

accurate considering available technology.

 

     (2) A reduction in or elimination of the stormwater utility

 

fee under subsection (1) shall be proportionate to the reduction of

 

the cost of service of the stormwater system to the property.

 

     Sec. 10. (1) To ensure that stormwater utility fees are

 

voluntary, property is not subject to a fee unless the local unit

 

of government demonstrates both of the following:


     (a) That the property utilizes the stormwater system.

 

     (b) That such utilization imposes a net cost to the stormwater

 

system when offset by any activities or conditions that reduce the

 

cost of service to the stormwater system or are reasonably related

 

to a benefit to the stormwater system provided by that property or

 

its owner, including, but not limited to, modifications or

 

improvements described in section 9(1).

 

     (2) The local unit of government shall provide the owner of

 

property initially determined to be subject to a stormwater utility

 

fee under subsection (1) with the opportunity to demonstrate that

 

the property either does not utilize the stormwater system or does

 

not utilize the stormwater system to the extent calculated by the

 

local unit of government in establishing the stormwater utility fee

 

and is therefore entitled to the elimination of or a reduction in

 

the fee. The stormwater utility ordinance shall set forth

 

procedures to implement this subsection.

 

     (3) A stormwater utility ordinance that establishes a

 

stormwater utility fee shall provide that, when additional property

 

begins to utilize the stormwater system, a stormwater utility fee,

 

as determined by the local unit of government, accrues.

 

     Sec. 11. A stormwater utility ordinance shall designate an

 

entity within the local unit of government to administer the

 

stormwater management utility and shall establish the

 

administrative duties. A stormwater utility ordinance shall

 

establish administrative policies and procedures or authorize the

 

administrator to establish the administrative policies and

 

procedures. The administrative policies and procedures shall


include at least the following topics, as applicable:

 

     (a) Criteria used to determine whether a stormwater utility

 

fee will be billed to the property owner.

 

     (b) Procedures for updating billing data based upon changes in

 

property boundaries, ownership, and stormwater runoff

 

characteristics, and stormwater runoff calculation methods.

 

     (c) Billing and payment procedures of the stormwater

 

management utility including the billing period, billing

 

methodology, credit application procedures, and penalties.

 

     (d) Policies establishing the type and manner of service that

 

will be provided by the stormwater management utility.

 

     (e) Regulations governing the resolution of stormwater

 

management disputes that arise between property owners within the

 

stormwater management utility.

 

     (f) Procedures for granting and modifying the reduction or

 

elimination of a fee, as authorized pursuant to section 9.

 

     (g) Procedures for appeals as described in section 13.

 

     (h) Enforcement policies and procedures.

 

     (i) A process by which fees, formulas for calculating fees,

 

and formulas for calculating fee reductions will be reviewed and

 

updated at least every 3 years.

 

     Sec. 12. (1) A stormwater utility ordinance shall establish

 

remedies for any unpaid stormwater utility fees as described in

 

this section.

 

     (2) A local unit of government may collect a stormwater

 

utility fee by any method authorized by law.

 

     (3) A partial payment of delinquent stormwater utility fees


shall be applied to the oldest delinquent fees, and remaining fees

 

may continue to accrue interest and penalties.

 

     Sec. 13. (1) A stormwater utility ordinance or the

 

administrative policies and procedures adopted under the ordinance

 

shall provide a procedure for appeals, the establishment of an

 

appeals board, and the reduction or elimination of any stormwater

 

utility fee. The procedure shall include at least all of the

 

following:

 

     (a) Any property owner liable for a stormwater utility fee may

 

appeal the determination that the property utilizes the stormwater

 

system or the amount of a stormwater utility fee, including a

 

determination on a reduction in or the elimination of the fee under

 

section 9. An appeal may be based on the quantity or quality of

 

stormwater runoff generated, the reductions established, the

 

reductions allocated, or any other matter relating to the

 

determination of the stormwater utility fee.

 

     (b) An appeal under subdivision (a) shall be heard by a

 

stormwater utility appeals board appointed by the local unit of

 

government. The appeals board shall consist of 3 members, 2 of whom

 

shall be licensed professional engineers not employed by the local

 

unit of government.

 

     (c) An appeal of a stormwater utility fee shall not be brought

 

more than 1 year after the fee was billed.

 

     (d) To prevail in an appeal of a stormwater utility fee, the

 

appellant must demonstrate in accordance with the requirements of

 

the stormwater management plan that the property does not use the

 

system to the extent determined by the local unit of government in


the calculation of that property's stormwater utility fee or that

 

there was a mathematical error in the calculation.

 

     (e) The sole remedy for a property owner who prevails in an

 

appeal of a stormwater utility fee is a prospective correct

 

recalculation of the stormwater utility fee.

 

     (f) If in an appeal of a stormwater utility fee a local unit

 

of government finds that the requirements of subdivision (d) have

 

not been met, that finding is conclusive until the property is

 

modified to either increase or decrease the utilization of the

 

system. The property owner remains eligible for a reduction in or

 

elimination of fees under the stormwater utility ordinance.

 

     (g) A property owner making an appeal shall provide the

 

appeals board with information necessary to make a determination.

 

     (2) A person aggrieved by a decision of the appeals board on

 

an appeal under this section may appeal to the circuit court in

 

which the property is located.

 

     Sec. 14. (1) This act does not expand existing authority of

 

local units of government.

 

     (2) This act does not limit existing authority of local units

 

of government to cooperate with respect to or jointly create and

 

operate stormwater management utilities, subject to section 3(1).

 

     Enacting section 1. This act takes effect 90 days after the

 

date it is enacted into law.