Summary of Fees Imposed on Non-Residential Properties by Ten Maryland Counties to Fund the Watershed Protection and Restoration Program

Justine Moreau of Bowie & Jensen LLC provided the following summary of the stormwater remediation fees that ten Maryland counties are now imposing. This summary focuses on the stormwater remediation fees as they relate to non-residential property only even though residential property is also affected. The stormwater fees will be the subject of a Commercial Real Estate Discussion Group lunch on September 10, 2013. For more information click here.

In 2012, the Maryland General Assembly passed stormwater management legislation (HB 987, Laws of Maryland Chapter 151) requiring ten of its jurisdictions to implement local legislation necessary to establish and fund a Watershed Protection and Restoration Program by July 1, 2013. These jurisdictions were targeted by the legislation because they are part of the Chesapeake Bay watershed and are subject to NPDES Phase 1 MS4 permits. The various methods chosen by each jurisdiction to pay for this unfunded State mandate have become major points of interest to the business community. Additionally problematic is the fact that the General Assembly exempted all property owned by State or local jurisdictions, despite the federal government’s agreement to pay its fair share for federally owned property.

Over 2000 jurisdictions in the United States have imposed fees or taxes called “stormwater remediation fees,” “drainage taxes” or “rain taxes.” Stormwater fees and taxes have been assessed on the property of residents and businesses alike to finance local stormwater management plans which will reduce the quantity and improve the quality of stormwater discharged from those properties. Often the assessed fee is based upon the amount of “impervious surface” on the property.

In Maryland the total fee for residential properties is established as a flat fee while non-residential properties (which bear the large majority of the fee) pay fees that depend on how a jurisdiction interprets four main factors:

(1) Its definition of “impervious surface”;

(2) The size of the unit that the county designates to be taxed (often referred to as an ERU or “equivalent residential unit”);

(3) The charge per ERU; and

(4) The credits available to reduce the fee, often offered for best management practices.

In addition, the stormwater remediation budget adopted by each county may vary widely from the other counties’ budgets. Often there is no line item accountability in a county’s budget and little transparency as to the expected projects to be funded. Naturally, those jurisdictions with outsized fees are the same ones which have outsized budgets. On close examination, these oversized budgets reveal a disturbing movement of general fund items into the stormwater remediation fee budget, thus swelling the cost to non-residential properties more than ever.

The ten Maryland jurisdictions subject to the State legislation include the counties of Anne Arundel, Baltimore, Carroll, Charles, Frederick, Harford, Howard, Montgomery, Prince George’s and Baltimore City. Each county has wide autonomy to implement HB 987 and, as such, the execution of the State law varies widely by county. For example, the Carroll County Commissioners decided not to assess fees against any Carroll County properties and resolved to find other sources of revenue within its budget to meet the standards. Baltimore City, by contrast, has imposed one of the highest fees in the State for non-residential properties, charging $15 per ERU of impervious surface per quarter (1,050 square feet) or $2,490 per acre per year. These disparities in fees charged raise concerns about jobs and businesses moving outside the highly assessed jurisdictions. Furthermore, since the State and local governments are not required to pay the fees, the uneven treatment greatly disadvantages private sector industry in situations where State owned property may be directly competitive with privately owned land, such as the Port, educational and health facilities.

The information for each of the ten Maryland counties in the context of non-residential properties is:

Anne Arundel: ERU 2,940 SF $85/ERU/year $1,260/acre/year

Baltimore City: ERU 1,050 $15/ERU/quarter $2,490/acre/year

Baltimore County: ERU 2,000 SF $69/ERU/year $1,503/acre/year

Carroll County: By Resolution decided not to impose a fee on Carroll County Properties

Charles County: $43 flat rate per parcel (no ERU system)

Frederick County: $0.01 rate per parcel (no ERU system)

Harford County: ERU 500 SF $0.70/ERU/year $61.00/acre/year

Howard County: ERU 500SF $15.00/ERU/year $1,307/acre/year

Montgomery County: ERU 2,406 SF $88.40/ERU/year $1,600/acre/year

Prince George’s County: ESU (“Equivalent Surface Unit”) 2,465 SF $20.90/ESU/year plus flat fee of $20.58 per parcel; $390/acre/year

The rates above are the current rates for year 2013-14. Some jurisdictions, such as Harford County imposed a phase-in fee structure, in which the cost will rise significantly in future years. With the exception of Baltimore City, which will bill the fee quarterly on the water bills, all of the other stormwater remediation fees will appear as a line item on the real property tax bill for that given parcel.

Most jurisdictions use GIS mapping data from 2011 to designate surfaces as “impervious”. The aerial photographs from the GIS data are reviewed for surfaces that appear to be impervious, such as buildings, roads, etc. Boundaries are then hand-drawn around each structure and the fee is calculated per square foot of such surfaces. This process is problematic for two main reasons: (1) the data is over two years old; and (2) it is impossible to discern the composition of some structures from these photos. For example, a dirt road may be incorrectly designated as a gravel road, and depending on the jurisdiction’s definition of impervious, become incorrectly subject to the fee.

There are helpful websites in many counties with further explanations of the fee, and most allow for viewing of the tax bills as well as the GIS maps used to determine the fee. Additionally, because this program is so new, counties are continuing to change legislation in order to accommodate public concern and needs. Each county sets forth an appeal process and an appeal deadline as well as potential reductions in the fee for specific best management practices. Therefore, it is imperative for property owners to review this information promptly and to note possible areas for appeal of the assessments as well as recent changes to the law.

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