Commonwealth Court Weighs in About Wastewater Management

By Shannon K. McDonald, Esquire

Sometimes you hear about interesting decisions from the most unlikely sources. Well, maybe a news source isn’t unlikely to you, but I didn’t expect to be reading a summary of a Commonwealth Court opinion on Hello, West Chester. 1 After reading her description, this non-precedential opinion deciding West Chester University and West Chester Borough’s cross motions for summary relief warranted more review.

Let’s begin with the Stream Protection Fee, the “fee” at issue in this case. For those who are not West Chester Borough residents or property owners, the stream protection fee is a charge levied by the Borough on property owners and raises funds to construct, operate and maintain stormwater management facilities. The theory is that the charge is assessed on developed properties that alter the impervious surface of the land, and thus contribute to the need for stormwater management. The charge is assessed based on the amount of impervious surface the property owner has, and the charge is assessed to every property owner in the Borough.

West Chester University, in a title held by Pennsylvania through the Pennsylvania State System of Higher Education (PSSHE), apparently owns approximately 32 acres of Borough land, an area called North Campus. This 32 acres is 8% of the impervious surface in the Borough. So, obviously, the Borough, after calculating the charge at “roughly” $132,000.00, sent a bill in 2017, 2018, and 2019. The University, as a non-profit not subject to taxation, declined to pay.

At issue here is whether the Stream Protection Fee is a fee, or a tax. The Borough contended that they were calculating a fee to protect the public welfare based on the direct relationship of public health to the problems of flooding, the health and quality of a watershed and tributaries to waterways in an area. Therefore that the charge is a fee for service (the service is stormwater management) and that the charge is reasonably proportionate to the impervious surface on a parcel of land. The University contends that the fee is not merely a charge, but instead a tax, because the benefit funded is a general benefit, and that the proportionality of impervious surface is inappropriate as it is not proportionate to the cost of running the stormwater system. The University further asserted that they manage their own stormwater and runoff.

The Commonwealth Court extensively reviewed the caselaw on what defines a tax versus a fee. Luckily for us,

Continued on page 18

Continued from page 16 there is a lot of case law on it. The classic tax is “imposed by a legislature upon many, or all citizens[. It] . . . raises money, [is] contributed to a general fund, and [is] spent for the benefit of the entire community.” San Juan Cellular Tel[.] Co. v. Pub[.] Serv[.] Comm[’]n of Puerto Rico, 967 F.2d 683 (1st Cir. 1992). A tax is an “enforced contribution to provide for the support of government.”

United States v. LaFranca, 282 U.S. 568 . . . (1931). Where a charge is imposed by a state or municipality not in its capacity as a sovereign but rather under a voluntary, contractual relationship, it has been held not to be a tax.

United States v. City of Columbia, M[o.], 914 F.2d 151, 156 (8th Cir.1990). A “fee” is paid to a public agency for bestowing a benefit which is not shared by the general members of the community and is paid by choice. City of Vanceburg, K[y.] v. Fed[.] Energy Regul[.] Comm[’] n, 571 F.2d 630, 644 (D.C. Cir.1977).” p. 12 (block quotes excluded for simplicity of the article).

Basically, sums up the Court, “a charge is a tax rather than a fee for service if it is not reasonably proportional to the value or benefit received in return for its payment.” p.16. The Court came to the conclusion that the stormwater charge provided a benefit to the general public and not an individualized service to particular customers (landowners, in this case). The Court also concluded that the calculation of the charge based on impervious surface area is not derived by benefits to the payor, but instead calculated based on the burden that property owner has placed on the stormwater system. p.17. Further, the charge was determined not to be an assessment because it is not subsidizing a project of limited duration, but instead an “on-going series of evolving tasks and projects.” p.19.

The Commonwealth Court found that the Stormwater Management Fee was in fact a tax. The Commonwealth Court found that the University is immune from taxation because the state and its agencies are immune from taxation absent any statutory authority. You can read the whole opinion for yourself at the Commonwealth Court’s site, and the docket number is 260 M.D.A. 2018. The decision was entered on January 4, 2023, so we’ll know if there is any appeal from this decision by the time this article is published.

Greg Nardi The New CCBA Executive Director

and development assignments. My final assignment in the Army was with the ROTC detachment at Temple University which is how my family and I ended up in Chester County.

As my first year as the Executive Director begins, I am looking forward to working with a great staff, assisting our members, and helping to put together some outstanding events and services. It’s an honor to be able to join an organization with a rich history and proven record of success and I am eager to do my part to continue this tradition of excellence. I pass my thanks to Matt Holliday for his years of service to the CCBA and for the time and effort he provided to me to enable a smooth transition.

By the time you read this, we will have celebrated our Annual President’s Dinner and passed the gavel from Michelle Bernardo-Rudy to Brian Nagle. We are looking forward to Spring Bench Bar on April 6, 2023, the Key Gala on May 4, 2023, and The Annual Bar Sail on June 15, 2023. In addition to these featured events, our sections and committees have a full schedule of CLEs, meetings, and happy hours.

As the new guy on the block, I was asked to share a little about my background. Before spending the last four-and-a-half years with the Bucks County Bar Association, I spent 22 years in the U.S. Army. As an armor officer, I had the privilege of serving in a variety of operational assignments from platoon to company to battalion level with service in the U.S., Korea, Iraq, and Afghanistan. Additionally, I had the opportunity to serve in some strategic planning and technology research

My wife, Jennifer, and I have four children. Jon is a new Infantry Lieutenant in the Army, Lauren is a junior nursing student at Duquesne University, Jake is a freshman at the University of Alabama, and Claire is a sophomore at Great Valley High School. Outside of work and family, I work with some local Scouting organizations in Malvern – Troop 7 and Troop 77 (a Scout troop for young men with autism and other disabilities). I also work with the Malvern Memorial Cabin Foundation that helps maintain the cabin and property (corner of Monument Avenue and Sugartown Road) for use by area youth organizations. I am also involved with the Philly Chapter of the Association of the United States Army and the FourBlock program which assists Veterans in their career transition as they reestablish their careers after serving.

I look forward to meeting our members and community partners in the coming weeks and months. The staff and I are committed to serving our members, the community, and our business partners. Please email, call, or stop in to ask a question, grab some coffee, or just say hello.

The CCBA has been here for the lawyers of Chester County through over two-dozen Presidents, two World Wars, and two global pandemics. Our tradition of service to our members and the community remains the same. I am proud to do my part to continue the tradition of service to our over-1100 members.