Illinois Municipal Law: Stormwater Fee Upheld by Illinois Appellate Court
By Joselyn Varghese
In recent years, municipalities have been attempting to combat higher rainfall and stormwater flooding. Many of these municipalities are having to extend and expand their stormwater management systems to account for the added moisture. However, these expansions can be costly and requires municipalities to offset such costs.
The Appellate Court of Illinois, First District recently struck down a resident’s claim that a fee assessed by the Village of Winnetka was actually a tax in relation to a stormwater system expansion project. This decision, by the Appellate Court, further defines home rule public bodies’ authority in assessing fees when it is within the bounds of improving utilities, without being challenged as an unconstitutional attempt to tax residents.
In Green v. the Village of Winnetka, the dispute arose over a 2014 ordinance regarding a stormwater management plan. The Village of Winnetka (Winnetka) had previously experienced severe flooding between 2008 to 2011, which required a possible overhaul of its stormwater system. In doing so, Winnetka would have to finance a majority of the project by issuing bonds, reflected in the fee paid by residents. The ordinance imposed the fee based upon an equivalent runoff unit (ERU) of 3,400 square feet of impervious surface area. Green made a number of arguments on the first and second appeal, most notably he argued that this fee was not proportional to use of the stormwater system because it does not account for the amount of water discharged by each property, but rather was a property tax designed to cover the debt of issued bonds.
The Court ruled in favor of Winnetka’s argument that the fee is paid pursuant to an express or implied contract with a municipality in exchange for services, property, or improvements. Additionally, the fee does not have to reflect the actual value or cost of the services, property, or improvements. The fee is also subject to an adjustment based on a reassessment and change in each property owner’s ERU.
Another Illinois Appellate Court has addressed this issue in a strikingly similar case regarding a fee assessed to property owners for their use of stormwater systems in Rock Island. The Appellate Court held that the fee was not a tax because any revenue collected would be deposited into a stormwater fund to pay for the City’s stormwater utility. Church of Peace v. City of Rock Island, 357 Ill. App. 3d. 471. The Winnetka court followed in line with the 3rd Districts ruling because both ordinances used the ERU to assess the stormwater fees and both defined impervious areas identically. Additionally, property owners who do not use the stormwater system would receive a 100% credit.
Finally, the fact that the stormwater fee revenue is spent on capital improvements and pays for the bonds issued for those improvements does not render it as a tax. The court also noted Illinois Supreme Court precedent that a fee on developed land is not a real property tax merely because it was assessed upon real property and its owners. Since Winnetka was able to establish a constitutionally reasonable relationship between the subject and object of the fee, the Appellate Court found that the fee is constitutional.