Stormwater fees mean dramatic overhead increase for many Maryland businesses

 

By Donald C. Fry

It’s called an “ERU.”

This three-letter bureaucratic acronym for “Equivalent Residential Unit,” is at the center of new stormwater remediation fees, dubbed “rain taxes” by local and national media. The new fees, in the process of being enacted by local lawmakers in nine Maryland counties and Baltimore City, are being ridiculed by some as the ultimate in Orwellian government.

The fact is, new federally-mandated taxes on stormwater runoff are being enacted not just here, but in many states, metropolitan counties and cities near bodies of water – such as the Chesapeake Bay – into which run large amounts of stormwater from impervious surfaces including roads, roofs, driveways and parking lots.

In Maryland’s case, the more paving in the Bay watershed, the more runoff is generated. The more runoff, the more polluted water drains into the Bay. It’s increasingly expensive for government to remove pollutants from stormwater. State fiscal analysts project more than $7 billion in cost during the next 12 years to clean up such pollution.

This is where the ERU comes in. The ERU is the measurement often used to calculate the new fees a resident or business will owe local government to help it pay for capital improvements to their stormwater management systems.

An ERU is the average amount of impervious surface on a property with a detached single-family home and driveway. Legislation that has either passed or is pending in the affected 10 state jurisdictions typically assess flat fees for residences, but impose fees on business property based on the calculated number of ERUs on a particular business site.

Some jurisdictions use an “IU” for “Impervious Unit” as the basic measure for determining a fee for business properties.
However the fee is calculated, most businesses occupying more than a quarter acre will find themselves paying substantially higher fees than residential property owners, according to estimates.

Annual flat fees for residences contained in local legislation enacted or proposed in Baltimore-region jurisdictions range as low as $21 for a single-family attached home in Baltimore County to a high of $144 for a large home in Baltimore City, according to recent projections provided to the Greater Baltimore Committee by private-sector experts.

Top-scale flat fees for large residences in the region are $39 in Baltimore County, $85 in Anne Arundel County, $93 for a $6,000 square-foot home in Howard County, and $125 for all homes in Harford County. Carroll County fee proposals are pending an advisory commission study.

Proposed annual fees for Baltimore-region businesses are projected to range from $610 per acre in Harford County to $2,987 per acre in Baltimore City.

With these kinds of rates, the potential for dramatically high fees imposed on companies that occupy large sites is getting the attention of many in the business community. “Are you ready for the biggest business tax increase you’ve ever seen?” asked an email alert the Maryland Motor Truck Association sent to its members.

One of the organization’s members in Baltimore City would pay an additional $300,000 per year in new business fees under the city’s proposed stormwater fee rates, the email alert reports.

Why is this happening now? The short answer from local elected officials here is: “The state government is making us do it.”

The short answer from state lawmakers is: “The federal government made us do it.”

The more detailed answer is a jargon-laden lesson in the evolvement of regulations. Each of the 10 Maryland jurisdictions – Baltimore City and Anne Arundel, Baltimore, Carroll, Charles, Frederick, Harford, Howard, Montgomery and Prince George’s counties – must enact the new stormwater remediation fees by July 1 in order to comply with legislation passed by state lawmakers in the 2012 General Assembly session.

State lawmakers passed the legislation in order to comply with new regulations the U.S. Environmental Protection Agency issued in 2010 establishing the Total Maximum Daily Load (TMDL) for the Chesapeake Bay. The TMDL quantifies the maximum amount of pollution the Bay can receive and still attain water quality standards.

In effect, the standards require Maryland to reduce the annual loads of nitrogen being received into the Bay by 22 percent and to reduce the phosphorus load by 14.9 percent.

State policies have been decreasing pollution in the Bay from agricultural and wastewater sources since 1985, but stormwater runoff has been increasing from newly developed impervious surfaces, according to legislative analysts.

The 2012 General Assembly legislation was enacted to enable the 10 jurisdictions subject to NPDES (National Pollutant Discharge Elimination) permits and MS4 (Municipal Separate Storm Sewer System) permits to raise sufficient revenue to accomplish capital improvements needed to comply with federal pollution-reduction regulations.

For instance, the anticipated new revenue needed for Baltimore City to comply with the permit regulations is estimated to be $33 million in 2014 and $44 million in 2020.

Given the circumstances, for lawmakers in the House of Delegates and the Senate of Maryland who passed the enabling legislation in 2012 by votes of 91-45 and 33-14 respectively, the bill made sense.

Nevertheless, it’s hard to fault business owners facing significant stormwater-related overhead increases in a still-recovering economy for failing to see the logic.

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