It Flows Downhill

By Joshua C. George

For millennia, runoff has flowed wherever Mother Nature intended. This powerful force carved the Grand Canyon in Arizona, the New River Gorge in West Virginia, and the Snake River Canyon in Idaho (which is partially famous because of Evel Knievel but that’s another story). These amazing natural places are a testament to the power of water.

In more recent human history, water has become commoditized. It is diverted, stored, managed, purified, and treated before the cycle starts all over again. It is also used for manufacturing, cooling, and processing of almost everything we use every day. In short, water surrounds us all of the time.

Our dependence on water has led to a whole host of laws, regulations, and restrictions that impact the way we use water. From safe drinking water requirements to groundwater withdrawal regulations to stormwater management, nearly everything we do with water is subject to some type of rule, policy, or procedure. And, the labyrinth of regulations continues to grow every year.

In the real estate development industry, many of us are familiar with these requirements.  Want to drill a well for a single-family residence? Pull a permit from the Township. Want to put a walking bridge across a stream channel? Get a permit from the PA Dept. of Environmental Protection (DEP). Want to add impervious area to a site? Get an NPDES permit from the Conservation District. And these three examples just scratch the surface.

Some of the recent trends in stormwater regulation involve municipally based stormwater management authorities, impervious coverage taxes (fees), watershed based TMDLs (total maximum daily load – the amount of pollutants that can be discharged into a stream to allow it to maintain its water quality standard), and MS4s (municipal separate storm sewer systems). For most of these, the regulations are relatively new and how they impact real estate development will continue to evolve in the coming years.

Why are MS4s important to us in the real estate development industry? Because the stormwater management requirements placed upon local municipalities are universally passed down to developers, builders, and residents.  In York County, for example, 35 of the county’s 72 municipalities are part of the MS4 program.  These 35 municipalities must create a stormwater management plan to minimize the impacts of runoff in six different focus areas ranging from public education to construction site runoff control.

As someone who spends their days representing development interests, I’ve seen firsthand the impacts of these MS4 requirements. In 1999, when the MS4 program was expanded to include small MS4s (the program began in 1990 but only included large cities and urban areas), places like Central PA were suddenly required to view stormwater runoff in a different light. Stormwater quality and volume controls were first introduced into municipal ordinances about this time. Then, in 2002, stormwater volume was made a part of the NPDES program and stormwater management reviews became the two-headed monster of municipality and conservation district.

Keep in mind that there are 953 small MS4s in Pennsylvania so it’s highly likely that the Township where your development project is located has to follow DEP’s requirements for MS4. Specifically, each of these small MS4s must obtain NPDES permit coverage for discharges from their storm sewer systems.

New development brings new stormwater discharges. So any township-level MS4 requirements will be passed on to the developer.  We see this today with operation and maintenance agreements, escrow accounts for long-term municipal inspection of stormwater facilities, and mandated quarterly inspections by property owners.

In March, 2018, the PA DEP general permit (PAG-13) that governs the MS4 program was updated to require many municipalities (including those in the Chesapeake Bay watershed – which includes most of Central PA) to prepare Pollutant Reduction Plans (PRP).  The goal of these PRPs is to reduce the discharge of nutrients and sediment into the Chesapeake Bay. Specifically, Chesapeake Bay PRPs must reduce their loadings of sediment, total phosphorous, and total nitrogen by 10%, 5%, and 3% respectively.  Interestingly, DEP expects that reducing the total sediment loading by 10% will achieve the reductions in phosphorous and nitrogen concurrently.

The municipal PRPs, which had to be submitted to PA DEP in September, 2017, must include baseline measurements of the pollutants in streams and the municipality’s load reduction goal for each stream. Determining the baseline requirements necessitates measurements and estimates of the pollutants coming from each watershed which varies significantly from watershed to watershed. Thereafter, determining how to reduce the pollutant loadings is where the real work begins.

In the future, real estate developers should expect to be part of the municipality’s plan. For example, municipalities may identify parcels of land that they deem ideal for a stormwater best management practice (BMP). Once identified, these parcels could be added to a municipality’s Official Map much like roadway improvements have for decades. Then, when development is proposed on that parcel, the developer will have a responsibility to work with the municipality to implement the desired BMP.  These BMPs could include riparian stream buffers (even in watersheds not designated as high-quality or exceptional value), stormwater infiltration facilities, or mandatory open space areas.

The current version of PAG-13 will expire in 2023. During the next five years, each MS4 municipality will be required to document the effectiveness of its program with hopes of avoiding the more onerous TMDL restrictions. Put simply, the PRPs and TMDLs are to the MS4 program what General and Individual permits are to the NPDES program. Meeting the goals outlined in the PRP is definitely in a municipality’s best interest.

Not all recent trends in stormwater regulation specifically target real estate development. On a broader scale, stormwater management fees can affect each property owner within a municipality. Act 62 of 2016 allows second class townships to enact fees “for the purposes of funding the construction, maintenance, and operation of storm water management facilities, systems, and management plans.” These fees may be assessed (1) on all properties in the township, (2) on all properties benefited by a specific stormwater management project, and (3) by creating a stormwater management district and assessing the fee on all properties in the district.

Locally, Derry Township was one of the first municipalities to enact a stormwater management fee. Contemporaneously, the Township shifted control of its stormwater program to the Derry Township Municipal Authority (which was permitted by Act 68 of 2013). As part of this effort, the Township identified $27 million in stormwater management needs over a 20 year period. Through a study, the Township determined that a fee of $78 per year for a typical residential property and linearly higher for commercial properties would generate the necessary funds.  However, up to 45% of this fee can be offset through implementation of specific BMPs on each property.

Despite the public discussions about regulatory reform and a reduction in the number of regulations that affect our daily lives, the regulatory environment surrounding stormwater management has only just begun.  As real estate development professionals, we experience it every day in our work. As citizens, we’re also beginning to see it at home. There’s little doubt that good water quality is critical to our needs as human beings but the lens must focus on the cost benefit relationship that these regulations place upon us. That daredevil Evel Knievel failed more than he succeeded. As those involved in real estate development, we must work closely with the regulatory agencies that surround us to ensure that we succeed far more than we fail.