Opinion | Stormwater — the forgotten infrastructure

As currently structured, there is simply not enough money to meet the needs of our aging stormwater systems. A recent court ruling could change that.

Unlike drinking and wastewater systems, there is no designated source of funding for stormwater repairs and upgrades. Stormwater utilities, or fees providing a dedicated source of municipal revenue for stormwater system maintenance and upgrades, are part of the solution, but to date, cities have been hesitant to establish these utilities for fear of lawsuits. 

The City of Ann Arbor is one of a small number of municipalities in Michigan that has an established stormwater utility. One such lawsuit was brought against the city in 2021 questioning the legality of the utility. 

In October, the Michigan Court of Appeals ruled in favor of the City of Ann Arbor, denying the plaintiff's claim that their utility is a tax. This is a significant win in Ann Arbor’s battle to maintain funding for stormwater systems.

The longstanding question of whether stormwater utilities are a fee or a tax date back to a 1998 Michigan Supreme Court ruling (Bolt vs. City of Lansing) that deemed Lansing’s stormwater utility was in violation of the Headlee Amendment, which requires voter approval of any new tax. That decision opened the door to additional lawsuits in Jackson, Royal Oak, Birmingham, and Ferndale that cost those municipalities millions of dollars in ratepayer reimbursements. The new Platt v. City of Ann Arbor ruling is an important step toward affirming the legality of a stormwater utility. 

Michigan’s stormwater infrastructure has been given a “D” by the American Society of Civil Engineers’ 2023 report card. A “D” grade means the infrastructure is in poor condition and at risk of failure. Stormwater infrastructure, which includes curbs, gutters, pipes and some treatment structures like storage ponds, infiltration features, and filtration, is necessary to capture and convey runoff from rainstorms so it doesn’t flood properties. Most municipalities fund stormwater infrastructure and its upkeep with general funds from property taxes. But, parts of these systems are more than 100 years old and budgets are not sufficient for proper maintenance and improvements. A utility provides specific stormwater system funding that can only be used directly on the system. 

The Michigan Legislature must also pass Senate Bill 660, which authorizes local governments to create stormwater utilities and provides a clear legal roadmap for their adoption.

The Huron River Watershed Council’s Andrea Paine provided testimony in support of Senate Bill 660 this summer. “The bill empowers local governments to develop their own funding mechanism for repairing or replacing outdated stormwater infrastructure and constructing new stormwater systems, reduces the legal and financial risks of forming a stormwater utility and allows for broader adoption of utilities across Michigan. More stormwater utilities in Michigan would improve water quality and reduce flooding.” SB660 would help Michigan municipalities avoid costly and time-consuming lawsuits like that in Ann Arbor. 

Michigan is the Great Lakes State. Our rivers and lakes provide drinking water, recreation and wildlife habitat. We must address our failing water infrastructure if we are to protect and restore these resources. Paving a legal path for stormwater utilities in Michigan is a key strategy necessary to achieve this goal.