A stormwater charge is a tax, says the court
A stormwater charge is a tax, says the court
2026-09-15 · Pennsylvania · Courts
What happened. On 30 April 2026 the Pennsylvania Supreme Court held that the Borough of West Chester's impervious-surface stormwater charge is a local tax, not a fee for service. Borough of West Chester v. Pennsylvania State System of Higher Education, No. 9 MAP 2023, opinion by Justice Brobson, is precedential.1
The two-step test
The Court set out the framework at slip op. 20. First, the capacity in which the municipality acts:
"Where the municipality is acting out of duty, for the public benefit, and in the absence of a contractual relationship, the municipality is acting in its public capacity. By contrast, where the municipality is providing a discretionary service for private emolument, and within the scope of a contractual relationship, the municipality is acting in its quasiprivate capacity."1
Then the consequence: "If the court concludes that the municipality is acting in its public capacity, then the associated charge is a tax and the inquiry ends. If the court concludes that the municipality is acting in its quasiprivate capacity, then the court must proceed to the second step… If the charge is reasonably proportional to the extent of use or the value of the service rendered, then the charge is a fee. If, however, there is no necessary or likely connection between the amount of the charge and the services rendered, then the charge is, in legal effect, a tax."
The Court declined to adopt the federal "discrete benefit" approach, noting at 20 n.14 that the dispute could be resolved through the existing Pennsylvania framework.
Why stormwater failed the test
Because the benefit is diffuse: "By its very nature, stormwater impacts all properties, not just developed properties, and the benefit received from the Borough System (in the form of the management of stormwater flowing from a particular property) is a benefit that inures to the general public more so than to the owner of the particular property from which the stormwater flowed." (at 27)
The credit-programme point, which is the one with teeth
West Chester's ordinance offered credits and an appeal route — the standard design of a Pennsylvania municipal stormwater charge, and the feature municipalities rely on to argue the charge is voluntary and service-linked. The Court rejected that framing at 29 n.25:
"Requiring property owners who became subject to a unilaterally imposed stormwater charge to seek an appeal to avoid that charge is not equivalent to the individual or entity deciding in the first instance to accept or decline a service or engage or refrain from a regulated activity."1
And the conclusion, at 31: "Stated simply, the Ordinance permits the imposition of the Stormwater Charge in invitum, 'without any regard whatever to the extent or value of the . . . [service], or whether any [service] is made.'" The final holding, at 32: "Where a municipality is duty bound to provide a service for the public benefit and in the absence of a voluntary, contractual relationship between itself and those receiving the service, the associated charge is a tax."
The limit, stated plainly, because this is where it will be misread
This decision does not exempt homeowners associations from stormwater charges. The relief ran to PASSHE and West Chester University because they are tax-immune Commonwealth instrumentalities. Classifying the charge as a tax mattered because they are immune from local taxes; it would not have mattered otherwise. A community association is an ordinary taxable entity and has no equivalent immunity. The opinion says nothing about associations.
An association that reads this and stops paying its municipal stormwater bill has made an expensive error.
What it is actually worth to an association
It is the controlling Pennsylvania authority on the fee-versus-tax line, and that line matters to associations for a reason distinct from immunity: a municipality's power to levy a tax is not the same as its power to charge a fee, and it is constrained differently.
Fees can generally be imposed under a municipality's regulatory powers. Taxes require taxing authority, and Pennsylvania municipalities operate under statutory and constitutional limits on what they may tax and at what rate, with home-rule municipalities subject to their own constraints. A charge properly characterised as a tax has to survive that analysis. That is the argument this case makes available — not immunity, but authority.
The associations with the most at stake are those holding large impervious common areas: private roads, parking courts, clubhouse roofs and lots. An impervious-surface charge scales with exactly those, which is why a covenanted subdivision's association can receive a stormwater bill substantially larger than any individual household's.
The wider stormwater picture in Pennsylvania
This ruling arrives while the regulatory machinery above it is stalled. Pennsylvania's general permit for municipal separate storm sewer systems, PAG-13, expired in March 2023 and is running on administrative extension; the Department of Environmental Protection has said it does not plan to publish the final replacement during 2026. The pressure that produces municipal stormwater charges has not eased, and the municipalities generating those charges are doing so under an expired permit.
Meanwhile the Department's own guidance tells municipalities they may count privately-owned stormwater facilities toward their permit obligations, and does not require an agreement with the private owner to do it. For a Pennsylvania association, that is the more immediate exposure: not the charge on the bill, but the maintenance obligation attaching to a basin a township is relying on.
What to watch next
Whether a Pennsylvania municipality's stormwater charge is challenged by a payer who is not tax-immune, using this framework to attack the municipality's authority to impose it as a tax. Nothing of that kind has been decided. The Court's line-up suggests the framework itself is settled — the Chief Justice and Justices Dougherty and Mundy joined the majority, with separate opinions from Justices Mundy, Wecht and McCaffery — so the argument, if it comes, will be about application rather than about the test.
Related Pennsylvania HOA Topics
Stay on top of Pennsylvania HOA law
Every week: new Pennsylvania legislation, court rulings, and regulatory developments affecting condos, planned communities, and property managers. Free.
No spam. Unsubscribe anytime.