Can a Minnesota city charge property owners a monthly storm sewer utility fee based on impervious surface and rainfall runoff, rather than levying a special assessment?

Plain-English summary

The City of Delano adopted a Storm Water Utility Ordinance under Minn. Stat. § 444.075. The ordinance funded the city's storm water system through a monthly utility charge on improved property, exempting public rights-of-way, vacant unimproved land with adequate ground cover, and city-owned land. A consulting engineer built a formula keyed to rainfall, soil type, and percentage of impervious surface. The result, combined with the system's financial needs, produced a per-parcel charge. A standard single-family residential lot, for example, was billed $2.00 per month, added to the property's water and utility bill.

Delano City Attorney Mark J. Johnson asked the AG whether this fee structure was lawful. The AG answered yes, subject to qualifications.

Section 444.075 authorizes municipalities to construct and maintain waterworks and sewage systems, including storm sewers. Subdivision 3 specifically authorizes "reasonable charges" for use and availability, and says sewer charges may be fixed "by reference to the quantity, pollution qualities and difficulty of disposal of sewage and storm water produced, or on any other equitable basis." The AG read this provision as direct authority for a per-parcel fee tied to runoff contribution.

The opinion distinguished special assessments from utility charges. Earlier AG opinions (Ops. Atty. Gen. 206a, August 28, 1978 and August 22, 1979) had expressed caution about special assessments for drainage improvements where the assessment was not keyed to special benefit, though the 1979 opinion left the door open to assessments based on a parcel's contribution to the problem. The 1993 opinion went further, leaning on Minnesota Supreme Court decisions in Nordgren v. City of Maplewood, 326 N.W.2d 640 (Minn. 1982), and Crown Cork & Seal Co. v. City of Lakeville, 313 N.W.2d 196 (Minn. 1981). Those cases held that the "special benefit" requirement governs special assessments under § 444.075, subd. 4, but does not govern separately authorized service charges under subdivision 3. A subdivision-3 charge needs only to be "just and equitable."

The AG declined to rule on whether Delano's specific formula was reasonable as applied to particular parcels. Reasonableness in application is a question of fact outside the AG's opinion function (citing Op. Atty. Gen. 629a, May 9, 1975). The AG noted, however, that municipal rates and charges enjoy a presumption of reasonableness, with the burden falling on the party challenging the charge, and that a charge built on an engineering runoff study was unlikely to be found unreasonable.

Currency note

This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical context: what the AG concluded

The opinion drew the line between two different mechanisms that look similar in everyday use but operate under different legal rules.

A special assessment under Minn. Stat. § 444.075, subd. 4 requires "special benefit" to the assessed property. The Minnesota Supreme Court in Crown Cork & Seal had said lack of benefit was material under that subdivision. AG opinions in 1978 and 1979 had warned cities about drainage assessments that did not match special benefit to specific parcels.

A service charge under § 444.075, subd. 3 needs only to be reasonable. The Minnesota Supreme Court in Nordgren upheld substantial connection charges against properties that had been found not to be specially benefited by the improvement. The Court read subdivisions 3 and 4 as separately authorized, with different standards, so a charge could stand even when the same property could not have been assessed for special benefit. Nordgren, 326 N.W.2d at 642.

The opinion noted that § 444.075, subd. 3 expressly authorizes sewer charges based on "the quantity, pollution qualities and difficulty of disposal of sewage and storm water produced, or on any other equitable basis." That phrase directly contemplated formulas like the one Delano had built, where a parcel's contribution to runoff drives the charge.

The AG also pointed to authority from other states for the proposition that storm water utility charges are presumed reasonable and that the challenger bears the burden. State of Iowa v. City of Iowa City, 490 N.W.2d 825 (Iowa 1992), and County of Oakland v. City of Detroit, 265 N.W.2d 130 (Mich. App. 1978), both upheld municipal water and storm water charging schemes. The opinion also cited Grace Episcopal Church v. City of Madison, 385 N.W.2d 200 (Wis. App. 1986), without elaboration.

The opinion left the reasonableness of Delano's specific formula as a factual question. Whether $2.00 per residential parcel was just and equitable, whether the exemptions for public rights-of-way and unimproved land with sufficient ground cover were defensible, and whether the formula handled atypical properties fairly were all open questions, subject to challenge in litigation.

The opinion was signed by Assistant Attorney General Kenneth E. Raschke Jr. on behalf of AG Hubert H. Humphrey III.

Common questions

Q: What is the difference between a storm sewer service charge and a special assessment for drainage?
A: A service charge under § 444.075, subd. 3 is a periodic utility-style fee for use and availability of the system, billed monthly or quarterly, and needs only to be reasonable. A special assessment under subd. 4 is a one-time charge tied to a specific improvement and requires that the property be specially benefited by the improvement.

Q: Does the storm sewer charge have to be based on actual measured runoff for each parcel?
A: No. The statute authorizes a charge based on the quantity, pollution qualities, and difficulty of disposal of storm water produced, "or on any other equitable basis." A formula keyed to impervious surface, soil type, and rainfall data is a reasonable proxy for runoff contribution.

Q: Can a city exempt some property categories from the charge?
A: The Delano ordinance exempted public rights-of-way, vacant land with sufficient ground cover, and city-owned land. The AG opinion did not strike those exemptions down. Categories that contribute little or no runoff are plausibly outside the statutory rationale for the charge.

Q: Can a property owner challenge the charge as unreasonable?
A: Yes, but the owner bears the burden of proving unreasonableness. The AG observed that a charge built on an engineering study is unlikely to be overturned. The 1992 Iowa Supreme Court decision in City of Iowa City was offered as a recent example.

Q: Did the AG approve the specific $2.00 residential charge?
A: No. The opinion expressly declined to rule on the specific formula's reasonableness as applied to particular parcels, calling that a fact question outside the AG opinion function.

Q: What did the earlier 1978 and 1979 opinions on drainage assessments say?
A: Ops. Atty. Gen. 206a (August 28, 1978 and August 22, 1979) had cautioned cities about drainage special assessments not tied to special benefit. The 1979 opinion suggested that special assessments might be justified by a parcel's contribution to the problem. The 1993 opinion read the later Minnesota Supreme Court decisions in Nordgren and Crown Cork & Seal to permit broader use of service charges, separate from special assessments.

Q: Could a city impose both a service charge under subd. 3 and a special assessment under subd. 4 on the same parcel?
A: Nordgren held that connection charges under subd. 3 could be imposed in addition to or notwithstanding special assessments under subd. 4. The two mechanisms are not mutually exclusive.

Background and statutory framework

Minn. Stat. § 444.075 governs municipal water, sewer, and storm sewer systems. The relevant subdivisions in 1993 were:

• Subdivision 1. General authority to acquire, construct, improve, and operate the systems.
• Subdivision 3. Authority to impose "reasonable charges" for use and availability. Sewer charges may be fixed by reference to water consumption, type of premises, or the quantity, pollution qualities, and difficulty of disposal of sewage and storm water produced, or on any other equitable basis.
• Subdivision 4. Authority to levy special assessments for system improvements. Subject to the "special benefit" requirement that governs special assessments generally.

The Minnesota Supreme Court's interpretation of these subdivisions developed in two key cases:

• Crown Cork & Seal Co. v. City of Lakeville, 313 N.W.2d 196 (Minn. 1981), held that lack of special benefit was material in evaluating a special assessment under subdivision 4. It did not, however, require the same benefit analysis for charges under subdivision 3.
• Nordgren v. City of Maplewood, 326 N.W.2d 640 (Minn. 1982), upheld substantial connection charges against properties that had been found not specially benefited, on the rationale that subdivision 3 charges are separately authorized and require only that the charge be "just and equitable."

Authority from other states reinforced the same principle. State of Iowa v. City of Iowa City and County of Oakland v. City of Detroit both stood for the proposition that municipal rates and charges enjoy a presumption of reasonableness.

Citations and references

Statutes:
- Minn. Stat. § 444.075 (municipal water, sewer, and storm sewer systems)
- Minn. Stat. § 444.075, subd. 3 (service charges)
- Minn. Stat. § 444.075, subd. 4 (special assessments)

Cases:
- Nordgren v. City of Maplewood, 326 N.W.2d 640 (Minn. 1982)
- Crown Cork & Seal Co. v. City of Lakeville, 313 N.W.2d 196 (Minn. 1981)
- Grace Episcopal Church v. City of Madison, 385 N.W.2d 200 (Wis. App. 1986)
- State of Iowa v. City of Iowa City, 490 N.W.2d 825 (Iowa 1992)
- County of Oakland v. City of Detroit, 265 N.W.2d 130 (Mich. App. 1978)

Other AG opinions referenced:
- Op. Atty. Gen. 206a, August 28, 1978
- Op. Atty. Gen. 206a, August 22, 1979
- Op. Atty. Gen. 629a, May 9, 1975

Source

• Landing page: https://www.ag.state.mn.us/Office/Opinions/
• Original PDF: https://www.ag.state.mn.us/Office/Opinions/387b10-19930308.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

SEWERS: STORM SEWERS: CHARGES: City may impose reasonable charges to produce storm sewer revenue based on a reasonable classification of properties. Minn. Stat. § 444.075 (1992).

387-B-10
March 8, 1993

Mark J. Johnson
Delano City Attorney
Lang, Pauly & Gregerson
4400 IDS Center
80 South 8th Street
Minneapolis, MN 55402

Dear Mr. Johnson:

In your letter to Attorney General Hubert Humphrey III, you present substantially the following:

FACTS

The City of Delano enacted a Storm Water Utility Ordinance pursuant to Minn. Stat. § 444.075 to handle storm water drainage problems in the City of Delano. The charges necessary to pay for the storm water system are assessed to the various improved parcels of property within the City. The land uses which are exempt from the storm water drainage fees include: public right-of-way, vacant, unimproved land with sufficient ground cover so as not to create any significant run-off as determined by the City Engineer, and land owned by the City.

The charges are based upon a study performed by Delano's consulting engineer, who developed a formula for determining storm water run-off from each parcel of property in the City. This formula focuses upon rainfall, soil type and percentage of impervious surface. These factors were then evaluated along with the financial requirements of the storm water system and a charge was developed for each parcel of property which was found to create storm water run-off. The standard residential charge, for example, was determined to be $2.00, which is then stated as a separate charge on the monthly water and utility bill.

You then ask substantially the following question:

QUESTION

Is the fee system adopted by Delano in its Storm Utility Ordinance authorized under Minnesota law?

OPINION

Subject to the qualifications noted below, we answer your question in the affirmative.

Minn. Stat. § 444.075 (1992) provides authority for municipalities to construct and maintain waterworks and sewage systems, specifically including storm sewer systems. Among the mechanisms authorized to pay for construction, improvement, maintenance and operation of such facilities, is a imposition of reasonable charges "for the use and for the availability of the facilities." Specifically Minn. Stat. § 444.075, subd. 3, provides in part:

Charges made for service directly rendered shall be as nearly as possible proportionate to the cost of furnishing the service, and sewer charges may be fixed on the basis of water consumed, or by reference to a reasonable classification of the types of premises to which service is furnished, or by reference to the quantity, pollution qualities and difficulty of disposal of sewage and storm water produced, or on any other equitable basis including, but without limitation, any combination of those referred to above.

(Emphasis added).

Thus, it seems clear that the city is expressly authorized by statute to impose charges for storm sewers upon a reasonable classification of property which may be based upon, among other things, the amount of storm water produced. We are aware of previous opinions which have expressed caution about imposition of special assessments in connection with drainage improvement projects where the assessments are not based upon special benefits to the property assessed. See, e.g., Ops. Atty. Gen 206a, August 28, 1978 and August 22, 1979. In the latter opinion, however, we expressed the view that changing concepts in permissible government regulation could support recognition of special assessments based upon a parcel of land's contribution to the problem addressed by the assessible improvement. Thus, we suggested that special assessments may be permitted against lands which contribute water which is stored, handled or controlled by a watershed improvement.

Furthermore, courts in Minnesota and elsewhere have distinguished between the standards for imposition of special assessments and those for other authorized charges. For example, in Nordgren v. City of Maplewood, 326 N.W.2d 640 (Minn. 1982) the Minnesota Supreme Court upheld a substantial connection charge against property which which had previously been found not to be benefitted by the improvements in question. In holding that connection charges were separately authorized by Minn. Stat. § 444.075 and could be imposed notwithstanding, or in addition to, special assessments, the Court relied upon the previous decision in Crown Cork & Seal Co. v. City of Lakeville, 313 N.W.2d 196 (Minn. 1981) wherein the Court held that the lack of benefit to the plaintiff's property would be material in evaluating a special assessment under Minn. Stat. § 444.075, subd. 4, but was not a requirement for imposition of separate charges permitted pursuant to subdivision 3. The latter subdivision only requires that the charges be "just and equitable." Nordgren, 326 N.W.2d at 642. See also Grace Episcopal Church v. City of Madison, 385 N.W.2d 200 (Wis. App. 1986).

Therefore, it is our view, that the city is authorized to impose reasonable charges upon property for storm sewer services provided. Whether or not the specific formula developed by the city of Delano for fixing such charges is reasonable as applied to the particular properties is an issue of fact which is outside our opinion function. See, e.g., Op. Atty. Gen. 629a, May 9, 1975. As a general proposition, however, municipal rates and charges such as those authorized by section 444.075 will be presumed to be reasonable, with the burden of proving otherwise being upon the person asserting the unreasonableness of the charge. See, e.g., State of Iowa v. City of Iowa City, 490 N.W.2d 825 (Iowa 1992); County of Oakland v. City of Detroit, 265 N.W.2d 130 (Mich. App. 1978). Insofar as the charges in question are based upon an engineering study designed to evaluate storm water runoff from private property, it seems unlikely that they would be found unreasonable.

Very truly yours,

HUBERT H. HUMPHREY III
Attorney General

KENNETH E. RASCHKE JR.
Assistant Attorney General

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