UHNA Liaison to the Buckhead Council of Neighborhoods (BCN) and UHNA Vice President Beau Grant provides a summary of recent activities you should be aware of.
ATLANTA’S EFFORTS TO IMPOSE A NEW STORM WATER FEE
Atlanta is facing a new “Stormwater Utility Fee,” a policy widely known in legal battles as a “Rain Tax.” This does not merely introduce an additional standard utility rate fee; it amounts to a new, permanent tax levied on the “impervious surface area” of your property—your roof, driveway, and patio. Unlike taxes, which require a vote, this “fee” is being imposed administratively without a Sunset Clause. Without a Sunset, the fee will permanently continue long after the Consent Agreement compliance projects are complete.
This initiative is led by the new Department of Watershed Management (DWM) Commissioner, Greg Eyerly. Recruited from his last role in Houston, Texas, during his tenure there Eyerly Eyerly deployed this exact scheme which has resulted in a decade-long legal quagmire, Jones & Watson v. City of Houston, where engineers and residents successfully sued the city for diverting “drainage fee” revenue to pay for general city salaries and administrative overhead. There are several other legal cases relevant to this issue, some of which were litigated in the Atlanta area, which are at the bottom of this report.
The “Double-Dip”
We are already paying for stormwater management via Sewer Rates and the Municipal Option Sales Tax. This new fee is a calculated “Double-Dip” taxation scheme.
- The MOST 10% Set-Aside: The Municipal Option Sales Tax (MOST) was reauthorized in 2024. The legislation explicitly allows for up to 10% (approximately $12.5 to $18 million annually) of that revenue to be dedicated to stormwater management projects. If we pay a new fee, that sales tax revenue becomes a slush fund.
- Sewer Rates (Combined System): A large portion of Atlanta (including Proctor Creek/Upper Westside) relies on a Combined Sewer System. Rainwater goes into the same pipe as sewage. Residents already pay a Sewer Rate based on water usage to treat this mixed water. Charging a separate fee for “runoff” that enters a pipe you already pay to “treat” is billing for the same gallon of rain twice.
- Consent Decree Funding: The MOST primarily funds the Federal Consent Decree, which mandates massive tunnels like the West Area Tunnel. These exist almost exclusively to manage stormwater surges. The MOST is already a de facto stormwater tax.
The Math is Simple:
- Current Reality: (Sales Tax [MOST]) + (Sewer Rates) = Fully Funded Mandated Infrastructure
- Proposed Scheme: (Sales Tax [MOST]) + (Sewer Rates) + (New Impervious Fee) = Surplus Revenue & Bloated Administration
Warnings from Houston of What’s to Come to Atlanta Water Customers:
Commissioner Eyerly’s track record in Houston is defined by “regulatory compliance” funded by aggressive rate hikes rather than efficiency. In Houston, the “Drainage Fee” became a permanent cash cow.
- Houston used the fee to pay for unrelated administrative roles, street sweepers and traffic light technicians, claiming they were “drainage related.”
- “Impervious surface” maps were frequently wrong, billing residents for grass and gravel. The burden of proof was on the homeowner to hire surveyors to fight the city.
- No Sunset Clause: Once the specific compliance projects are finished, the fee remains forever.
Community Action Plan
We must challenge Eyerly’s permanent double-taxation scheme and his “Impervious Surface” math at all Townhalls, upcoming presentations by city representatives townhalls, etc. This is a permanent regressive tax that disproportionately impacts the fixed-income, disabled, and elderly members of our community who cannot afford to subsidize City Hall’s administrative overhead. The tax reduces housing affordability and access to water to at risk community members.
Demand Answers to These Three Questions:
1. The Sunset Clause “Commissioner, if this fee is designed to fund a specific Federal Consent Decree backlog, will the fee sunset and expire once those specific projects are completed? Taxes need votes; fees for specific services must end when the service is rendered.”
2. The Revenue Neutrality Requirement “The MOST tax collects up to $18 million a year specifically for stormwater. If you implement this new fee, will you reduce the Sewer Rate or the MOST allocation by an equal amount? If not, why are we paying for the same MS4 repairs twice?”
3. The Burden of Proof “In Houston, the maps were wrong and residents had to pay for their own surveys to prove it. If a resident disputes your digital map of their property, will the City accept a simple photo as evidence, or will you force homeowners to pay for a certified survey to correct your errors?”
Resources
Atlanta Water Commissioner Press Conference: https://www.youtube.com/watch?v=hyEQrn6G68o
Atlanta is the cradle of the Civil Rights movement, an ongoing fight for Equality and Fairness.
This unjust, regressive “Rain Tax” is a threat to the affordability of our community.
This is yet another opportunity for Atlanta community members to display our ‘Quality’ and hold the City of Atlanta and our Department of Watershed Management accountable for this misguided exercise of “public policy”.
LEGAL WATCH: The “Rain Tax” in the Courts
Commissioner Eyerly’s model is not new—and neither are the lawsuits it generates. Courts across the country have repeatedly struck down these “impervious surface” fees, forced cities to refund millions, or ruled that these “fees” are actually illegal taxes. Ultimately, the Tax payers foot the bill for all of the litigation.
Part I: The Houston Precedents (Eyerly’s Legacy)
These cases occurred in the district Commissioner Eyerly previously managed or directly impacted the system he oversaw.
Case 1: The “Hidden Tax” Verdict
- Dacus v. Parker
- Texas Supreme Court (2015)
- The Finding: The Court voided the election results that created the drainage fee because the ballot language was “misleading.” The City failed to inform voters that the “dedicated funding source” was actually a new monthly charge on their property.
- Why it Matters: This proves that when these schemes are actually put to a fair vote with honest language, they often fail legal scrutiny. It took years of litigation to force the City to be honest about the cost.
Case 2: The “Lockbox” Scandal
- Jones & Watson v. City of Houston
- Texas District Courts (Recent Rulings)
- The Finding: Engineers and residents sued the City for diverting “Drainage Fee” money to pay for general city salaries and administrative overhead.
- Why it Matters: This happened during Commissioner Eyerly’s tenure in Houston. It illustrates the danger of a “Lockbox” that isn’t welded shut. Without strict legal definitions, “Stormwater Funds” become a slush fund for City Hall.
Case 3: The “Failure to Protect” Liability
- In re Upstream Addicks and Barker (Texas) Flood-Control Reservoirs
- U.S. Court of Federal Claims (2019/2025)
- The Finding: The Court ruled the U.S. Government was liable for the flooding of thousands of homes.
- Why it Matters: In Houston, residents paid drainage fees for years, yet the infrastructure still failed them. This case proves that paying a “Rain Tax” is no guarantee of safety or service. When the system fails, the government may still try to claim immunity to avoid paying for the damage to your home.
Part II: Nationwide Precedents (The “Tax” Defense)
These cases expose the legal strategy cities use to bypass voter approval.
Case 4: The “Federal Refusal” (The Local Hypocrisy)
- DeKalb County, Georgia v. United States
- U.S. Court of Federal Claims (2013)
- The Finding: DeKalb County sued the Federal Government for refusing to pay the county’s stormwater fee. The Federal Court sided with the US Government, ruling that the fee was a TAX, and therefore the Federal Government (which is immune from local taxes) did not have to pay it.
- Why it Matters: A Federal Court right next door has effectively ruled that these fees are “taxes in disguise.”
- The Reality: The City calls this a “Fee” for one reason only: so they don’t have to let us vote on it. If they admitted it was a tax—as Federal Courts have ruled similar charges to be—they would have to ask for our permission at the ballot box.
- The Trap: If it passes City Council, you have to pay it. The City doesn’t care if you call it a tax or a fee; they just want the revenue. They label it a “fee” specifically to bypass your right to vote on it, knowing it would likely fail in a November referendum.
Case 5: The “Bad Map” Settlement
- Michigan Warehousing Group LLC v. City of Detroit
- U.S. District Court, Eastern District of Michigan (Settled 2017)
- The Finding: Detroit agreed to a $29.5 million settlement after business owners sued over the “drainage fee.”
- Why it Matters: The lawsuit exposed that the City’s data on “impervious surfaces” was deeply flawed and often overstated the pavement on properties. Detroit was forced to refund millions to ratepayers who had been overcharged based on bad aerial mapping data—the exact same method Atlanta plans to use.
Case 6: The “General Benefit” Ruling
- Borough of West Chester v. Pennsylvania State System of Higher Education
- Pennsylvania Commonwealth Court (2023)
- The Finding: The Court ruled that the stormwater charge was illegal when applied to tax-exempt entities because it was, in reality, a TAX, not a fee.
- Why it Matters: The Court found that because stormwater management provides a “general public benefit” (cleaner rivers, dry roads) rather than a specific service to the individual payer, it cannot be disguised as a utility fee. This precedent threatens the legality of any stormwater fee that claims to be a “service charge.” to claim “sovereign immunity” to avoid paying for the damage to your home.
Case 7 : No “Sunset Clause”
- Bolt v. City of Lansing (1998).
- Michigan Supreme Court
- The Finding: In Bolt, the Michigan Supreme Court ruled that for a charge to be a Fee (legal) and not a Tax (illegal without a vote), it must serve a “Regulatory Purpose”—meaning it must pay for a specific job (like fixing a specific set of drains).
- Why it Matters: If a fee has no sunset clause, it collects money forever. Once the specific drains are fixed, the money starts piling up or gets used for other things. At that moment, the court says it stops being a “Regulatory Fee” and becomes a “Revenue-Raising Tax.” You demand a Sunset Clause to force the City to prove the fee is for a project (which ends), not for profit (which never ends). If they refuse a sunset clause, you cite Bolt to argue they are creating a permanent tax.
Revisiting the 1998 Seminal Bolt Decision
https://crcmich.org/revisiting-the-1998-seminal-bolt-decision
Case 8 : The “Pass-Through” Tax Ruling
Why it Matters: This ruling closes the “pass-through” loophole. It establishes that a city cannot hide a tax by forcing a utility company to collect it on their behalf. If the fee generates revenue for the government’s general budget rather than strictly funding the specific utility service, it is a tax that requires voter approval. This precedent provides a powerful legal weapon against “Stormwater Fees” that are used to pad general budgets or pay for unrelated administrative overhead. mmary Argument Against Stormwater Tariffs as Double Dip Taxation:
James Heos v. City of East Lansing
Michigan Supreme Court (2025)
The Finding: The Court ruled that a “franchise fee” added to utility bills was an illegal tax because it failed the Bolt test: it was involuntary (residents had no choice but to pay it to get electricity), the revenue was diverted to the General Fund (used for pensions, not infrastructure), and it was not proportionate to the actual cost of the service.