If you live in Pennsylvania, odds are that you’re within the service area of at least one municipal or joint municipal authority.
It has been estimated that Pennsylvania has roughly 2,000 active municipal authorities. Whether for water distribution, wastewater treatment, sewer, school, hospital, mass transit, recreation, business development, or some other purpose, most citizens get some sort of service (and, as importantly, receive bills or special assessments) from a municipal authority.
But what exactly is a municipal authority? Many see the word “municipal” in the title and assume it’s an arm or agency of the municipality in which it is located. However, a municipal authority is not an agent or representative of a municipal government, but is instead an agency of the Commonwealth of Pennsylvania. Municipal authorities are formed under and governed by Pennsylvania’s Municipality Authorities Act, and are considered independent corporate agents of the Commonwealth.
What can a Municipal Authority do?
The Municipality Authorities Act dictates a municipal authority’s powers and limitations. They have the ability to exercise governmental, as well as private, corporate powers, in assisting the Commonwealth in meeting the needs of its citizens. Municipal authorities are often set up to facilitate the acquisition, operations, financing, and construction of projects, from stormwater management to wastewater treatment to construction of school buildings. In pursuing these purposes, municipal authorities have certain unique powers, including the ability to incur debt, own property, and finance their activities by means of issuing revenue bonds (independent of the municipality), fixing and collecting lease rentals, or other charges or assessments.
There are, however, some limitations on what a municipal authority can do. The projects it undertakes must be in the proprietary fields of government, must be in the public interest, and must be self-sustaining. The Act sets forth 18 different kinds of projects that an authority may undertake. The Articles of Incorporation of many municipal authorities can include a specific limiting purpose and/or specific projects, in which case no other projects may be undertaken than those specified. And in the case of municipal authorities created to provide business improvements or administrative services, their power to charge assessment fees is further limited by a requirement that all business improvement plans and proposed methods of assessment must be formally approved by the municipality in which the project is located.
How are Municipal Authorities different than Municipal Governments?
Municipal authorities differ from municipal governments in the following key aspects:
- A municipal authority has many more limitations on the exercise of its power than general purpose governments, which have general police powers to protect the public safety, health and general welfare;
- A municipal authority is limited to project-related revenues, like user charges, connection fees, or special assessments as provided in the Act, while municipal governments have broader general taxing authority;
- Municipal authorities generally have fewer restraints and restrictions on operations, budgetary and personnel practices than municipal governments;
- An municipal authority’s board is not elected, but appointed by the local municipal government(s);
This last point is one of the most important differences. The extra layer of insulation from political pressure allows municipal authorities to undertake certain long-term projects and raise and spend money without having to face voters – who may have seen large increases in user charges or special assessments – at the ballot box.
This freedom from political pressure also has other side effects, like allowing qualified professionals to be appointed to serve on the board who would likely not be interested in running for elected office, allowing for greater continuity of leadership, and being more attractive to quality employees with the promise of stability and tenure.
How can you challenge the charges or assessment fees of a Municipal Authority?
The negative side of a municipal authority board being appointed and insulated from political forces is that property owners or developers may not feel they have much recourse if charges or rates are increased, or they believe an assessment is excessive or improper. Though property owners may not be able to exert political pressure on a municipal authority, there is some recourse available to dispute or challenge a charge or assessment.
The Act gives municipal authorities broad discretion and empowers them to assess and collect charges in their service area “at reasonable and uniform rates to be determined exclusively” by the municipal authority. However, the Act also authorizes “[a]ny person questioning the reasonableness or uniformity of a rate fixed by an authority or the adequacy, safety and reasonableness of the authority's services, including extensions thereof, [to] bring suit against the authority in the court of common pleas of the county where the project is located․”
Whether you’re a developer or property owner wishing to dispute a water or stormwater authority’s cost of water or stormwater construction or operating costs, customer facilities fees or tapping fees, or a property owner in a business improvement district wishing to dispute the assessment on your property, a diligent attorney will be able to guide you through the complex requirements of the Act and assess whether bringing suit would be beneficial to your interests.
Our experienced municipal government team at High Swartz has in-depth knowledge and experience in the Municipality Authorities Act and related case law, and [can] counsel both municipal authorities and property owners in navigating the law and protecting or asserting their sometimes competing interests.