NJ has a new tool to fund clean water — and many towns are refusing to use it

Published by NJ Clean Stream  |  Stormwater Fees & Green Infrastructure Series, Article 1 of 3

In 2019, New Jersey gave municipalities the authority to create stormwater utilities and charge stormwater fees — one of the most important new water quality funding tools in decades. More than five years later, most of New Jersey’s 564 municipalities have not established stormwater utilities. Many of the communities that most urgently need dedicated stormwater funding have been among the slowest to act.

What is a stormwater utility?

A stormwater utility is a governmental enterprise fund — similar in structure to a water or sewer utility — that finances stormwater management through fees charged to property owners. The foundational principle is the connection between impervious surface and stormwater runoff. Impervious surfaces — rooftops, driveways, parking lots, roads — shed rainfall rapidly and in large volumes into whatever drainage pathway is available. The amount of stormwater runoff generated by a property is roughly proportional to its impervious surface area.

This provides the basis for a legally defensible fee. Each property is assessed based on its contribution to the stormwater problem — typically measured in Equivalent Residential Units (ERUs), where one ERU represents the average impervious surface area of a single-family residential lot. A property with twice the average impervious surface area pays twice the base rate. Large commercial properties — big box stores, shopping malls, industrial facilities, hospitals, universities — have very large impervious areas and pay correspondingly large fees.

The credit mechanism transforms the fee from a simple revenue tool into an incentive system. A property owner who installs a rain garden, green roof, or permeable pavement that demonstrably reduces stormwater runoff can qualify for a credit against their stormwater fee — sometimes as large as 50 to 75 percent of the base fee for that portion of impervious surface. This makes the stormwater utility a market-based driver of green infrastructure investment throughout the community.

What stormwater fees fund

Infrastructure maintenance and repair. Storm drains, catch basins, detention ponds, and stormwater conveyance pipes require regular inspection, cleaning, and repair. In municipalities managing stormwater from the general fund, these maintenance activities are frequently deferred when budgets tighten. A dedicated stormwater fee eliminates the annual competition for maintenance funding.

Capital infrastructure replacement. Stormwater infrastructure ages and eventually requires replacement. Dedicated stormwater fee revenue provides the stable long-term revenue stream needed to support bond financing for capital replacement — the same mechanism that funds water main replacement in well-managed utilities.

Green infrastructure installation. Municipalities with stormwater utilities can use fee revenue to fund rain gardens, bioswales, green roofs, permeable pavement, and urban tree planting in the public right-of-way at a scale impossible from general fund budgets.

Regulatory compliance. New Jersey municipalities are required to comply with MS4 stormwater permit requirements — for illicit discharge detection, public outreach, and structural stormwater control installation. Stormwater fee revenue provides the funding to meet these requirements adequately.

Who has adopted — and who hasn’t

The pattern of adoption reflects several factors. Municipalities with professional management and financial sophistication are better positioned to navigate the administrative complexity of establishing a new utility. Where political leadership has championed adoption, it has moved forward. Where large commercial and industrial property owners — who would pay the largest fees — have lobbied against adoption, they have sometimes been effective in delaying it. Communities that have experienced visible flooding or water quality problems have stronger motivation to act.

The mismatch between adoption patterns and environmental need is concerning. Some of the communities most in need of stormwater management investment — older, denser municipalities with combined sewers, aging infrastructure, and the most serious water quality problems — are also those with the most constrained municipal capacity and the most political resistance to new fees.

The state’s role: from enabling to requiring

New Jersey’s current approach is permissive — municipalities may establish stormwater utilities, but are not required to. NJ Clean Stream believes this is insufficient. The state’s MS4 permit requirements apply to all municipalities with municipal storm sewer systems, imposing real obligations for stormwater management. There is a straightforward policy solution: if the state requires municipalities to manage stormwater to a specified standard, it should also require them to adopt the funding mechanism that makes meeting that standard financially feasible.

NJ Clean Stream is advocating for legislation requiring all municipalities subject to MS4 permit requirements to establish dedicated stormwater funding mechanisms within a specified timeframe, coupled with state technical assistance for municipalities that lack capacity to implement stormwater utilities independently. The state should provide model ordinances, fee calculation tools, billing system guidance, and programmatic support for communities that need help standing up a new utility.

What NJ Clean Stream is doing on stormwater utilities

  • At the state level: Advocating for legislation requiring municipalities subject to MS4 permits to establish dedicated stormwater funding mechanisms within a defined timeframe, with state technical assistance and model implementation resources.
  • At the local level: Engaging with municipal governments that have not yet adopted stormwater utilities — providing advocacy, technical information, and community organizing support to build the political will for adoption.
  • Tracking adoption statewide and publishing that information so residents can see whether their municipality has acted — and, if not, can ask why.
  • Working with adopting municipalities to ensure robust green infrastructure credit programs that maximize the incentive for private-sector investment.

This is Article 1 of 3. Article 2 explains what green infrastructure actually looks like on the ground in NJ neighborhoods — rain gardens, bioswales, green roofs, permeable pavement, and urban trees. Article 3 provides a practical step-by-step guide for residents who want to push their town to adopt a stormwater utility.