Property Owners Sue City of Miami Beach Over Stormwater Fees

The owners of the Setai and Hotel Victor have filed suit against the City of Miami Beach on behalf of 26 properties claiming they are unfairly penalized by the City’s method of calculating stormwater fees. The action comes as the City is in the middle of a $658 million stormwater program to update its aging system and mitigate for flooding. Since the inception of the new stormwater program in 2015, fees have nearly tripled.
 
The Nakash family brought suit in Miami-Dade County on behalf of its Setai, Victor, Hotel Ocean, Casa Casuarina, and Breakwater properties. Eighteen multifamily residential buildings owned by David Muhlrad or his family members are also listed. (The properties are known for their red and white color schemes.) The Hotel Barcelona on Española Way as well as the Parkview Point Condominium Association and Tower Forty One Association are also plaintiffs in the suit.
 
According to the filing, by using an average calculation of impervious surface areas for residential properties and applying the calculation to all properties equally rather than using an actual calculation for each property, the burden of the cost of the stormwater system falls more heavily on condo and multi-family homes. 
 
The calculation is known as the Equivalent Resident Unit or ERU. In 2015, fees were $7.61 per ERU or $7.61 per dwelling unit per month. Currently, the fee is 22.67 per ERU. Fees were expected to go up another $4.59 beginning October 1, but due to a delay in the program’s implementation following a review by the Urban Land Institute and a follow-on implementation plan that is being developed, the next rate increase is now expected in Spring 2020. In the current fiscal year, citywide stormwater revenues were projected to total $29,390,000.

Citing a City commissioned study, the lawsuit says the “average impervious surface area of condominiums and multi-family homes is 306 and 478 square feet respectively. These numbers dwarf in comparison to the average impervious surface area of single family homes in the City – 2,868 square feet.”
 
“It follows that a single family home in the City contributes more stormwater and, thus, creates a disproportionately higher need for a stormwater management program, than a condominium or multi-family home,” the filing states. 
 
The average calculation assigns an ERU of 791 square feet per dwelling according to the suit. Citing the “high concentration of condominiums and multi-family homes in the City, which have far lower effective impervious surface area than single family homes,” the suit states the City’s calculation method “penalize[s] condominium, multi-family home, and commercial property owners who bear the brunt of the major costs of the program.”
 
“For all residential properties the City attributes 1 ERU (791 square feet) per dwelling unit. Thus, a condominium owner pays a rate that is based on 2.6 times more than their average contribution to the need for a stormwater management program while a single family home owner gets a windfall and only pays for a mere 28% of their contribution,” according to the filing.
 
Meanwhile, the suit says, “The method the City employs is arbitrary since the exact same building can have different quantities of ERUs assigned to it depending on its use. For instance, a condominium is assigned ERUs based on its number of units, while a hotel, with exactly the same size impervious surface area as the condominium, will be assigned ERUs based on its actual square footage of impervious surface area.”
 
The suit also claims that more recently developed properties or those that have been modified to comply with new resiliency and elevations requirements must retain stormwater onsite yet have to pay the stormwater fee “despite not contributing stormwater to the City’s system.”
 
The suit asks the Court to declare the stormwater fee invalid, prohibit the City from continuing to collect the fee, and refund all stormwater utility fees paid by the plaintiffs.
 
In a statement, Miami Beach Chief Deputy City Attorney Aleksandr Boksner said, “A consortium of commercial and mixed-use properties located within the City of Miami Beach (“City”) have initiated a lawsuit against the City seeking declaratory relief from the Court in hopes of establishing that the City’s stormwater utility fee established in Chapter 110, Article III of the City of Miami Beach Code of Laws and Ordinances is invalid.  Additionally, these Claimants have alleged specific entitlement to restitution for all stormwater utility fees that have been previously paid by the Claimants. Contrary to the Claimants’ frivolous allegations in the complaint, the City’s storm water utility fee is in full compliance with Florida law, which unequivocally authorizes local governments to establish and charge these stormwater utility fees throughout the City. Therefore, the City of Miami Beach intends on appropriately defending this meritless lawsuit, and will explore all possible avenues to recover its attorney’s fees and costs in defense of this litigation.”
 
The lawsuit does cite the Florida Statute authorizing local governments “to establish and set aside a continuing source of revenue to plan, construct, operate, and maintain stormwater management systems.” However, the suit states “that any stormwater management system fee authorized under the statute must assess a fee that is based on the beneficiaries relative contribution to the need for a stormwater management system.” The calculation method is the stated basis for the claim.