MSD not required to refund revenue from now-invalid stormwater charge

New pension system to save $18 million over next 10 years.

By EVAN YOUNG

The Metropolitan St. Louis Sewer District does not have to refund moneys collected with a now-invalidated charge, according to a Lincoln County circuit judge.

Judge Dan Dildine stated in a Nov. 29 order that MSD is not required to refund customers the roughly $90 million collected over two and a half years with its impervious stormwater charge.

Revenue from the charge already has been spent on stormwater services, so customers would have to pay additional money to refund themselves, the judge ruled.

Dildine in July invalidated the stormwater charge, saying it violated state law because district voters did not approve it.

The decision was made in a class-action lawsuit filed in 2008 by Chesterfield resident William Zweig and others. A hearing on awarding plaintiffs’ attorney fees tentatively is set for Jan. 18. The district in a statement said it will determine afterward whether it will appeal Dildine’s decision.

In response to the July ruling, the MSD Board of Trustees suspended the stormwater charge — 14 cents per 100 square feet of impervious area — and reinstated a previous system of flat charges and property taxes to pay for stormwater service.

The district expects a $20 million revenue shortfall by switching to the previous system. Trustees in October cut $15.5 million in stormwater services and projects from the fiscal 2011 budget. The district now can only provide customers inside of Interstate 270 with basic stormwater services, while customers outside of I-270 will receive virtually no stormwater service, officials have said. MSD expects funding for stormwater projects to run out in June 2012.

“MSD has a responsibility to its customers to continue to provide adequate stormwater services to the region, but cannot do so without a dedicated stream of revenue,” Executive Director Jeff Theerman said last week, noting the district went to “great lengths” two years ago to “craft a charge that was fair, equitable and would provide for improved stormwater services for its customers.”

The Zweig case does not affect MSD’s ability to provide wastewater collection and treatment because those services are funded with separate user charges.

In other MSD news, the board last week granted final approval to legislation that will establish a “401(k)-style” pension program next year for new employees.

Trustees voted unanimously Nov. 9 to set up a defined-contribution pension system for employees hired after Jan. 1. Most current district employees will remain in the district’s defined-benefit program, which promises a certain amount of their salary as pension upon retirement, funded entirely by the district through investments.

Employees with less than 10 years of service to MSD will have the option of switching to the new system. Under the new program, MSD annually will contribute 7 percent of an employee’s covered wages toward his pension plan. It also will match 50 percent of up to the first 4 percent employees contribute to their pension.

The new defined-contribution program was part of agreements MSD negotiated earlier this year with its unions, according to Lance LeComb, the district’s manager of public information. Officials hope the defined-contribution program, which shifts some of the investment risk to employees, will ease the district’s pension costs, which have increased from roughly $7.7 million in 2007 to an estimated $11 million in 2010.

The district expects to save its customers $18 million over the next 10 years with the new pension system, LeComb said.