Underwriting Stormwater Fees In Small Multifamily

Stormwater fees can sneak up on small multifamily deals in Allegheny‑West. You might not spot them until you review the PWSA bill, and by then they can affect your pro forma. If you own or are underwriting a duplex, triplex, or a compact apartment building on the North Side, understanding how these fees work can protect your NOI. In this guide, you’ll learn how PWSA bills for stormwater, how to verify the impervious area behind your charge, and when on‑site fixes or credits can pay off. Let’s dive in.

Why stormwater fees exist in Pittsburgh

Pittsburgh’s stormwater fees fund citywide work to manage runoff, reduce pollution, and maintain systems. The Pittsburgh Water and Sewer Authority (PWSA) administers the fee based on how much runoff your property is likely to generate. Impervious surfaces like roofs and parking lots drive runoff, so they drive the fee.

The program supports the city’s obligations under the federal Clean Water Act. Municipalities with MS4 permits must manage stormwater and reduce pollutants. You can read more in the EPA’s MS4 overview and the PA DEP MS4 guidance. Locally, PWSA publishes the fee structure, billing rules, and credit options in its Stormwater Fee Program materials.

For owners and buyers, the practical takeaway is simple. The stormwater fee is a recurring utility expense tied to property characteristics. It belongs in your operating expenses and NOI model.

How PWSA bills small multifamily

PWSA uses a unit called an Equivalent Residential Unit, or ERU. One ERU represents the average impervious area of a single‑family residential parcel in Pittsburgh. Non‑residential properties, which often include small multifamily on a single parcel, are billed based on measured impervious area converted to ERUs or billed per square foot depending on current rules.

ERUs and billing mechanics

• Your bill will show billed ERUs or total impervious square feet, the rate per ERU or per square foot, and any applied credits.
• Multifamily classification can vary by program rules. Properties with multiple dwelling units on one parcel are often billed as non‑residential, which means measurement matters.
• Billing happens at the parcel level. If your building shares a driveway or has a parcel split, confirm how PWSA allocates it.

Always confirm current definitions, ERU size, and rates directly in PWSA’s fee schedule and FAQs. The authority updates policies, fees, and credit rules from time to time.

Allegheny‑West nuances to watch

Allegheny‑West parcels are typically compact, with historic structures and limited yard space. Many small multifamily buildings rely on alley access and shared or tight parking. These features can affect how impervious areas are counted and how feasible retrofits might be. Walk the block. Alleys, rear garages, and small paved courtyards add up quickly in impervious calculations.

Verify the impervious area before you underwrite

The fastest path to savings is often a correction to the measured impervious area. Start here before considering retrofits.

Step‑by‑step verification

1. Get the PWSA bill and the underlying impervious calculation. Ask the seller or listing agent for billing details and any previous credit or appeal files.
2. Confirm the parcel boundary. Match the parcel ID to Allegheny County records to ensure the right parcel was measured.
3. Compare the impervious footprint. Overlay PWSA’s map on recent aerials and building footprints. Look for obvious overcounts or missed updates.
4. Flag common discrepancies. Pervious pavers, vegetated areas, elevated decks with gaps, or canopies can be misclassified. Gravel may be treated differently. Check PWSA definitions.
5. Visit the site. Measure roof areas, walkways, patios, driveways, and parking. Note where downspouts drain and whether any features are truly pervious.
6. Document differences. Photos, marked‑up aerials, and plan excerpts help. If needed, commission a short surveying or civil scope for a certified impervious plan.
7. Appeal or request a re‑measurement. Follow PWSA’s appeal instructions and include supporting documents. Track timelines and keep copies.

Pitfalls that trip up small multifamily

• Shared access across parcel lines. Make sure the billing matches the actual parcel split.
• Pervious or open‑grid surfaces counted as impervious. Align with PWSA’s definitions and credit manual.
• Previously installed BMPs not registered. If a rain garden, green roof, or disconnection exists, confirm it is documented with PWSA.

Credits and retrofits that can lower your fee

PWSA offers credits for on‑site measures that reduce runoff volume or disconnect stormwater from the system. Credit types typically include:

• Volume control practices like rain gardens, infiltration beds, or bioretention.
• Downspout disconnections to stone trenches or vegetated areas.
• Green roofs or vegetated roof systems.
• Cisterns or rainwater harvesting that reduce discharge.
• Impervious removal or conversion to accepted pervious paving.

How credits usually work

• Credits often reduce billed ERUs by a percentage or reduce the portion of impervious area that counts. Many are capped or apply only to the drainage area served by the practice.
• You submit an application with design calcs, as‑built drawings, and a maintenance plan. Approvals may require inspections and periodic renewals.
• Maintenance is part of the deal. If you do not maintain the system, credits can be revoked. Budget for seasonal care.

What fits small Allegheny‑West footprints

• Downspout disconnections to small stone trenches along side yards or alleys. Lower cost and often feasible.
• Compact rain gardens in front or rear setbacks. Offers curb appeal but needs seasonal care.
• Selective permeable paving for a few parking stalls. Higher cost, targeted impact.
• Green roofs on flat roofs. Useful where ground space is limited, but costs can be significant.

Before you invest, confirm which practices qualify, the design standards, and documentation needs in PWSA’s credit materials. Requirements evolve, and approvals hinge on details.

When retrofits improve NOI

Not every retrofit pencils from fee savings alone. Use a simple framework to decide.

• Materiality. If the annual fee is a small fraction of gross income, impacts on NOI will be modest. Larger paved areas produce more leverage.
• Cost vs savings. Compare total installed cost and annual maintenance to expected annual fee reduction. Calculate simple payback and, if helpful, NPV over your hold period.
• Space and feasibility. Small sites limit BMP size. Target big runoff sources like roofs and parking for the best return.
• Hold period and financing. Long‑term holds can justify lower annual savings. Grants or incentives can tilt the math.
• Low‑cost wins first. Correcting overcounts or misclassification through appeal is the fastest way to improve NOI.

A simple underwriting model

Here is a straightforward approach you can drop into your spreadsheet.

Inputs to collect

• Parcel ID and address.
• Billed impervious area or billed ERUs from the latest PWSA invoice.
• Current fee structure and unit rate from PWSA.
• Existing credits and any approval letters.
• Space available for retrofits and feasibility notes.
• Estimated retrofit capital cost and annual maintenance.
• Planned hold period and your discount rate, if modeling NPV.

Core formulas

• Billed Fee before credits = (Impervious area in square feet ÷ ERU size in square feet) × Fee per ERU, or use Fee per square foot if that is how PWSA bills.
• Fee After Credits = Billed Fee − Credit Reduction.
• Annual Fee Savings from Retrofit = Current Fee After Credits − New Fee After Retrofit.
• Simple Payback = Retrofit Capital Cost ÷ Annual Fee Savings.
• Annual Net Savings to NOI = Annual Fee Savings − Annual Maintenance Cost.
• NPV over hold = Sum of discounted Annual Net Savings − Capital Cost.

Illustrative example only

This example is for illustration. Always confirm current PWSA ERU size, unit rates, and credit rules before you rely on numbers.

• Billed impervious area: 6,000 square feet
• ERU size (illustrative): 3,000 square feet per ERU → 2 ERUs billed
• Fee per ERU (illustrative): 80 dollars per ERU per year → 160 dollars per year
• Credits: none
• Retrofit concept: downspout disconnection to bioretention that reduces billing by 0.5 ERU
• Retrofit capital cost: 6,000 dollars
• Annual maintenance: 150 dollars
• Hold: 10 years

Calculations

• New billed ERUs: 1.5 → 120 dollars per year
• Annual Fee Savings: 40 dollars
• Simple Payback: 6,000 ÷ 40 = 150 years
• Annual Net Savings to NOI: 40 − 150 = negative 110 dollars

Interpretation: In this hypothetical, fee savings alone do not justify the retrofit. It might still make sense for resilience, marketing, or if grants are available. But the model helps you decide quickly.

Due diligence checklist for Allegheny‑West buyers

Use this list during underwriting and inspection.

• Request from the seller

  • Last 3 to 5 years of PWSA stormwater bills and any billing breakdowns.
  • PWSA impervious area map or calculation used for billing.
  • Any credit applications, approval letters, and as‑built drawings.
  • Site plans, surveys, roof plans, and recent paving permits.
  • Maintenance logs for any BMPs and any recorded maintenance agreements.
  • Records of prior appeals and outcomes.

• Ask PWSA to confirm

  • Property classification for billing and what drives it.
  • Current ERU definition and unit rate or per‑square‑foot rate.
  • The impervious map and data used to calculate the bill.
  • Which BMPs qualify, required design standards, and documentation.
  • Credit calculation method, any caps, and renewal timelines.
  • Appeal steps, deadlines, and inspection schedules.

• Ask the owner or operator

  • Any installed BMPs, related maintenance, and performance issues.
  • Recent site changes that may not be reflected in PWSA data.
  • Recorded easements or covenants related to stormwater.
  • Any notices or violations related to stormwater.

• Inspect on site

  • Measure roof footprints and trace downspouts to discharge points.
  • Verify parking, alleys, walkways, patios, and any pervious surfaces.
  • Look for evidence of prior retrofits and their condition.
  • Note opportunities for small, targeted BMPs that fit tight lots.

Practical takeaways

• Treat the stormwater fee like any other operating expense. It belongs in your model.
• Verify the impervious area. Appeals and corrections are the lowest cost lever and can improve NOI immediately if you are overbilled.
• If you pursue credits, design to the rules. Scope, documentation, and maintenance commitments determine approval and staying power.
• Small footprints limit options. Focus on roofs and parking areas for the best chance at measurable savings.
• Monitor updates. Policies, rates, and credit programs change, so anchor to current PWSA materials.

If you want a fast, finance‑first read on a specific Allegheny‑West property, we can help you gather the right documents, pressure test the ERU math, and present clear next steps. Request a Concierge Consultation with Unknown Company and get a clean underwriting view for your next buy or sale.

FAQs

What is an ERU for PWSA billing?

• An Equivalent Residential Unit represents the average impervious area of a single‑family parcel. PWSA uses it to convert a property’s impervious area into a billable unit for stormwater fees.

How can I confirm my impervious area is correct?

• Compare PWSA’s impervious map to recent aerials, site plans, and on‑site measurements. If you find discrepancies, submit an appeal with photos, markups, and any surveys.

Can a small multifamily with little yard still get credits?

• Yes, but options are limited. Downspout disconnections, small bioretention areas, selective permeable paving, or a green roof can qualify if designed and documented to PWSA standards.

Do credits require ongoing maintenance?

• Usually yes. Credits often come with maintenance plans, inspections, and periodic renewals. Budget time and cost to keep the credit in place.

Will a retrofit pay for itself through fee savings?

• Sometimes. It depends on your fee size, the area you can treat, installation and maintenance costs, and your hold period. Run the payback and NPV before you commit.