Judge rules water hike OK, but amount still open to question

A judge has ruled that the city of Athens had the legal right to increase the fees it charges for hooking into the city's water/sewer system, but that the size of the increase is still open to legal challenge.

Athens County Common Pleas Judge Michael Ward has scheduled an evidentiary hearing "“ essentially a bench trial "“ for Nov. 17, to determine whether the city can legally justify the amount by which it raised its water/sewer "œtap fees" in 1996 and 2008. (The second increase applied only to sewer fees.)

The issue matters to the city because it claims that it needs the increased fees to cover the costs of keeping its treatment plants and water/sewer lines in good working order. If it fails to do so, city officials argue, it may be unable to allow new homeowners to hook up water and sewer service in the future.

In April 2008, the company that owns the new Palmer Place student apartment complex on Stimson Avenue filed a lawsuit challenging the rate increase. The complex, which opened last fall, is home to about 250 tenants, most or all of them Ohio University students.

Palmer Place of Athens, whose principal figure is developer Les Cornwell, filed the suit after receiving a bill of more than $179,000 for water/sewer hookup. (That amount was later reduced to about $134,000, based on the fact that the city first began negotiating rates with Palmer Place before it had increased sewer fees in 2008.)

At one point, the city was threatening to not allow the complex to hook into the system, despite the fact that numerous tenants had already signed leases for the fall. The two sides reached an agreement, however, that allowed the complex to open complete with running faucets and flushing toilets, while the lawsuit worked its way through the court.

Palmer Place's attorney, Gerald Mollica, argued initially that the city's "tap fee" for a water/sewer hookup was actually an "impact fee," meant to cover city expenses related to maintaining and improving the city's water treatment plants and water/sewer lines.

The city at some point seems to have accepted this interpretation, and it has cited case law supporting the notion that a municipality can hike new-user fees to help pay for the past and future costs of keeping its water/sewer equipment in good shape.

Palmer Place, however, has cited city records that supposedly show the volume of water usage in Athens has stayed about level over the past decade. Therefore, Mollica has argued, the city cannot justify an increased fee based on "impact."

City officials have countered that the city has had to take on millions of dollars in debt to pay for maintaining and improving its water/sewer infrastructure, in order to meet state and federal EPA requirements.

In a motion filed in the lawsuit, city Law Director Patrick Lang noted that the Ohio EPA had "placed the city on notice" that if it did not upgrade its water treatment system, it might be barred from allowing any new single-family homes to hook into it.

Both sides have asked Judge Ward to issue summary judgment in their favor. In a ruling filed last Tuesday, the judge found that a city ordinance passed by Athens City Council in 1996, raising tap fees, is legally valid.

A major factor in this finding appears to be a 1980 Ohio Supreme Court case from the northeast Ohio city of Amherst, in which the high court found that municipalities can charge a tap-in or connection fee for water utilities, but that "the fee must bear a reasonable relationship to the entire cost of providing services to the new users."

Though the Amherst ruling suggests Athens has the right to impose a fee hike, Ward found, "there is conflicting evidence as to the fairness and the reasonableness of the tap-in fee, and whether the fee bears a substantial relationship to the per-unit cost of providing the services." Therefore, he concluded, he'll need to hear evidence in court from both sides on this issue before deciding on the fairness of the fee hike.

City Law Director Lang could not be reached for comment Friday.

Palmer Place attorney Mollica said that while he considers the Amherst ruling a "bad decision" by the state Supreme Court, it is clearly the controlling decision in the case.

However, he said, even if the city has the legal right to charge an "impact fee," the allowable size of that fee still has to be based on actual financial impacts to the city.

"I am prepared to show that there is no impact, if you look at it in terms of consumption of water," Mollica said. "There was no increase in water usage over the past 10 years, for whatever reason "“ using (the city's) own records."

In a deposition in the lawsuit, however, Athens City Councilmember Nancy Bain has maintained that one factor in water usage levels has been precisely the fact that increased fees have encouraged reduction in water use "“ for example, she testified, OU has stopped its former practice of watering grass with drinking water.

Bain also noted that one thing the city has spent money on is reducing leakage from the system.

The city has also relied in the lawsuit on a consultant's study, by engineer Jennifer A. Frommer, who studied the city's tap fees and concluded that they are "reasonable, easily justified and fairly apportioned to new users." The fees were based on EPA standards for what the agency calls "equivalent residential units" "“ essentially a measure of residential water usage.