Moratorium survives court test

Federal judge sides with City on access

Michelle Monroe

By Michelle Monroe

Executive Editor

Just
The Facts

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ST. ALBANS — St. Albans Town developer Sam Smith has lost his case against the City of St. Albans over water and sewer access.

Smith had sought to prove the city discriminated against him, in violation of the equal protection granted by the Fourteenth Amendment, when it included his property on the southeast side of the city in a moratorium on new water and sewer hookups while continuing to allow hookups in the town’s northern sewer district.

He had filed suit in U.S. District Court as Ingleside Equity Group, a family-owned company with Smith as its head. The family business includes Smith’s wife, Rachel.

The city instituted the moratorium in 2011 in the midst of a lawsuit between the city and town over differing interpretations of a 2009 agreement that had, itself, been part of the settlement of a lawsuit filed by the town against the city.

After the moratorium was enacted, Smith requested and was denied water and sewer access needed for the construction of a hotel on his property near Interstate Exit 19. He then filed suit.

A two-day bench trial was held in federal court before Judge William Sessions III in October 2014.

Sessions issued a decision yesterday, finding: “The court concludes that Ingleside’s property was not similarly situated to the sewer district, that excepting the sewer district from the moratorium was justified by legitimate governmental policy, and that the City did not intentionally single out Ingleside’s parcel in any way. Accordingly, the court will enter judgment in favor of the defendant.”

The Fourteenth Amendment was enacted after the Civil War to protect the rights of the newly freed slaves. It has traditionally been used by groups of people seeking protection from discrimination, perhaps most famously in Brown V. Board of Education of Topeka Kansas, which ended segregation of schools by race.

It is possible to bring suit under the Fourteenth Amendment as a “class of one,” but the legal bar is high. “Class of one claims are proper when plaintiffs can demonstrate that they have been intentionally treated differently from others similarly situated and that there is no rational basis for the difference in treatment,” wrote Sessions.

To win his case, Smith needed to prove his property was similarly situated to the north end sewer district and that the city had no legitimate reasons for treating the two differently.

Both Smith’s property and the sewer district are similar in many ways, Sessions found. Both have multiple lots zoned for future commercial use. Both have built infrastructure capable of serving future development with the expectation of access to water and sewer services from the city.

However, Sessions found there is one key difference: “The sewer district had what the City believed was a longstanding reservation of 100,000 gallons per day.”

When the moratorium was enacted, the city declared it would honor all existing allocations, including the allocation for the north end sewer district, located along U.S. 7-North.

The town had created the district to pay for the installation of a sewer line to connect properties north of the city to the city’s sewage treatment facility. The town took out a bond to pay the $600,000 for the installation, with the payments to be made from a tax levied only against property owners along that line, i.e. those in the district.

At the time, the line was built the city granted a collective 100,000 gallons per day of access to the district, which landowners could then purchase for individual use. Both the city and the town had treated that initial allocation as non-expiring, although it would be reduced as landowners made use of it.

Discovery in this case revealed that the allocation had, in fact, expired two years after it was granted.

“The unique nature of the reserve allocation to the sewer district makes its exception from the moratorium reasonable,” Sessions wrote. “The City felt bound to avoid interfering with its longstanding treatment of that special district and what it believed to be a valid allocation. Perhaps the City can be accused of failing in its due diligence, but the fact the allocation technically expired is not fatal to the City’s case.”

Because of the uniqueness of the sewer district, Sessions concluded Smith’s property and the district were not similarly situated. He also noted that both Smith and other landowners outside the district had been allowed to renew existing allocations since the moratorium was created. Thus, Smith had been treated like other landowners outside of the district.

In his decision, Sessions also examined the city’s reasons for creating the moratorium, finding the moratorium was intended to give the city more leverage in its relationship with the town while also promoting economic development in the city. “There is no evidence suggesting that the Smiths were in any way involved or even considered when the City enacted the moratorium; it simply had nothing to do with them,” Sessions wrote. “The moratorium was enacted for a variety of reasons that pertained to years of unresolved tension between the Town and the City and a desire to increase the City’s negotiating power when they redefined their relationship going forward.”

“The City had rational reasons for choosing the path it did,” Sessions concluded. “The moratorium itself is a legitimate use of the government’s power.”

“The Court concludes that the City had a legitimate reason to exempt the sewer district but not the Smiths’ land from the moratorium and that the Smiths were not intentionally discriminated against in any way,” Sessions found.

In his initial filings, the Smiths argued the city had also violated Article 7 of the Vermont Constitution and engaged in extra-territorial zoning by providing the sewer access needed for development to one area of the town but not others. Early in the suit both sides filed motions for summary judgment, with the city winning dismissal of the charges based on state law.

The city is in the process of drafting ordinance changes to end the moratorium and establish an annual fee to be paid by new users of city water and sewer who are located outside of the city limits.

  • Jeff

    Get it yet, Sam?