ST. ALBANS — St. Albans Town went to court on Friday to convince Judge A. Gregory Rainville that it has legal standing in its lawsuit challenging St. Albans City’s water and wastewater affiliation fee.
Rainville had called for the hearing to give the town an opportunity to present evidence to bolster its claim of standing. The city has argued for dismissal of the case on the grounds that the town lacks that standing.
In order to have standing to bring a lawsuit, the plaintiff must show that an injury has been suffered, that the defendant caused the injury and that the courts could potentially redress that injury in whole or in part.
“It has to be an injury in fact… it can’t be so remote it’s speculative,” Rainville said, later adding, “I don’t know if the town has met its burden or not… I see it as a real issue.”
The town has challenged the affiliation fee on 12 different grounds. The city has countered that the town lacks standing on each of its dozen claims.
The passage of the affiliation fee ordinance in November 2015 ended a moratorium on the sale of new water and wastewater allocations outside the city limits. Under the ordinance, anyone with a new connection to city water and wastewater must pay an affiliation fee based on the value of their property to the city. If the allocations are to expand an existing business, the fee is based on the additional value of the property.
The affiliation fee is in addition to the fees charged by the water and wastewater utilities. Unlike those fees, the affiliation fee goes to the city’s general fund, not the utility funds.
Every application from a town property owner seeking water and wastewater allocations has been approved since the ordinance was passed. That includes the town itself, which was granted allocations in August for a proposed town garage. As a non-profit the town does not have to pay the affiliation fee.
The town considers the fee an infringement of its taxing and zoning authority. In addition, town attorney Chad Bonanni argued, the town pays rates to the water and wastewater system which gives it grounds to challenge what it sees as an illegal diversion of funds paid for water and wastewater utilities – the affiliation fee – to the general fund.
When Bonanni mentioned that the town has now filed for water and wastewater allocations, the city’s attorney, William Ellis, promptly pointed out that the allocations were granted and that the town does not have to pay the affiliation fee, stating, “No injury.”
“They were still subject to the review criteria, which we argue is standardless and arbitrary,” Bonanni replied.
The town called just one witness, town manager Carrie Johnson.
Johnson was asked about filling out the town’s application for water and wastewater allocations, including the criteria asking why the project can’t be built in the city.
She said, “It was a difficult question to answer because we would like it in our municipality.”
As part of the town’s application, Johnson stated, “I had to… go to a city council meeting and request water and sewer for our town facility. It just felt odd to me.”
No one asked Johnson about previous versions of the garage plan, which included an onsite mound system for sewage.
Bonanni also entered in to the record allocation applications from two businesses and a non-profit, at least two of which included site plans. All of those allocations were granted. Johnson also estimated that Peerless Clothing pays $25,000 to $28,000 annually to the city in affiliation fees following its recent expansion.
Ellis asked Johnson if applicants were required to submit site plans as part of the allocation request. She said no, adding, “I sense consultants view it as similar to a zoning application.”
Ellis also asked Johnson, “How is the town injured?”
She answered that there were two ways in which the town is injured. “It feels like they’re taxing our residents, and I’d like to be the only one to have that ability, since there’s a lot of infrastructure.
“If feels like they’re zoning our residents and businesses.”
When a zoning application comes before the town, the town has the ability to approve it, disapprove it or approve it with conditions, Ellis said, prompting Johnson.
Johnson agreed they did. She also agreed that was true regardless of whether or not the project sought water and wastewater allocations from the city.
The town could also levy property taxes regardless of the source of the water and wastewater, Johnson admitted.
Asked if the town benefitted from the increased property value of developments using city waste and wastewater, Johnson said it did.
Ellis asked if properties with city water and wastewater added more value to the town, presumably to the grand list, than other properties. Johnson said that was “probably fair to say.”
However, she added that businesses look at their total cost of doing business and the addition of the affiliation to that cost may cause a business not to locate in the town.
In response to a question from Rainville, Johnson said she had heard of businesses choosing not to locate in the town because of the affiliation fee.
Following up on that statement, Rainville asked if the town had direct evidence of such a business.
Bonanni said they did not.
Rainville then asked if the town had evidence of the fee having an adverse impact on growth and economic development.
Bonanni said that evidence was in Johnson’s testimony.
“It’s opinion evidence, not based on facts,” Rainville answered. “She may be absolutely right. I’m just looking for evidence to support the opinion.”
The city chose not to call any witnesses.
Ellis instead pointed to briefs the city has already filed. “The town has the burden of establishing it was directly injured… not just that they’re concerned,” he said.
The town, Ellis argued, has been “unwilling or unable to buy into the city’s system,” adding, “The city isn’t going to give away its asset for free.”
“The moratorium wasn’t good for the region,” Ellis continued. “This was an attempt by the city to allow some economic development in the region, given the town’s unwillingness to participate.”
Bonanni challenged that characterization, saying, “The fact that it isn’t on the city’s terms, doesn’t mean they’re unable.”
Taking aim at the town’s argument that the fee is a tax levied by the city outside its boundaries, Ellis said, “This is voluntary. Taxes are involuntary.”
He compared paying the fee to joining a club. By paying the fee, town property owners can access city water and wastewater services on the same terms as city residents and businesses. “It’s an access fee. It’s a membership fee, and people are willing to pay it,” Ellis said.
The town, Ellis noted, could provide water and wastewater services. “They could go build their own plant if they so choose,” he said.
When it was his turn to speak, Bonanni reiterated his argument that the town’s status as a ratepayer conveyed standing.
“But you haven’t shown discrimination,” Rainville said. “You’ve asserted it, but you haven’t shown it.”
Rainville asked the city how a developer could have certainty of approval of a project given the subjective nature of the review criteria, presenting a hypothetical case of a developer seeking funding for a project, and not getting it because she can’t assure the bank the project will qualify for water and wastewater allocations.
Ellis answered, “They may be subjective, but there’s criteria.”
“If there’s a developer out there who gets denied an application, they have standing,” said Ellis. “Attack something that is concrete, that we can litigate. This is all theoretical.”
Both the city and the town have asked for Rainville to issue a summary judgment, as the two sides do not disagree on any of the facts in the case, just the legal validity of the fee ordinance.
The town is seeking a favorable judgement on its 12 claims, while the city is seeking a dismissal on the grounds that the town does not have standing to sue.
Rainville did not say when he expects to issue a decision on any of the motions before him.