The stink over sewer fees

HAYDEN — With the elections behind them, two newly elected officials in the city of Hayden are looking into a lawsuit that could potentially have a huge financial impact on the city.

The lawsuit filed by the North Idaho Building Contractors Association challenged the city of Hayden’s sewer capitalization fees because of the way the city was using the money it collected. At first the courts sided with the city, saying it could continue collecting the fees, but NIBCA appealed that decision to Idaho’s Supreme Court, which took issue with how the city was using those funds.

“The court said the only way the city could charge an impact fee is to base it on the value of the existing system,” said NIBCA President Erik Campbell, explaining the city was basing its fees on the cost of expanding the sewage treatment facility they use.

Campbell said the city cannot charge a sewer capitalization fee for expansion of the system. He gave an example, saying if the city owned a $1 million treatment plant that served one million people, the city could charge a sewer capitalization fee of $1 per user of that system.

“It’s designed to pay for the system, not expansion,” he said, adding the cities of Post Falls and Coeur d’Alene have legitimate sewer capitalization fees. “Hayden is not doing it right.”

City Administrator Stefan Chatwin did not return phone calls Friday, but Hayden City Council President Roger Saterfiel said he thinks the city may be close to resolving the sewer fee issue.

“There’s not a lot I can tell you about it because it is an active lawsuit,” Saterfiel said. “In my opinion, it is probably close to being resolved and I don’t want to jeopardize that.”

Saterfiel said the courts didn’t say the city had to stop collecting the fees.They simply didn’t like the way the city calculated the fees.

“So we hired a consultant to take a look at that,” he said, adding the consultant calculated the new fee and found that Hayden was actually charging less than what they could have legally charged for sewer. “I don’t think we will do that. I think what we are currently charging is adequate.”

Saterfiel said he expects the city will be able to discuss the issue in more detail shortly after the beginning of the new year.

Mayor-elect Steve Griffitts could not be reached for comment on Friday, but said in earlier interviews that he is very concerned about the potential financial impact the city is facing if they have to refund all of the sewer capitalization fees.

When the Supreme Court remanded the case back to district court, Campbell said NIBCA filed for a summary judgment and a refund of the sewer fees. That hearing is scheduled for Feb. 16.

Councilman-elect Matt Roetter, who made the sewer fees a campaign issue, said he has also been looking into the potential impact to the city. Roetter, who is also very familiar with the class action lawsuit process, said when he read the class certification filings in the lawsuit, he discovered the sewer fees amounted to more than $3 million. Then Roetter said he discovered the city has spent well over $500,000 on defending the lawsuit.

“I said to myself, ‘Whoa, that is a big hit,’” he said. “I don’t know where that money come from. Will the city have to create a new levy to pay for that?”

Roetter said the city only collects about $1.2 million in property taxes. The rest of its $5 million budget is funded through various fees and other sources of revenue. Roetter is also concerned the city will get stuck paying attorney fees for NIBCA if they prevail at the hearing in February because they are being backed by the National Association of Home Builders and the state association is helping to back up the lawsuit. The city’s insurance will not cover any of those costs.

“I just wonder why is the National Association of Home Builders picking on a small city like Hayden?” Roetter said, adding they are the largest lobbyist group in Washington, D.C. “I just think that money could have been better spent fighting the Environmental Protection Agency and getting them to back off on the (water quality rules) that forced the cities in Kootenai County to spend over $100 million to upgrade their sewage treatment facilities.”