BOISE – Cities across Idaho are closely watching a lawsuit that seeks refunds of millions of dollars in sewer connection fees paid to the city of Hayden by everyone who built a new home there.
The lawsuit went before the Idaho Supreme Court on Wednesday, the Idaho Press-Tribune reported. The justices will issue their decision in writing in the coming months.
Jason Risch, attorney for the North Idaho Building Contractors Association, argued, “The city of Hayden illegally extracted money from its citizens. . What’s in dispute today is do they get to keep the money, or do they have to give it back?”
He called the $2 million in question “ill-gotten proceeds.”
Hayden Mayor Steve Griffits said his city has done nothing different from other cities across the state.
“We know we’re going to have growth,” he said. “How do you pay for replacement and expansion? Every city’s going to go through that.”
The builders’ lawsuit is a class-action suit on behalf of everyone who paid the Hayden fee during the years in question. Initially, a district judge tossed out the 2012 lawsuit, saying the city’s fee – which was raised from $774 per home to $2,280 in 2007 – was a reasonable user fee.
Idaho law allows cities to charge sewer connection fees, but they must be user fees – based on how much that new user will benefit from connecting to the sewer system.
The North Idaho Building Contractors Association appealed to the Idaho Supreme Court, which ruled in 2015 that the city hadn’t proven its case and sent the case back to district court.
The Association of Idaho Cities filed a friend-of-the-court brief in the case, urging the Idaho Supreme Court to clarify how cities can legally charge sewer fees to be able to serve growing communities.
Griffits said the city has spent more than $800,000 on attorney’s fees in the case over the past eight years. He said Hayden all along has just been trying to make sure it can “handle commercial, industrial and residential growth and development. We have to have infrastructure to be able to do that,” he said.
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