Knob Hill Dev. LLC v. Town of Georgetown
| Decision Date | 11 September 2019 |
| Docket Number | Court of Appeals Case No. 18A-MI-2123 |
| Citation | 133 N.E.3d 729 |
| Parties | KNOB HILL DEVELOPMENT LLC; ASB LLC; RPO Construction, Inc.; Written Builders LLC; Appellants-Petitioners, v. TOWN OF GEORGETOWN, Indiana, Appellee-Respondent. |
| Court | Indiana Appellate Court |
Attorneys for Appellants: J. Christopher Janak, Paul D. Vink, Bradley M. Dick, Bose McKinney & Evans LLP, Indianapolis, Indiana
Attorney for Amici Curiae The National Association of Home Builders and Indiana Builders Association: Jason A. Lopp, McNeely Stephenson, New Albany, Indiana
Attorneys for Appellee: L. Rachel Lerman, Barnes & Thornburg LLP, Los Angeles, California, Nicholas K. Kile, Barnes & Thornburg LLP, Indianapolis, Indiana, Kristi L. Fox, Fox Law Offices, LLC, New Albany, Indiana
Attorneys for Amici Curiae Accelerate Indiana Municipalities and Indiana Municipal Lawyers, Inc.: Douglas D. Church, Alexander P. Pinegar, Church Church Hittle & Antrim, Noblesville, Indiana
[1] Knob Hill Development LLC; ASB LLC; RPO Construction, Inc.; and Written Builders LLC ("Builders") are all real-estate developers who appeal from the trial court's refusal to invalidate a 2018 ordinance passed by the Town of Georgetown ("the Town") setting charges for new customers of the Georgetown Municipal Sewage Works ("the System"). Builders contend that the system development charge ("SDC"), a/k/a connection fee, in the ordinance is arbitrary, capricious, and contrary to law. Builders also contend that a provision of the ordinance that automatically increases the SDC 2% each year is contrary to law. Because we disagree with Builders' first contention but agree with the second, we affirm in part, reverse in part, and remand with instructions.
[2] Builders each own property that is or will be connected to the System, which was constructed in the early 1990's and had its flow treated by the City of New Albany at the time. In 1994, the Town received approximately $3.8 million in grants ("the 1994 Grant") and, in 1998, the federal government forgave approximately $1.25 million in loans to the Town ("the 1998 Loan Forgiveness"). In 2004, the Town adopted an ordinance to finance expansions to the System, which began charging SDCs per equivalent dwelling unit ("EDU") upon connection. The SDCs were initially set at $2300 and $4800 per EDU for new in-town and out-of-town connections, respectively, to increase $100 per year after 2004.
[3] In or around 2011, the Town determined that it should build its own treatment plant, which it did, with the plant having an initial capacity of 350,000 gallons per day. The Town received a $3.5 million grant pursuant to the American Recovery and Investment Act ("the ARRA Grant") to fund construction of the treatment plant. In the years since, the Town has almost outgrown the plant's original capacity and is in the process of expanding it to treat 700,000 gallons per day. The Town has devoted $3.1 million borrowed from the Indiana State Revolving Fund and over $900,000 in Town funds to the expansion. On February 20, 2018, the Town adopted Ordinance Nos. G-18-03 and G-18-04, which established monthly sewer user fees and new SDCs, respectively. Ordinance No. G-18-04 imposed a new SDC of $7140 per EDU for both in-town and out-of-town customers with the SDC to increase 2% each year.
[4] On March 1, 2018, Builders filed a petition objecting to the rates and charges set in Ordinance Nos. G-18-03 and G-18-04. On June 19, 2018, the trial court conducted an evidentiary hearing. Doug Baldessari had advised the Town regarding the SDCs in Ordinance No. G-18-04 and testified at the hearing. Baldessari relied on the Water Environment Federation manual, "Financing and Charges for Wastewater Systems," ("the WEF Manual") which included the following guidance for setting SDCs:
[5] With this guidance in mind, Baldessari testified that he had used a combined method in which the new SDC would be determined by adding (1) the value of the utility divided by the number of existing EDUs to (2) the net cost per EDU to finance new development. Baldessari's calculations, dated February 8, 2018, are shown below:
[6] When calculating the total value of the utility, Baldessari testified that grants given to a utility for the purposes of keeping rates down at the time, such as the 1994 Grant, the 1998 Loan Forgiveness, and the ARRA Grant (collectively, "the Grants"), did not have to be left out. Baldessari testified that the SDC set by Ordinance G-18-04 "doesn't make the inside-of-town customers pay for growth that they don't share in[,]" Tr. Vol. II p. 91, and that leaving items such as the ARRA Grant out of the calculations would likely leave the Town short of the SDCs needed for growth-related improvements in the future. While Baldessari's calculations indicated that the new SDC should be $8800, he ultimately recommended a new SDC of $7140 for all new users.
[7] On August 13, 2018, the trial court (1) upheld Builders' objection to Ordinance No. G-18-03 because it failed to specify the percentage rate differential between in-town and out-of-town users as required by Indiana Code section 8-1.5-3-8.1 and (2) overruled Builders' objection to Ordinance No. G-18-04 on the basis that the Town had a rational basis for setting the SDCs as they did. The Builders appeal, claiming that Ordinance No. G-18-04 is arbitrary, capricious, and contrary to law in setting the base SDC and violates due process because it provides for an automatic 2% yearly increase in the SDC.
[8] Builders requested that the trial court enter findings of fact and conclusions of law pursuant to Indiana Trial Rule 52(A). (Appellants' App. Vol. II p.41.). In such cases, our standard of review is two-tiered. In re Paternity of B.M. , 93 N.E.3d 1132, 1135 (Ind. Ct. App. 2018). "First, we determine whether the evidence supports the findings, and second whether the findings support the judgment." Id. "The trial court's findings and conclusions will be set aside only if they are clearly erroneous." Id. "In reviewing the trial court's entry of special findings, we neither reweigh the evidence nor reassess the credibility of the witnesses." Id. "Rather we must accept the ultimate facts as stated by the trial court if there is evidence to sustain them." Id. "Conclusions of law are reviewed de novo ." 11438 Highway 50, LLC v. Luttrell , 81 N.E.3d 261, 265 (Ind. Ct. App. 2017), trans. denied .
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