QUESTION:

The following question was sent to the Legal Affairs Committee via email on October 19, 2006:

“We are seeking information about litigation of any nature concerning sewer service ‘availability’ charges, i.e., those sewer charges authorized by ordinance, regulation or policy for a public agency to collect money for sewer service available to a landowner even though there is no sewer connection to the land affected.”

RESPONSES/ANSWERS:

NACWA received a number of responses to this question, and has compiled the responses below as a resource for our members. The answers are listed by state, reflecting the different approaches that various states take to this issue. The only states listed are those from which NACWA received responses. Additionally, there is an excellent paper on availability fees, posted with permission of NACWA Legal Affiliate Barnes & Thornburg, LLP, that can be found at http://www2.nacwa.org/images/stories/membersonly/2006-leg-availabilityfeespaper.pdf.

California: California generally prohibits such charges, called "standby" charges, unless there is compliance with Proposition 218, which treats these charges as something like taxes which require customer/voter approval before new "standby charges" can be adopted. Additionally, the California Supreme Court recently decided Bighorn-Desert View Water Agency v. Virjil, 128 P.3d 220 (2006), which draws lines between water rates and charges and connection/capacity charges, and expands the reach of Proposition 218.

Kansas: In Kansas the issue turns on whether the charge is in the nature or a sewer use charge or in the nature of a capital charge and/or special assessment that benefits the land. If it is a sewer use charge it is not legal unless there is a sewer connection to the affected land. Jennings v. Walsh, 521 P. 2d 311 (1974). If it is a capital charge or special assessment, no sewer connection is required. Whitehead v. City of Fredonia, 673 P. 2d 125 (1983).

Massachusetts: No current law on this issue.

Michigan: In Michigan, sewage systems cannot make a ready to serve charge to properties not connected to the sewage system. Smith v Norton Township,2 Mich App 17; 138 NW2d 523 (1965). A property can be compelled to connect to the system over the owner's objection. Bedford Township v Bates, 62 Mich App 715; 233 NW2d 706 (1975).

Nebraska: Section 14-361 of the Revised Statutes of Nebraska code provides municipalities with authority to force a sewer connection and payment of sewer connection for any landowners with the corporate limits. However, if the municipality chooses not to force a connection, there is no authority to charge an availability fee.

North Carolina: Section 160A-317 of the North Carolina Statutes gives a municipality the authority to require connections to a sewer service, or alternatively to charge a limited availability fee to avoid hardships.

Ohio: Under Ohio case law (Colley v. Village of Englewood, 80 Ohio App. 540), a municipality may levy sewer charges against nonusers under the authority of the precursor to Ohio Revised Code Section 729.49, provided that the rates are fair, reasonable, and indiscriminatory.

Oklahoma: The City of Tulsa has an ordinance allowing availability fees, but it has not been enforced.

Rhode Island: Many municipalities have established “mandatory connection programs” that provide land owners with a specific amount of time to establish a connection. If no connection is established within the designated time period, the land owner is charged a quarterly “connect capable fee” until such time as a connection is established.

South Carolina: Availability fees are allowed where a sewer line is installed and no service connection is made because the property owner does not have a need at that time. It is typically charged for new developments where lots are sold and houses have yet to be built. The fees are charged to the property owner until the service connection is made and a "tap fee" is collected. The availability fee is then no longer charged, as the customer is connected and pays the normal user fees.

Tennessee: The Tennessee Court of Appeals ruled in the unreported opinion Phillips v. Metropolitan Government of Nashville (1991) that as long as sewer services are available to an owner/occupant of property, a municipality is authorized to charge for that availability whether or not there is an actual connection and use.

Texas: No current law on this issue.

Washington State: There are three cases wherein Washington courts have dealt with the issue to some extent: Holmes Harbor Sewer Dist. v. Holmes Harbor, 155 Wash. 2d 858, 123 P. 3d 823 (2005); Carrillo v. City of Ocean Shores, 122 Wash. App. 592, 94 P. 3d 961(2004); and Samis Land Co. v. City of Soap Lake, 143 Wash. 2d 798, 23 P. 3d 477 (2001).