WASHINGTON TOWNHOMES V. WASHINGTON COUNTY WATER CONSERVANCY DISTRICT
From 2006 through 2017, the Washington County Water Conservancy District (WCWCD) charged impact fees on new building lots and homes. Generally speaking, impact fees are appropriate, normal, and even necessary to offset the cost of connecting a new home to the WCWCD's water resources and distribution system. But those impact fees must relate to the actual cost or impact of connecting the new home to the system. In this case, home builders and residential developers who built homes and developed property from 2012 through 2017 (Plaintiffs) challenged the fee amount.
The claim is simple – Utah law allowed WCWCD to charge Plaintiffs the cost to WCWCD of serving new construction and development but did not allow it to collect more than a reasonable calculation of that cost. From 2006 through 2017, WCWCD’s impact fees were based on a detailed financial analysis, which predicted what the cost to service a new home would be. In this case, the Plaintiffs claim that WCWCD’s analysis overstated the cost to serve a home from 2012 through 2017 as follows:
Overcharge for Actual Use. The impact fee amount assumed that a typical single family home demands 800 gallons of water per day (.89 acre feet per year). According to WCWCD's own records of historical use, a home actually demanded less than half that amount.
Unfair Discrimination Against Homes. Under WCWCD's plan, homes were forced to pay for twice the water resources their home would require, while business, industrial, and institutional users with larger water meters were charged based on calculation of actual historical use though the meter size required by the new user.
Overcharge for Actual Cost. Approximately eighty percent of the calculated impact fee to serve these homes was based on the projected cost of the Lake Powell Pipeline (LPP). The Plaintiffs here do not challenge the long-term need for the LPP but challenge the 2006-17 impact fee for three main reasons:
1. LPP Not Needed Yet. The LPP was not actually needed to serve homes built between 2012 and 2018. Most homes have now been connected to WCWCD’s service for from five to ten years without the LPP. Under the law, impact fees should be based on the cost to serve a new home, not the cost to serve homes that will be built several decades in the future. WCWCD’s own expert witness on water resources testified in 2020 that even three years after the last impact fee was paid in this case, WCWCD had all the water it needed, including for emergency purposes, to serve homes connected years after 2017.
2. LPP Not Paid for by WCWCD. WCWCD's impact fee plan ignored Utah law and assumed that WCWCD would issue hundreds of millions in bonding to build the LPP. Under state law, the state, not WCWCD, is to bear the initial cost of acquisition and construction of the LPP project. Therefore, the bonds to be repaid by the impact fees charged by WCWCD never existed and never were going to be issued because the state of Utah, not WCWCD, would provide construction funds. And even then, under state law, WCWCD has fifty years after the date that LPP water is first delivered to Washington County to repay its share.
3. Not Reasonable. Impact fees must be based on realistic financial assumptions. When the fees were collected, it was unrealistic to assume that water reserved for homes between 2012 and 2017 must come from a project that had not been built or even permitted at the time. Given the challenges involved in building the LPP, the impact fees should not have been collected to build it until the timing and construction costs could be more realistically calculated. A Washington County citizen or property owner cannot get a building permit to construct any land use that requires a water meter unless they pay an impact fee to the WCWCD. As all property rights are thus denied without payment of the fee, the fee by law must be reasonable and fair. Plaintiffs claim that to deny all use of land unless a property owner pays for a project which was not in place 5-10 years ago, was not needed to serve the property at that time, and was not likely to be built within a realistic time frame is both unfair and illegal.
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