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Sewer system's financial health rests on fee's legality
A court hearing Monday could determine whether some Holmes Harbor Sewer District residents get a refund on some payments.
It could also end almost doubling the monthly sewer fees currently paid by district residents.
A lawsuit brought by Jack Sikma, a landowner with dozens of properties in the district, will challenge the district's policy of charging stand-by fees on vacant lots. The suit, scheduled for a hearing Monday in Island County Superior Court, comes as the district initiates the foreclosure process on two of his 38 individual property holdings within the district.
Stan Walker, president of the Holmes Harbor Sewer District Board of commissioners, said the district knew the suit was coming. The foreclosure on two of a number of Sikma's properties that are in arrears on assessment payments was done purposely to trigger the suit.
Based on a case law established by the state Supreme Court in 2001, Sikma's suit claims stand-by fees, or fees charged on vacant properties for the possibility of future municipal services, are illegal.
The Supreme Court agreed with this argument in the case of a landowner who sued the city of Soap Lake over water service standby fees. The city was forced to pay back tens of thousands of dollars it had made off the fees since 1990 and had to stop charging them.
In the Holmes Harbor Sewer District, similar fees have been charged since the district built its sewer treatment plant in the early 1990s. However, Walker said, the fees have always been used specifically for providing sewer service. Soap Lake placed its stand-by revenue in its general fund for multiple uses.
Walker said the district's commissioners and its attorney, Michael Ruark, are "cautiously optimistic" about the case. He said district property owners have always known fees charged on vacant lots in the district benefit a sewer system they voted to build. Property values in the district are tied to that system.
"Without a sewer system here, your lot is a summer camping lot," he said.
Should the district lose the suit, Walker said, the district would lose a lot of income. The monthly cost of sewer fees paid by the district's 205 homeowners would likely jump from $58 to $93 to make up the difference.
For his part, Sikma claims the district owes him about $75,000 in stand-by fees. Should he win the suit, other vacant lot owners in the district could collect fees they have paid over the years.
But, he said Friday, the suit is not about money the district might lose.
"I don't see it that way," he said.
The suit is about whether or not it is charging fees according to state law, he said.
Sikma said he could not venture a prediction as to the outcome of the case.
Judge Alan Hancock will hear arguments in the case starting at 1 p.m. at the Island County Law and Justice Center.