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Supreme Court rules against Holmes Harbor

The state's highest court on Wednesday may have dealt a serious financial blow to Holmes Harbor Water District.

In a unanimous decision, the Washington Supreme Court ruled Nov. 23 that the Holmes Harbor Sewer District cannot assess fees and collect money from property owners who have unimproved home sites within the Freeland subdivision.

The district had sued Holmes Harbor Home Building, owners of some 80 vacant lots in the Freeland neighborhood, to collect monies needed to build and maintain sewage treatment facilities.

"Obviously we're a little disappointed with the decision," said Rosemary Larson, the sewer district's attorney. "We were a little surprised as well."

After noting she'd had less than a day to review the court's findings, Larson added that she can't comment further until she meets with district commissioners at their regular meeting Dec. 1.

Subdivision dates

back to the 1960s

First platted in the 1960s, Holmes Harbor Golf and Yacht Club was originally designed for 500 lots. But by the late 1970s, it was realized that the soil wasn't suitable for on-site septic tanks and the Holmes Harbor Sewer District was formed.

To pay for current and future sewage treatment, the district began assessing all property owners a fee. For owners of vacant lots, that fee had risen to $48.33 per month per lot by August 2002; property owners with a home on their lot paid that amount, plus $10 more.

Following their purchase of 80 sites -- most of which are unconnected to the sewer-treatment system and generate no wastewater -- the owners of Home Building refused to pay the assessments for their properties. The essential question: Whether the assessments were permissible regulatory fees or unconstitutional taxes.

Supreme Court rules for developer

In its decision, the state Supreme Court observed that the district required property owners, at their own expense and subject to district approvals and resolutions, to install on-site facilities before connecting to the sewer system. There is an application fee, a system connection charge, delinquent utility improvement payments (if any) plus engineering and inspection fees.

After Holmes Harbor Home Building refused to pay, the Holmes Harbor Water District sued the company. The district lost in lower court, then pursued the matter to the Supreme Court.

The court, however, ordered the case back to superior court.

"Given that the properties at issue are not improved, are not connected to the sewer system and have no guaranteed right to connect upon improvement ... we find that sewer service is not available to the properties ... and remand to the trial court with instructions to grant summary judgment in favor of Home Building," the justices ruled.

"Accordingly, we find the charges imposed by the district on the properties at issue are not authorized."

The court specifically noted that the lower court must determine if Holmes Harbor met the requirement allowing fees unless the land contained a structure that was "habitable" or "available for human occupancy."

Company happy with court ruling

Not surprisingly, the development company's attorney praised the ruling.

"We are very pleased the Supreme Court ruled as it did," Elaine Spencer said.

"They got it right. This has been a very sorry tale for all concerned," she said.

"The owners of vacant lots don't get to vote on commissioners who determine these unfair fees.

"Over time this became intolerable."

Spencer said her client had continued to pay the monthly assessment of $3,866 -- "For empty land," she added -- during the course of the lawsuit and would now go back to court.

"They have been forcing him to pay while the appeals have been going forward since February 2003, and he'll justly seek to get it back," Spencer said.

Spencer couldn't say if the decision would affect others who own vacant land at Holmes Harbor.

"I can't speak for them, but I assume it would," Spencer said.

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