By Eric Curl
Feb. 5, 2023 – The city of Savannah may pay up to $3.5 million to settle a lawsuit challenging utility connection fees charged to commercial and residential property owners.
VTAL Real Estate LLC alleged in the 2021 lawsuit that the city charged Von Trapp Animal Lodge “illegal” tap-in fees for water and sewer service even though the business was already connected to the city’s service lines. The class action included similar allegations for “numerous” unnamed property owners that had paid similar fees, citing court precedent that found “a municipality cannot impose a fee for services that have not been provided.”
VTAL sought a refund for about $2,300 in fees paid by the animal lodge in 2021, along with interest and reimbursement of attorney’s fees and costs. In addition the suit sought refunds for similar payments made by potential class action members since July 30, 2016, based on city and state restrictions concerning the eligibility of such refunds.
In total, VTAL originally sought $14 million prior to the reduced settlement amount being approved by the Savannah City Council in December after more than a year of discovery and “intense” discussions, according to city spokesperson Nick Zoller. Amounts not claimed by would-be class members would be returned to the city, Zoller said.
Meanwhile, city staff made the decision in mid-2022 to stop collecting the fees in similar circumstances, when there was no need to establish a new water and sewer connection. No changes have been made to the city’s ordinance in response to the lawsuit, but potential changes are a topic that will be discussed following finalization of the settlement by a judge, Zoller said.
VTAL’s attorney, James Roberts, IV, said via email on Jan. 31 that a proposed consent judgment has been drafted and once it is approved, all the parties will be submitted to the court. At that time, a motion for preliminary approval of the proposed settlement will be filed and class members will be notified prior to the scheduling of a final approval hearing, Roberts said.
The potential settlement comes as the city prepares to adopt an impact fee ordinance as a way to defray costs of expanding public facilities needed to serve new growth. The first of two public hearings concerning the proposed ordinance, along with a first reading, is scheduled for the city council’s meeting on Tuesday.
The potential impact fee is something some city council members have been pressing for since taking their seats in 2020 and is not being spurred by the lawsuit. In its court response, the city denied that any illegal taxes were charged and argued that the city was permitted to collect the tap-in fees without adopting an impact fee ordinance. The response cited court precedent that found municipalities could collect “a proportionate share of the capital cost of water or sewer facilities by way of hook-up or connection fees as a condition of water or sewer service to new or existing users.”
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