HAYDEN — A North Idaho city’s officials are breathing easier after the Idaho Supreme Court on Friday, Dec. 28, vacated a district court ruling on its long-running feud with the North Idaho Building Contractors Association.
Hayden has been embroiled for years in a legal fight with NIBCA over the city’s sewer capitalization fees. From 2001 to 2007, the city raised the fee from $580 per connection to $774 per connection, and then hiked it to $2,280 per connection in June 2007.
NIBCA claimed that the fee was unlawful, calling it an impermissible tax instead of a fee for services rendered by the city. In 2015, district judge Cynthia K.C. Meyer held that the fee was lawful and dismissed NIBCA’s lawsuit.
However, the Idaho Supreme Court vacated the decision and remanded the case back to the district court. In its opinion, the Idaho Supreme Court noted that the record did not demonstrate if the $2,280 fee “was based upon the value of that portion of the existing city sewer system that the new user will be utilizing.”
When Meyer took up the case again, both sides argued about the meaning of the higher court’s holding. The city submitted a study by Financial Consulting Services Group, Inc. to show why its $2,280 fee was reasonable.
While acting in the belief that the Idaho Supreme Court’s decision had held that “the fee was an impermissible tax enacted without authority and without basis in Idaho law,” Meyer refused to consider the FCS study. The district judge then held that the fee had constituted an unlawful taking in violation of federal law, and awarded NIBCA $976.78 in costs, $219,707.77 in attorney fees, and $729,403.58 in damages plus post-judgment interest to be calculated at 6.5 percent.
Last month, however, the Idaho Supreme Court vacated the huge financial award, and remanded the case back to Meyer with additional clarification on its intent from the NIBCA I opinion.
“We hold that the district court erred when it failed to consider the FCS study,” Justice G. Richard Bevan wrote in the ruling. “We vacate the judgment and remand the case with instructions for the district court to permit both sides to present evidence on whether the 2007 Cap Fee complies with Idaho law. Since we vacate the judgment, we likewise vacate the award of attorney fees to NIBCA.”
Bevan added that whether there are any damages to award “will be an open question upon remand.” Neither party, said Bevan, will be entitled to attorney fees on appeal.
“It appears that the decision by the Supreme Court validates, at some level, the city of Hayden’s position with respect to capitalization fees,” said Hayden Mayor Steve Griffitts. “There obviously is more work to be done.”
With the case going back to trial, Griffitts said it also appears that “the citizens of Hayden will be incurring additional legal expense, which I wish they did not have to do.”
NIBCA executive director Leslie Streeter said the organization would have a comment after discussing the case with its attorney. Boise attorney Jason Risch, son of U.S. Sen. Jim Risch, argued NIBCA’s case before the Idaho Supreme Court.