The Arizona Supreme Court has ruled that the town of Marana is in violation of state law after forcing future homeowners to bear the complete costs of a new wastewater reclamation facility.
The justices said in an unanimous decision that development investment fees may not be imposed onto new residents if it is a burden that all taxpayers should carry equally, according to state law.
The justices emphasized that their ruling was to not second-guess Marana’s policy judgements about what is needed to obtain a 100-year water supply, but to “narrowly construe the Town’s authority to assess development fees… to ensure that new residents do not bear a disproportionate share of the costs of necessary public services.”
“As a threshold matter, most if not all of the acquired, new, improved, and expanded facilities clearly provide necessary public services,” Justice Clint Bolick wrote.
Back in 2012, Marana obtained the wastewater reclamation facility from Pima County. This allowed for the facility’s effluent to contribute to the 100-year water supply and use it to “recharge” the aquifer, demonstrating long-term water supply.
In 2017, Marana approved a Capital Improvement Project that would raise the town’s Class B+ water quality standard to the highest water quality possible, Class A+. But then, the town assigned 100% of the project debt to future water and sewer customers.
A lawsuit was then filed in 2018 by the Southern Arizona Home Builders Association.
The court of appeals upheld the trial court’s decision to side with Marana saying that the intent of the project was “entirely for purposes of new development” and that the town’s assessment of development fees was valid. However, the state supreme court says that validity does not apply in this case when the need for improved facilities are “unchallenged.” The court also added that intent is irrelevant, especially when permission is determined through a town’s compliance with state requirements.
Marana’s attorneys contended, saying that the level of service for existing residents remained the same.
“They get tap water. They flush the toilet and it goes away.”
Bolick disagreed, saying that state law actually requires “new development costs [to be] based on the same level of service provided to the existing development,” which was B+ water quality– not A+. Yet, the Arizona Department of Environmental Quality required Class A+, based on available technology.
“The uncontroverted evidence demonstrates that the improvement in water quality from B+ to A+, which ADEQ mandated as a condition of the project, provides healthier water that may be used for a wider variety of purposes— to the entire community’s benefit,” the justice wrote.
Now, the Southern Arizona Home Builders Association may be able to argue expenses included in the fees. However, this does not mean that new development does not have to pay their proportionate share. The proper allocation of costs requires “evidence-based findings” under the state statute.
The state supreme court sent the case back to the trial court to determine cost allocation.