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Despite ruling, city expects no immediate change to drainage fee

Tuesday, July 1, 2014 by Mark Richardson

A judge’s ruling rendering a portion of the city’s Drainage Fee invalid could put millions of dollars worth of critical flood control and watershed protection programs at risk. State District Judge Amy Clark Meachum ruled Friday that the flat $9.20 fee charged to almost all of Austin’s utility customers was unfair to people living in multifamily housing such as apartments or condominiums.


The monthly fee raises more than $71 million a year, and the city uses the money to fund projects such as building and maintaining storm sewers, as well as high profile projects, including the plan to buy out hundreds of flood-damaged homes in the Onion Creek floodplain. The city also uses the fee to fund erosion control and creek bank stabilization projects and to pay for debt service on bonds sold to fund major drainage projects such as the Waller Creek Tunnel. Most of the programs funded by the fee are administered by the city’s Watershed Protection Department.


A group of ratepayers brought the lawsuit against the city in 2009, claiming that the Drainage Fee charged for their small apartments was the same amount the city charged owners of large homes and businesses.


“The state statute requires several things of the drainage fee charge, one of which is that is has to be equitable for similar services,” said Robby Alden, the attorney for the three plaintiffs. “All the other cities in the State of Texas treat multifamily properties like commercial properties, so they are charged for the actual square footage of their impervious cover on the land. The drainage fees are designed to help municipalities pay for their stormwater collection systems.”


Alden said Monday that Judge Meachum instructed him to prepare the judgment in the case, which is what typically occurs in such cases.


“They city will have to look at it and I don’t know whether we can reach an agreement of what the terms of the judgment will actually be or not,” Alden said. “What our lawsuit was about was declaring the city’s drainage fee ordinance invalid as it applies to multifamily users.”


He said the fee hits low income Austinites particularly hard, as most of them tend to live in apartments.


“One of our clients was a retired lady on a fixed income who occupied a 600-square foot apartment, and she’s paying the same fee that Michael Dell does,” he said.


For its part, the city is taking a wait and see attitude about the ruling. Through City spokesman Kyle Carvell, the Law Department issued this statement Monday:


“The judge’s ruling is preliminary and not a final judgment. Moving forward, the city and the plaintiffs in this case will work closely with the judge to obtain a final judgment,” it said. “The city is disappointed in the judge’s ruling and will assess its legal options as this matter continues to evolve within the court.”


However, the spokesman did move to shore up any concerns over a multimillion-dollar program approved by City Council less than 24 hours before the judge’s ruling, saying, “It is the city’s assertion that the court’s decision does not affect approved buyouts in the Onion Creek area.” He was referring to the $31 million program approved Thursday to buy out another 116 homes in the Onion Creek floodplain using revenues from the Drainage Fee.


The city charges the drainage fee to 27,500 commercial customers and 320,000 residential customers, almost half of whom live in multifamily properties.


“For multifamily properties in the City of Austin, the city treats them like residential units and they simply charge the same flat rate for apartment users as they do houses,” Alden said. “They have studies that show a huge difference in the amount of square footage that an apartment typically occupies versus a residential home. … So typically, the residential user will pay 10 times more than the other tenants for occupying the same amount of space in the same building.”


Alden says he believes that the city should not be able to charge the drainage fee to multifamily utility customers until it comes up with a system to restructure the fee to make it fair. However, he said the city is likely to ask the judge to stay the enforcement of the judgment until an appeals court rules in the case, and if that is the situation, they could continue to charge the fee until the case is resolved.


Alden says he will meet with city officials in the next few weeks to begin negotiating the judgment in the case.

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