Judge rules against Saugus in I and I suit; town to pay over $758G

SAUGUS – A Salem District Court judge sided with four developers calling the town’s inflow and infiltration fee an unlawful tax and has hit the town with a $758,000-plus judgment.What concerns Town Manager Andrew Bisignani more than the judgment, however, is if the ruling invalidates the Administrative Consent Order mandated by the Department of Environmental Protection nearly five years ago.The town was hit with a consent order in 2005 calling for a massive cleanup of the town’s sewer system. At the time, DEP Deputy Director Madelyne Morris recommended the town establish a sewer bank to help fund the cleanup. The sewer bank would require anyone who wanted to connect to the system to first remove waste water from the system.The program that was ultimately put into place required builders to pay $3,300 per bedroom to tie into the town’s sewer system. The cost was based on a 10-1 ratio where developers had to remove 10 gallons of wastewater for every 1 gallon they planned to add to the system.The DEP, however, also set benchmarks based on the number of gallons removed from the system, where the Selectmen could lower the ratio to 6-1 then 4-1, lessening the cost to developers. The Board of Selectmen as the Sewer Board could have lowered the cost to developers once the benchmarks were met but there was not enough support to pass the initiative.In fact board members clashed numerous times over the issue and in the meantime George Georges, Kevin Procopio, Central Street Realty and Lynnfield Developer Peter Confalone filed a lawsuit calling the fee an unlawful tax.The developers’ argument was essentially that an old problem should not be paid for on the backs of new business.The court agreed.Bisignani said the lengthy finding read in part that because the developers did not create the town’s sewer problems there was no rational logic or justification in charging new users for the cleanup cost. Court papers also ordered that the fees paid only by the four developers be returned.Bisignani said that accounts for the $758,000 and the plus would be statutory interest, which still has to be determined.”We have $1.73 million in the I and I account,” Bisignani added. “It will cover the cost.”The town has collected $1,672,000 in total in inflow and infiltration fees, however, so if all the fees are determined to be unlawful it will all but wipe out the account.Bisignani said what might save the town from having to pay back everything is the fact that the developers who argued against the fees made a point of noting they were paying the fees in protest.”The other developers did not do that,” Bisignani added.Selectman Michael Kelleher said the verdict didn’t surprise him because it’s what he predicted would happen all along.”Everybody likes to be right but I’m not happy that I am,” he said.Kelleher sought five times to lower the rate and was blocked each time by then board members Janette Fasano, Michael Serino and Stephen Horlick. Peter Rossetti sided with Kelleher.Initially Kelleher wanted to drop the ratio to 6-1, which would have dropped the fee to $2,200; later he lobbied for an even lower ratio, 4-1, which would have lowered the fee to $1,320 per bedroom. It wasn’t until Serino felt the town had banked enough in the sewer bank that he was swayed and actually made the motion to lower the fee.”The previous board was adamant that we get to one million gallons and that was three times what we had to do,” he said. “The board refused to lower the fees. It’s the risk we ran and now that risk has come home to roost.”Bisignani said the board could appeal the ruling and he planned to call a meeting to discuss the possibility.