State high court to mull Saugus sewer squabble

SAUGUS – The state Supreme Judicial Court (SJC) has agreed to review a lawsuit between the town and a group of developers opposed to being billed for new sewer hookups.At issue is whether the town-imposed charge, which can reach nearly $10,000 for a three-bedroom home, is a fee or a tax.Although it may seem legal hair-splitting at first glance, one distinct difference under Massachusetts law is that a fee is not tax deductible.The plaintiffs challenging the town’s so-called inflow and infiltration fee are Denver Street LLC; Central Street Saugus Realty LLC; Kevin Procopio, trustee of Vinegar Hill Estates Trust; and Paul DiBiase, trustee of Oak Point Realty Trust.Money collected through the charge helps defray the cost of a massive sewer overhaul project the town was ordered to undertake by the state Department of Environmental Protection (DEP).”It’s a very interesting case and point of law,” said Town Counsel John Vasapolli, adding that the case is relatively unusual for the state’s highest court. “Basically the town was under a consent order to reduce the amount of sewage entering the Saugus River and flowing to the pump station. Unfortunately the pipes have leaks, so there was a lot of surface water getting into the system.”During heavy rains, the pump station carrying sewage for treatment in Lynn became overwhelmed by the volume, forcing Saugus to release the tainted water into the river. The DEP wanted the situation corrected.According to Town Manager Andrew Bisignani, the town sends about 4 million gallons of sewage daily to the Regional Wastewater Treatment Facility on the Lynnway in Lynn. But when it rains, the volume can easily increase to 17 million, he said.”If we didn’t let it go into the river, it would back up into people’s homes,” he said.The town is further burdened by the cost of sending surface water, which has infiltrated into the sewer pipes, for treatment in Lynn because the charge is per gallon.”There are times when we are paying to treat rain water,” Vasapolli explained. “We sat down the DEP and had to agree to stop the leaks.”The town counsel said the DEP in 2006 initially wanted to impose a moratorium on sewer hookups in Saugus, at least until the town decreased the volume of water infiltrating into the sewer system.”There was a formula,” said Bisignani. “For every gallon you put into the sewer system, you had to show you removed 10 gallons.” The fix, however, proved costly. The town hired an engineer to find the leaks and the work began. The most problematic areas were addressed first, mostly by relining the existing pipes unless they were beyond repair. Eventually, the volume of sewage was reduced to a level where the DEP agreed to lower the one-gallon-for-every-10 formula.The “i and i” fee was set at $9,900 for a three-bedroom home, based on estimates of water usage by a set number of occupants. Between 2006 and 2009, the town collected the fees and deposited them in a special account dubbed the sewer bank. During that time, homes were under construction, the owners eager to connect to the sewer system.The developers have argued the assessment is illegal, that a fee of $3,300 per bedroom for new construction is really a tax. The state Superior Court sided with the developers, as did the state Appeals Court late last year.The Appeals Court upheld the Superior Court view that the “i and i” fee was really an illegal tax. The SJC has stepped in to clarify the point of law, but no decision is expected until late 2011.If the highest court orders it, the town will have to pay back anyone who challenged the fee, plus 12 percent interest, Bisignani said.”Right now it amounts to a $1.2 million liability to the town. But we didn’t spend that money. We held it in escrow, anticipating there might be a challenge,” the town manager said. “We have $1.5 million in escrow.”Attorney Ira Zaleznik, who represents the town, said the case could be heard by the SJC as early as October or November. “It’s not an unusual time