The City of Delaware filed an answer in federal court this week responding to a class action lawsuit from a Westerville-based developer that alleges the city’s capacity fees are illegal and discriminatory.
Seattle House LLC filed the lawsuit in June, claiming the fee the city charges to tap into the city’s water and sewer lines violates the Fair Housing Act of 1968.
The lawsuit comes after Seattle House LLC purchased 24.2 acres on the city’s east side across from Glennwood Commons and developed the Seattle House Apartments on the property, which consists of 240 one- and two-bedroom apartments.
The developer’s attorney, Joseph R. Miller, states in the complaint that the developer had to pay fees totaling $1,917,883 to tap into the city’s water and sewer lines. The developer, Miller adds, contracted an independent third party to investigate the fee and claimed the developer should have paid only $693,881.
Miller also claims the fees are leading to an affordable housing crisis within the city, and the fees are a form of racial discrimination since “racial minorities make up a disproportionate share of lower-income households who rely on affordable housing,” and the lack of affordable housing has a disproportional effect on racial minorities.
The complaint also alleges the money obtained by fees amounts to unjust enrichment, and the city should be required to make restitution to Seattle House. The lawsuit asks the court to make the city pay damages, interest, attorney’s fees, and prohibit the city from charging the fees in the future.
The city’s attorney, David Moser, filed the city’s response Tuesday, denying the allegations made in the lawsuit.
“The claims in this case are contradicted by fact and unsupported by law,” Moser states at the start of his response. He adds the city has the highest amount of affordable housing in the county, and 17 of 36 low income apartment communities in the county reside in the city.
Moser said the city’s water and sewer fees are less than or reasonably comparable to fees in similar Ohio communities like Carroll, Gambier, Lancaster, Marysville and Pickerington. Moser adds “there is no demonstrable affordable housing crisis in the city, caused by any action or policy of city, including but not limited to the city’s current water and sewer fees.”
The response argues the lawsuit is just a way for Seattle House to try to make some of its money back.
“The complaint merely represents an opportunistic, threadbare, and arbitrary attempt by a property development company specializing in for-profit, market rate housing to claw back money on fees it has already paid to connect to the city’s water and sewer systems – fees carefully and comprehensively based on common industry rate-setting practices, supported methodology, and state guidance,” Moser wrote in the response. “Even worse is the developer’s thinly-veiled attempt to pad their bottom line through baseless accusations of racial discrimination.”
After the lawsuit was filed initially, City of Delaware Community Affairs Director Lee Yoakum issued a statement on behalf of the city.
“We are confident that these claims lack merit and the city will ultimately prevail,” Yoakum said. “As in any community boasting a high share of multi-family housing developments and exceptional water and sewer service, individuals and entities utilizing these services are asked to pay their fair share. Our city uses a well-established method to determine these fees and allocate costs that is used by many of our neighbors. We strongly object to a prominent developer’s attempt to derive profit from a baseless housing discrimination claim.”
On Wednesday, a preliminary pretrial conference was set for 11 a.m. Sept. 15. There have been no filings since the hearing was scheduled.
