Seattle House LLC filed a class action lawsuit in federal court Monday against the City of Delaware, alleging the city’s capacity fees are illegal and discriminatory, which has led to the city’s “affordable housing crisis.”
Westerville-based 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 in order to tap into the city’s water and sewer lines, the city imposed “arbitrary, capricious, and unlawful fees” on Seattle House totaling $1,917,883.
Miller goes on to state Seattle House contracted an independent third party to look into how the city calculated the nearly $2 million in fees. The investigation, he adds, argues Seattle House’s total fees should have been $693,881, and the city “overcharged” the developer by more than $1.2 million.
Miller states the fees are discriminatory and violate the Fair Housing Act of 1968.
“While the fees may appear to be facially neutral, the fees have a discriminatory impact on racial minorities,” Miller states.
In the lawsuit, Miller adds there is a shortage of affordable housing within the city and “racial minorities make up a disproportionate share of lower-income households who rely on affordable housing.”
“The fees make it economically infeasible to develop affordable housing in the city,” Miller states. “The lack of affordable housing in the city has disproportionate effect on racial minorities.”
Miller also states the city does not require non-residential developments to pay fees based on estimates and lets them only pay based on what they actually use, which he says violates the Fourteenth Amendment to the Constitution.
“Any possible basis of the city’s distinction between residential properties and non-residential properties is not based on distinguishing characteristics which are relevant to the interest that the city has authority to implement,” Miller states. “The city has no rational basis for the discriminatory treatment of residential properties.”
Miller adds the fees also violate the city’s own code, specifically a section that states water capacity fees will be evaluated and updated annually.
“The city has not evaluated or updated the sewer capacity fees each year since 2006,” Miller said.
Additionally, Miller alleges the fees violate Ohio law because they are “not fair, are unreasonable, and do not bear a substantial relationship to the cost of providing services to new users.”
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 complaint 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 has not yet filed a response to the complaint, but Lee Yoakum, the city’s community affairs director, 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.”
Glenn Battishill can be reached at 740-413-0903 or on Twitter @BattishillDG.