11/15/2011 SEWER COMMISSION Minutes

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U.S.Supreme Court to hear Indianapolis sewer case Homeowners who paid in full say they were penalized By Jon Murray and Bill McCleety jon.mur•i-ay@indystar.com November 15, 2011 The nation's highest court agreed Monday to wade into a 6-year-old fight over Indianapolis sewer hookups that has left some homeowners feeling punished for paying fees promptly. They shelled out more than $9,000 in a single payment for new sewers in the Northwestside's Northern Estates neighborhood --and then watched, slack jawed,just a year later as officials forgave the debts owed by residents who had opted for installment plans and refunded nothing to those who had paid in full. The changes came as the city revamped its sewer expansion program to slash the cost of converting neighborhoods on septic tanks to sewers. The question for the U.S. Supreme Court: Did the city violate the U.S. Constitution's equal-protection clause when it treated the two groups of Northern Estates residents differently? The answer might seem obvious, but a legal expert said the case is tricky because courts often defer to such decisions by local governments. Taxpayer-rights groups are watching the Indianapolis case closely. "We do have examples where some people get treated differently than other people,"such as in tax amnesty programs, said David Orentlicher, a professor at the Indiana University School of Law-Indianapolis. "The question is,if you're going to say this is unacceptable, why is this (instance) unacceptable when the other ones are acceptable?" He added: "The court is going to have to draw some lines here.'' Whatever the justices decide could be worth thousands of dollars to 1,500 Indianapolis homeowners participating in two lawsuits--the one before the U.S. Supreme Court and one pending in U.S. District Court with nearly identical claims. For the city, more than $3.5 million --in partial refunds to homeowners who paid in full or paid installments early under the old sewer program --is potentially on the line. Already, the Northern Estates case that's'headed to the Supreme Court has tripped up various courts in Indiana. It's the smaller.of the two lawsuits and was brought on behalf of 45 plaintiffs living at 31,properties. A Marion County judge ruled the city owed the residents $381;000.The Indiana Court of Appeals upheld that. But in May, the Indiana Supreme Court disagreed. Its 3-2 decision found that the city's distinctions between installment payers and those who had already paid in full were rational. Essentially, the city argued that installment payers were more likely to be under financial hardship than those who paid all at once. No date for oral arguments has been set,'but those involved in the case said it's likely the U.S. Supreme Court will schedule a hearing in the spring. The outcome likely will affect the other case--which, so far, has held more promise for residents seeking partial refunds. Last year, a federal judge in Indianapolis ruled the city violated the equal-protection clause. The city likely will end up on the hook for$3.2 million once U.S. District Judge Tanya Walton Pratt, who has since taken over the case, enters a final judgment. The city plans to appeal that case to the 7th U.S. Circuit Court of Appeals in Chicago, but a Supreme Court ruling may decide the issue for both. Bill Rosenbaum, an Indianapolis attorney working on the U.S. District Court case, said he represents a class of 1,459 plaintiffs. He has conferred with attorneys working on the U.S. Supreme Court case, including Ronald J. Waicukauski: - Waicukauski said the cases arose from "a situation of incredible unfairness." "What the city did --essentially penalizing the people who are paying upfront--was really perverse," he said. "The last thing any government should do, in my mind, is penalize somebody who pays promptly the full amount." Waicukauski's clients all lived at the time in Northern Estates --an area between Kessler Boulevard, North Drive; Melbourne Road; 39th Street; and Kenilworth Drive.