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Court overturns judge's ruling against Berkeley County's public water and sewer districts

Court dismissed Faircloth Realty's lawsuit, but did not rule on the legality of capacity improvement fees

February 25, 2011|By MATTHEW UMSTEAD | matthewu@herald-mail.com

MARTINSBURG, W.Va. — In a 4-1 decision, the West Virginia Supreme Court of Appeals has ruled that a judge did not have jurisdiction last year when he decided that Berkeley County's public water and sewer districts exceeded their power when they imposed capacity improvement fees.

Justice Brent Benjamin dissented in the memorandum decision that was filed Thursday in the case between Larry V. Faircloth Realty Inc. and the Berkeley County Public Service Water and Public Service Sewer districts.

The West Virginia Public Service Commission, which regulates public utilities in the state, was an intervenor in the case.

The high court ruled that Faircloth Reality "failed to exhaust its administrative remedy" through the state PSC, which initially converted the developer's complaint in 2009 into a general investigation and has yet to issue a final order, according to attorneys handling the case.

"The remedy sought by Faircloth Realty in the circuit court is essentially the same remedy being addressed by the PSC's general investigation that was initiated by the two complaints filed by Faircloth Realty against the Public Service Districts," the court ruled.

While the court dismissed Faircloth Realty's lawsuit, it did not rule on the legality of capacity improvement fees, attorneys said Friday.

Faircloth Realty attorney, Laura Faircloth, said the court's ruling "basically throws the hot potato back to the Public Service Commission" and vowed that her client would exhaust the remedies the legal process provides, including another possible appeal to the high court.

In his January 2010 ruling in favor of Faircloth Realty, former state Supreme Court Justice Elliott E. "Spike" Maynard said the utilities exceeded their powers when they imposed the fees, which he ruled are "substantially the same concept and fee as an 'impact fee'" that is allowed under the Local Powers Act.

The Berkeley County Commission and its agencies are disqualified from imposing and collecting impact fees because it has not adopted a comprehensive zoning ordinance, which is a tenet of the Local Powers Act, according to Maynard's decision.

The utilities collect a total of $6,770 per proposed residential building lot as part of financing upgrades to their respective systems.

Utility officials have said customers would have had to shoulder substantial rate increases to cover the cost of new infrastructure that has been financed with the fee structure if it is deemed illegal.

Water district legal counsel Hoy Shingleton said the utilities have contended that the capacity improvement fees were legal because the public service districts are separate legal entities from the county and are governed by the PSC, which permitted the fees to be collected.

While water district board members are happy about the ruling, Shingleton acknowledged that the PSC has yet to issue a final order.

"We'll have to wait and see what they do," Shingleton said.

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