UPDATE: The Minnesota Supreme Court has just announced it will hear a pivotal case regarding the city of Duluth’s stormwater utility fees, a legal clash with significant financial implications for local businesses. The court’s decision, confirmed earlier today, stems from a class-action lawsuit filed by Moline Machinery LLC and Glass Merchant Inc., doing business as Walsh Windows, which claims the city has overcharged nearly 1,500 businesses since 2015.
The lawsuit, initiated in September 2021, alleges that Duluth employs an inequitable system to collect stormwater fees, a practice that could cost the city an estimated $14.85 million in refunds. This urgent case has drawn attention as it implicates broader issues of municipal finance and regulatory authority.
In a previous ruling, Judge Eric Hylden sided with the city, stating that the utility fees were designed to “break even” and did not constitute “unjust enrichment.” However, the Minnesota Court of Appeals revived the case in September, indicating serious questions about the fairness of the city’s fee structure, which is based on the amount of impervious surface on business properties.
The plaintiffs argue that their stormwater fees are disproportionately higher than those of other property types, including multifamily housing. They assert that the city has engaged in “sweetheart deals” by underbilling certain properties while overcharging others, leading to significant financial burdens for businesses like Moline, which claims it was charged up to $32,569 annually.
The Supreme Court’s involvement means that the case could redefine how municipalities across Minnesota manage stormwater utility fees, a vital issue as cities grapple with climate change effects and aging infrastructures.
The court has scheduled a series of written briefs and responses to be submitted through May, setting the stage for oral arguments to follow. The legal battle is not just about money; it underscores the complexities of municipal governance and its impact on local communities.
Assistant City Attorney Elizabeth Sellers Tabor warned that the appellate court’s decision could lead to detrimental consequences for municipal utilities statewide, claiming it undermines established legal precedents. Meanwhile, attorneys Shawn Raiter and J.D. Feriancek, representing the businesses, argue that the case addresses essential principles of equitable relief and should not be dismissed lightly.
In a noteworthy development, the League of Minnesota Cities has been granted permission to file an amicus brief, highlighting the case’s statewide significance. The outcome could influence how cities assess utility fees necessary for managing stormwater discharges, a requirement under state and federal regulations.
As the legal landscape evolves, stakeholders and the public are eager to see how this case unfolds, with potential ramifications that reach far beyond Duluth. Stay tuned for further updates as the situation develops, and consider sharing this urgent news with your network.
