Maynard

Faircloth

CHARLESTON – Former state Supreme Court Justice Spike Maynard and former state legislator Larry Faircloth abolished a tax on new homes in Berkeley County, but state and local regulators want the Supreme Court of Appeals to reinstate the tax.

The Justices will hear oral arguments Feb. 15 on "capacity improvement fees" that county water and sewer commissioners imposed on homes Faircloth built.

Maynard, acting as special judge after five local judges recused themselves, found the state Public Service Commission exceeded its authority when it approved the fees.

He defined county sewer and water districts as county government, alarming water and sewer commissioners who have borrowed millions on their own authority.

Jefferson County public service commissioners, arguing as friends of the Court, claim Maynard's decision added $9.58 to their average monthly residential bill.

Faircloth argues the county taxed improvements he had to donate to the county.

"Double taxation by any standard is not only absurd but is blatantly unconstitutional," wrote his spouse and lawyer, Laura Faircloth of Martinsburg.

She wrote that the fees would increase the cost of a new home by more than $7,000.

"Perhaps what the public service districts fear is the political impact that raising water and sewer rates will have on the integrity and public confidence in the management of the districts," she wrote. "It might jolt the county commission out of its slumber."

She asked why salary increases of district attorneys and managers approximate what Supreme Court justices earn. She asked how the sewer district can justify salaries of its general manager and his wife who operates in a supervisory capacity.

She asked why the sewer district manager drives a state vehicle to and from his residence in Maryland. She asked how the district can justify $1,500 chairs and exorbitant Christmas parties.

She asked how water district general manager Paul Fisher purchased three residential properties worth $600,000 from a developer around the time water was provided to that person's subdivisions.

In 2009, Faircloth and his company, Larry V. Faircloth Realty, filed a complaint with the Public Service Commission over capacity improvement fees.

The commission initiated an investigation and held a hearing.

While the commission awaited briefs, Faircloth sued the water and sewer districts in Berkeley Circuit Court.

After five recusals, the Supreme Court of Appeals appointed Maynard to preside.

Water and sewer commissioners argued Maynard lacked jurisdiction because Faircloth hadn't exhausted administrative remedies.

They claimed public utility rates were the province of the Public Service Commission.

They denied they were agents of the county.

Maynard held a hearing and upheld Faircloth on all points.

He wrote that any decision by the commission would be a determination of facts and not a legal determination.

"The court therefore concludes that there are no administrative remedies to be exhausted," he wrote.

He wrote that the issues were within his conventional experience and didn't require the special expertise of an administrative agency.

He found capacity improvement fees substantially the same as impact fees subject to the Local Powers Act of 1990.

He wrote that a county can't require impact fees from developers without meeting requirements including adoption of a comprehensive zoning ordinance.

Finding the county hadn't adopted an ordinance, he disqualified county commissioners from imposing and collecting fees under the act.

He rejected a distinction between counties and utility districts they create, quoting six West Virginia Code provisions connecting them.

He wrote that "public service districts are under the virtual, if not micro, control of the county commissions that establish them."

He held that the Public Service Commission's authority over rates didn't apply because capacity improvement fees didn't meet the definition of rates.

He wrote that rates are continuous charges and special assessments are different.

He called capacity improvement fees "a special kind of tax that is imposed upon only some of the properties in a governmental district because of the special benefit to those properties of a particular public improvement."

He wrote that the Infrastructure Act of 2005 eliminated capacity improvement fees on developers like Faircloth who donate improvements.

"The court concludes that when the enactments of the Legislature and an administrative agency conflict, the enactments of the Legislature prevail," he wrote.

The next day, he declared himself a candidate for Congress and recused himself.

The water and sewer districts appealed, and the Justices consolidated the cases.

For the water district, Robert Rodecker of Charleston wrote that Faircloth developed Elizabeth Station subdivision on 135 acres.

He wrote that at least 170 homes had been built with 105 lots planned for sale.

He wrote that capacity improvement fees equitably apportioned future capital needs.

He wrote that in six years the district constructed capital improvements of $56,592,067.

"Defendants were unaware of the fact that Justice Maynard intended to rule on the plaintiff's motion for summary judgment until receiving the declaratory judgment order from counsel for the plaintiff on Feb. 17, 2010," he wrote.

He wrote that Maynard and Faircloth apparently didn't understand the purpose and function of the Infrastructure Act.

He predicted a 22 percent rate increase if Maynard's order stands.

For the sewer district, William Rohrbaugh of Martinsburg wrote that it spent more than $100 million on collection and treatment capacity from 1995 to 2005.

He wrote that in 2006, the Public Service Commission authorized the district to repay $2,500,000 in bonds primarily through capacity improvement fees.

He wrote that the district pledged capacity improvement fees as primary security for a $15,000,000 bond issue.

He predicted an 18 percent rate increase if Maynard's order stands.

Public Service Commission general counsel Richard Hitt, as intervenor, wrote that utilities in Berkeley and Jefferson counties needed capital to meet unexpected costs.

He wrote that a capacity improvement fee is a utility fee or charge, not a tax.

In response, Laura Faircloth wrote that the Public Service Commission forgot that its function is to protect consumers from unfair or unlawful fees.

She mocked the districts for claiming they weren't aware that Maynard would rule.

"This is nonsense," she wrote. "What did the districts think the circuit court was to do with their motions?"

She wrote that the Public Service Commission abhors the Infrastructure Act because it cuts a wide swath through the commission's functions and jurisdiction.

"This Act effectively trims the PSC's sails," she wrote.

She wrote that voters have twice defeated a county wide zoning ordinance and no one plans to resubmit the issue to voters.

More News