Real Estate Development Advisory: Massachusetts Court Rules that an I/I "Fee" for Sewer Connections Is Actually an Ilegal Tax

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More than $670,000 has been returned to developers of new properties in Saugus, thanks to a recent decision by the Massachusetts Superior Court. In Denver Street LLC v. Town of Saugus, the court ruled that the Town of Saugus had imposed an unlawful tax on new developers.

The decision dealt with the Town’s attempt to finance its state-mandated infiltration and inflow (I/I) reduction process. I/I includes groundwater and other extraneous water that enters a sewer system through defective pipes, illegal connections, manhole covers, and the like. I/I increases the volume of liquid in a sewer system, which can lead to sewer overflows.

In April 2005, after repeated sewer overflows into the Saugus River, the Town entered into an administrative consent order with the Massachusetts Department of Environmental Protection in which the Town agreed to reduce its rate of I/I. The Town then began requiring any person seeking a new connection to the sewer system to pay the Town an amount equal to 10 times the project’s proposed wastewater flow, multiplied by $3.00—known as the I/I Reduction Contribution (I/I Contribution).

Please see full advisory for more information.

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