A group of concerned Adams County taxpayers, including County GOP Chairman Gary Mikes and the Stop Stormwater Utility Association (SSUA), filed a motion on Friday asking an Adams County judge to enter judgment against the County’s hotly contested stormwater utility fee, referred to by its challengers as a “rain tax.” The citizens are represented by attorneys Sean Gallagher and Richard Murray of the national law firm Polsinelli PC. The citizens’ motion presents to the court evidence from the County’s own witnesses that demonstrates that the stormwater “fee,” as it is called by the County, is actually an illegal tax in violation of the Taxpayer’s Bill of Rights Amendment of the Colorado Constitution (TABOR). The motion is based on large part on the testimony of two county employees who admitted a laundry list of troubling facts. The most troubling revelation is that in its two years of existence, the stormwater “utility” has collected over $4 million from the taxpayers, and has yet to spend a penny on any stormwater projects.
“We find it very troubling that the stormwater utility has wholly failed to do any of the things it was created to do,” lead counsel Sean Gallagher said. “Rather, the County is just using these fees to pay for the overhead of government employees that previously was paid for by tax proceeds.” The taxpayers request that the judge prevent the County from collecting any further stormwater taxes and order that the nearly $4 million collected since 2013 be refunded to the taxpayers with interest.
Rather than put the fee up for a public vote as required by TABOR, the Board of County Commissioners pushed through on a 2-1 party-line vote a resolution in late 2012 creating a “stormwater utility” as a TABOR-exempt enterprise and imposing a service fee on property owners in unincorporated Adams County. In an internal County memo unearthed during the lawsuit, the County’s conclusion was: “The stormwater utility will most likely fail to pass a public vote.” The County’s main justification for the fee and the express purpose of the utility was to address critically needed stormwater capital projects and maintenance. The citizens in the lawsuit obtained thousands of pages of documents and a wealth of favorable testimony that show the County collected $4 million in fees but has not spent any monies whatsoever on stormwater projects or maintenance. Rather, in the utility’s first two years, about $711,000 has been spent, almost all of which has gone to administrative overhead, including staff salaries and benefits previously paid for by the County’s general fund.
The facts unearthed by the Polsinelli firm reveal that while only about $700,000 has been spent by the utility on overhead, the County spent over $5 million on stormwater activities from general fund and other governmental sources—the very activities that the fee was created to fund. In the lawsuit, the citizens describe what has happened as “an unconstitutional bait-and-switch.”
The Polsinelli firm also discovered that the stormwater utility is nothing more than another department of the County. The County’s witness admitted in sworn testimony that the utility does not itself employ anyone (they are all County employees); the utility does not have its own budget (all budgeting is done by the County); the utility is a “division” within a County department; and the stormwater fees collected are in a bank account owned by the County and considered County assets. The 40 plus page motion filed with the Adams County District Court details numerous other examples of the mirage of an enterprise, and the citizens contend that the evidence, all derived from the County’s own documents and witness, prove that the “fee” is an illegal tax, that there is no real enterprise, and that TABOR has been violated. The County has until January 9, 2015 to file a response to the citizens’ motion.
A copy of the Motion for Summary Judgment can be found on SSUA’s website at www.StopRainTax.com.