The Rapidan Service Authority (RSA) responded to the Greene County Board of Supervisors’ first lawsuit last week, citing sovereign immunity as well as calling the facility fee “an impermissible tax,” according to documents filed at the Greene County Circuit Court Clerk’s office.
RSA was created as a regional water and wastewater authority on June 17, 1969, by the counties of Greene, Orange and Madison. After the RSA Board of Members voted 4-2 July 16 to end monthly facility fee billing, Greene County requested the boards of supervisors in Madison and Orange counties to allow Greene to leave RSA. Both boards voted against that request.
The Greene County supervisors filed the six-count lawsuit on Sept. 14, requesting more than $25 million for alleged contract breaches, alleged violations of fiduciary duty and alleged non-compliance with its duties to Greene County.
In the demurrer, RSA asks that the suit be dismissed and the county be required to pay for the authority’s expenses.
There are six counts in the lawsuit. The first is alleged breach of contract that stems from the RSA board’s July 16 meeting vote to stop billing for and collecting of the facility fees which were an integral part of the county’s plan to fund the water project and continue to pay the debt on the sewer project.
The county is asking for $24.2 million for the money spent by Greene County in preparation for the new water system, according to the lawsuit.
The second count is alleged breach of fiduciary duty. The county alleged in the lawsuit that Greene paid for a $19,180 billing system to allow the facility fees to be added to the billing, as well as the fact that RSA kept 10% of facility fees collected monthly as part of the original agreement with the county. The county is asking for both the cost of the billing system, as well as the amounts collected from facility fees monthly by RSA and for RSA to produce the customer list to the county.
In the court documents, RSA says the two counts should be dismissed because the facility fee is an “impermissible tax.”
“The Greene County Board of Supervisors’ constant reference to this facility fee as a revenue source makes application of the law clear,” the plea in bar stated. “The facility fee is a revenue source and not for regulatory purposes. It is an impermissible tax and accordingly plaintiff’s count 1 and count 2 should be dismissed.”
Count three is for alleged breach of contract causing the “unjust enrichment” of RSA because the county assumed the debt in the 2005 agreement.
“RSA has been unjustly enriched by Greene County’s payment of $7,537,524.22 over 15 years,” the lawsuit stated. The county still owes $1,313,732.17 for future bond payments, according to the lawsuit. The county is asking for all that money back.
The fourth count alleged breach of contract due to RSA’s alleged failure to maintain the system.
The fifth count alleged breach of articles of incorporation as it relates to the infrastructure in Greene County.
The final count in the civil lawsuit alleged breach of contract for water hookup fees due to the fact that the July 16 board of members’ vote “unilaterally determined that all water (hookup fees) would be paid directly to RSA. There was no consultation with the Greene Board of Supervisors about this change prior to the breach,” the lawsuit stated.
RSA is also asking for the counts to be dismissed due to sovereign immunity afforded by the Virginia Water and Waste Authority Act.
“Counts 1 and 2 of the plaintiff’s complaint seek to compel Rapidan Service Authority to assess a ‘facility fee’ on its customers and give the fee to the plaintiff,” court documents stated. “Alternatively, count 2 seeks Rapidan Service Authority’s customer lists, as the plaintiff wants to assess its own facility fee on the authority’s customers.”
The General Assembly, the plea argues, “did not give counties any statutory authority to set fees for services provided by an authority.”
On Tuesday, July 28, the Greene County Board of Supervisors unanimously approved a resolution that requested Madison and Orange boards of supervisors release Greene from the Rapidan Service Authority.
Both Orange and Madison supervisors said no to the release of Greene County.
On Sept. 14, Greene County filed a lawsuit in Greene County Circuit Court requesting, among other things, that a court dissolve the corporation and to surrender to Greene all RSA assets within the county and without cost to the county.
RSA attorney Terry Lynn said after the Sept. 17 board of members meeting that nobody will comment on the lawsuit.
“It’s in the court; that’s where we’ll try it,” Lynn said.
Greene County Board of Supervisors filed a second lawsuit on Sept. 28 requesting the dissolution of the utility.
The second lawsuit comes after the two Greene County representatives were prohibited at the RSA board’s Sept. 17 meeting from speaking at all during the meeting and going forward.
RSA Board of Members was scheduled to meet Thursday, Oct. 15.
At press time no hearing date had been scheduled for either lawsuit and no responses filed by RSA for the second lawsuit.
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