Franklin residents mull lawsuit against sewerage district

Listen to this article

A Franklin resident is trying to recruit as many of his neighbors as possible to sue the Milwaukee Metropolitan Sewerage District over a sewer tax.

Basil Ryan, who is organizing the lawsuit, said he owns one of about 540 properties in the city that now are taxed to help MMSD pay Franklin for the nearly complete Ryan Creek Interceptor sewer.

But many of the people added to the tax district own private septic systems, and some said they have no interest in using what they now are paying for.

“No one’s been able to use this thing,” said Franklin resident Susanne Mayer, “and everybody’s already being taxed on this.”

MMSD, Mayer said, charged her almost another $2,000 on her 2012 property tax bill.

Steve Jacquart, MMSD’s intergovernmental coordinator, gave two justifications for taxing residents for a service, even if they have no intention of using it. First, the sewer is there for them if their septic systems fail. Second, property values rise if a sewer is nearby.

Jacquart compared the benefit to a public school system. Every resident pays to support it, he said, even if not every resident has children.

Mayer objected to that comparison.

“If I wanted my children to be in the Franklin school district,” she said, “I could go over there for free and get my kids in there on Monday.”

If she wanted to connect to the interceptor, she said, she would have to pay for lateral pipes connecting her house to the new sewer.

Jackie Ioder, another Franklin resident, said the interceptor might raise nearby property values, but it also creates another hurdle for residents.

“Then it would also increase our taxes,” she said. “Our taxes are based on the assessment of our houses.”

Ioder said MMSD in 2012 taxed her property about $750. John Napientek, who lives across the street and is Ioder’s brother, said he had to pay about $680. Neighbor Pat Shawgo said she had to pay almost $1,000.

All four said they want to sue.

Ryan declined to give the number of people who have told him they want to join the class-action lawsuit. He said three attorneys are in the running to represent the class, and Ryan plans to call a group meeting so every class member can help decide who to hire. He said he expects to file the lawsuit by early to mid-April.

Ryan said the lawsuit would seek to force MMSD to remove class members from the tax district and refund any taxes paid under protest. It also would try to force the district to follow the statutory process for absorbing new taxable areas, he said.

However, Jacquart said, MMSD followed the law in expanding its tax district and has the city’s consent to tax all its residents.

“They wouldn’t have a sewer had they not approved,” he said.

MMSD has agreed to buy the interceptor from Franklin. The district will make its first payment in 2015 and eventually pay the city back for about $27.5 million in federal loans and 20 years of interest.

James Peterson, an attorney for MMSD, said the agreement to buy the interceptor was contingent on MMSD expanding its tax district to include the entire city. But, he said, MMSD technically didn’t need the city’s consent.

The newly taxed portions of Franklin were added through a biennial review of MMSD’s taxable areas, he said. The portion of the statute requiring municipal consent, Peterson said, deals with deleting a taxable area rather than adding one through biennial review.

Still, Peterson said, MMSD expected the tax district expansion to be controversial and asked for some level of consent from the city. That, he said, drove MMSD and the city to an understanding apart from the Intergovernmental Cooperation Agreement, which is a 2010 contract laying out how MMSD will buy the interceptor from Franklin.

“They said, ‘OK, fine, let us have some political cover by just saying we didn’t oppose it,’” Peterson said.

He said MMSD would not have agreed to buy the Ryan Creek Interceptor without being able to expand its tax district.

“They agreed not to object to it,” Peterson said, “and we agreed to pay for the sewer for them. That sounds an awful lot like consent.”

Jesse Wesolowski, Franklin’s attorney, said his role dealt only with the parameters of the ICA. He directed questions about “political cover” to Franklin Mayor Tom Taylor.

“I’d say the agreement says what it says,” Wesolowski said. “There aren’t any side agreements or anything like that.”

Taylor did not respond to multiple requests for comment by deadline Tuesday afternoon.

Furthermore, Wesolowski said, he relied on Peterson’s interpretation of the statute. Franklin, Wesolowski said, did not have to consent.

A section of the ICA refers to MMSD’s intention to explore expanding the taxable area.

“The District,” according to the ICA, “requires that it undertake the procedures necessary to consider the inclusion of all lands within Franklin within the District’s boundary as a condition precedent to purchasing the Ryan Creek Interceptor from Franklin.”

But the ICA does not expressly say what MMSD would do after that exploration was done.

Cal Patterson, Franklin’s treasurer and director of finance who was one of the city officials to sign the ICA, said agreeing to the ICA did not equate to the city giving its consent for MMSD to expand its tax district.

“The city agreed,” he said, “not to oppose an action that MMSD might take.”

Not opposing something, Patterson said, is not the same as consenting to it.

If any Franklin resident, such as Mayer or any of the others joining Ryan’s lawsuit, calls City Hall looking for an explanation of the MMSD sewer tax, they probably will hear a version of the answer crafted by Mike Luberda, Franklin’s director of administration.

Luberda sent a memo to City Hall staff members Dec. 19 guiding them on how to answer questions about the tax.

“This action,” according to the memo, “was outside the direct control of the City and was not approved by the City.”

For the city to have approved it, Luberda said Monday, Franklin would have had to pass a resolution or something similar.

“We have no action that says we approve this,” he said. “It wasn’t our action to take. It was an action of MMSD.”

Franklin resident Napientek said he assumed the city gave its approval of the tax, and that played a role in his decision to sign on to the lawsuit.

“I think the big question is, is whether the city gave consent,” he said. “The city says it did not, and MMSD said they did.”

Editor’s Note: This story was updated on Aug. 21, 2013, to reflect the fact that Franklin did not receive a federal loan for the Ryan Creek Interceptor sewer project. The city received a state loan.