DULUTH - Two longtime Duluth businesses suing the city of Duluth over stormwater fees are asking a judge to certify the case as class-action, which has the potential to add more than 1,500 plaintiffs, according to their attorney.
Moline Machinery and Walsh Windows filed a suit in 2021, alleging the city overcharged them when assessing stormwater service fees, while undercharging or not charging others. They say the city used an inappropriate method to calculate payments for commercial properties when considering the amount of impervious surface of each.
"In internal emails, Duluth conceded that its stormwater billing has been 'highly flawed' and in 'disrepair' for many years," the filing reads.
The businesses allege the city violated its own code for years by giving discounts to some commercial and multifamily properties while failing to charge others. For example, until 2021, the city gave steep discounts to waterfront properties, which amounted to more than $1 million annually, or 20% of its stormwater utility budget. Duluth collected about $5.2 million in stormwater fees in 2020, and businesses paid nearly half of that, the lawsuit says, at a rate higher than those in comparable cities.
Attorneys for the city have asked the court to deny the class-action request, saying it fails to meet requirements.
In court filings, attorneys for the city argue that stormwater discounts for best practices are indeed allowed, and that the city had begun reviewing and fixing its billing practices long before the 2021 lawsuit was filed, a process that was completed this year and included remeasuring the impervious surfaces of thousands of properties. That process did find some properties weren't correctly charged; some because the city wasn't aware of changes to amounts of impervious surfaces.
What the businesses allege is "oversimplification" of the issue, attorney Emily McAdam wrote.
An attorney for the city did not respond to messages.
The lawsuit, which alleges a vast number of property owners are owed reimbursements, points to the BNSF Railway as an example of a waterfront property that wasn't charged in 2020. Without credits, it would have paid the city about $97,000. Instead, other commercial properties paid the difference, Moline attorney Shawn Raiter said.
Holding ponds and grasses that retain water are some of the things the city would grant discounts for, although Raiter argues that in past years, there wasn't city code authorization or documentation to support them.
More than 1,500 properties were billed at commercial rates in 2020, according to court documents, a number that also includes discounted properties.
The city recently retained additional counsel for the case, which is scheduled for a February jury trial.