Local

Suit: City Illegally Charging Water Customers

May 2nd, 2014

Two Atlanta residents are suing the city, claiming it is collecting tens of millions of dollars in illegal fees and taxes through the watershed department, costs that are then passed on to customers.As heard on the radio

The class-action suit alleges that since 2009, the city has collected nearly $59 million in franchise fees and taxes from the watershed department. It’s done so under a city ordinance that passed the city council in 1998, and was amended and put into effect in January 2009.

According to the lawsuit, filed Wednesday in Fulton County Superior Court, the city allegedly treats the department like it’s a private company rather than a publicly owned utility, charging the department about $9.8 million in fees and taxes annually to use city-owned equipment and resources.

“In essence, the city of Atlanta is taxing itself – charging itself franchise fees – which then in turn are being passed on to the city of Atlanta watershed department customers in their water bills,” said Jimmy Hurt, attorney for the residents. Hurt has brought the suit forward on behalf of Atlanta residents Freda Stokely and Stephen Newton. The latter owns a condo located on 14th Street.

The suit alleges customers don’t realize how much they’re paying in fees and taxes because there’s no line on the bill denoting the costs.

“The only way that watershed collects any money at all is through their water bills, so it has to be buried in the charges that the watershed department is billing to their customers,” Hurt said.

In a statement, city spokeswoman Melissa Mullinax confirmed the lawsuit had been received.

“While it is the practice of the City not to comment on pending lawsuits, please note that the City remains confident in the validity of the ordinances in question and looks forward to defending the ordinances in court,” Mullinax wrote.

The Department of Watershed is already under fire after the commissioner gave five-figure salary raises to some members of her leadership team.

Mayor Kasim Reed rescinded the raises, and a review of the department is underway.