What Is A Private Developer’s Agreement?
Picture this: you and your spouse just bought a home on 5 acres in a serene country setting on the far fringes of the city. After a few months, a private developer buys 80 acres of farmland a half mile down the road from your new house. The developer puts in water and sewer lines that run past your house to serve the McMansions that will soon house a few hundred of your new neighbors. A few months later, you get a notice from the county health department ordering you to connect to the new sewer line and pay the developer $20,000 for “your share” of the construction costs. If you don’t want sewer service then you are on the wrong end of a private developer’s agreement.
Is That Legal?
Sounds illegal right? Not necessarily. The longstanding rule in Ohio allows any person who builds a water or sewer utility line to recoup a pro-rated share of their costs from any adjacent property owners along the route that make use of the new line. In the case of a water line, an adjacent property owner can choose not to connect. However, in the case of a sewer line, connection is mandatory for public health reasons.
Enacted in 1972, ORC 307.73 allows county commissioners to authorize anyone to build such a line, then mandate reimbursement. This arrangement has long been common practice in Ohio, and private developers have been keen on cashing in on this arrangement to help subsidize private development. In the case of a sanitary sewer line, those along the project route must connect for public health reasons.
Under the statute, the developer need only give “constructive” notice to adjacent property owners by filing their approved resolution with the county auditor. Under this arrangement, it is very unlikely that any affected property owner receive actual notification of a looming project which may affect your substantive legal rights and your wallet.
Recent Ohio Case Overturns Private Developer’s Ability To Obtain Reimbursement
On June 30th, 2016, Ohio’s 11th District Court of Appeals struck down the law on due process grounds as an unconstitutional taking of private property in Bacak v. Trumbull Cty. Bd. Of Commr’s., 2016-Ohio-4737. The court reasoned that the law failed to give property owners adequate notice and meaningful opportunity to be heard for a multitude of reasons. The statute leaves no time limit for the filing of constructive notice, no notice or oversight of costs, no ability to object, and no judicial review. The court also cited the multitude of notice rules that counties must follow when constructing the same type of projects which did not apply to private developers.
TBD on what the future holds for this statute, but it is very likely that at this very moment there are hundreds of these developer’s agreements in place which may put the developer at risk of paying for substantially more of their project than they initially anticipated. This case will almost undoubtedly be appealed and watched very closely by private citizens, public utilities, county officials, and construction interests throughout the State of Ohio.
The Ohio Supreme Court will likely have to settle the issue once and for all. The only other time they looked at the statute was in DeMoise v. Dowell, where the Court questioned the constitutionality of the statute on due process grounds, but did not strike it down. DeMoise, 10 Ohio St.3d 92 (1984). Until the issue is settled, future construction under this type of agreement should proceed with extreme caution.
Text to the opinion of the appellate court’s decision can be found at the following link:
-Posted by CCI