County wins impact fee appeal, saves $2 million | Maryland Gazette (HometownGlenBurnie.com)

The Court of Special Appeals' opinion means the county must still refund some impact fees, but far less than the $4.7 million a county Circuit Court judge ordered in 2006 and only a fraction of the $22.1 million a group of Odenton-area homeowners and developers thought the appellate court ordered in February.

"This new decision confirms that," said County Attorney Jonathan Hodgson, estimating the current refund bill at $2.1 million. "That is a significant victory."

The Court of Special Appeals, which used its opinion Wednesday to clarify an earlier opinion it issued in February, sent the case back to the Anne Arundel County Circuit Court to gather more evidence and to compute the amount of damages owed to the plaintiffs.

John R. Greiber Jr., an attorney for the plaintiffs, said the three appellate judges reversed their decision in the past three months in light of current fiscal problems facing local governments like Anne Arundel County.

"It would appear Judge (Lawrence F.) Rodowsky has issued a result-driven opinion in aid of the government and against the taxpayers," he said. "He's really just trying to help the government out, that's all this is."

Both sides plan to ask the state's top court to weigh in on the case, with the plaintiffs claiming they are still owed more money and the county claiming they owe less or nothing at all.

Local jurisdictions like Anne Arundel County use impact fees instead of bonds and taxes to pay for capital improvements - such as schools and roads. However, Judge Rodowsky wrote in his February opinion, those capital improvements should benefit the property owners who paid the fees.

Unlike revenues raised from taxes, impact fees must be designated to specific building projects within six years of being collected. Otherwise, the money must be refunded to the current property owner.

Anne Arundel County began imposing such fees in 1987, according to the opinion.

The history

Odenton-area homeowners and developers filed the suit against the county in 2001, alleging that the county either misspent or didn't spend the impact fees it collected between 1987 and 1996 to expand schools and highways in that area.

In one instance, Mr. Greiber claimed the county spent as much as $5.5 million in impact fees to remodel Park Elementary School in Brooklyn Park and South Shore Elementary School in Crownsville, but failed to expand the schools' capacities as required by law. He claimed the county did use the money to install trailers and "relocatable classrooms," but he said impact fees are not intended to pay for such structures.

In 2006, Circuit Court Judge Philip T. Caroom ordered the county to refund more than $4.7 million in impact fees plus interest, finding the county didn't properly spend the money. Judge Caroom also awarded 30 percent of the final payout to go to the plaintiff's attorneys.

Because the case was certified as a class action lawsuit, anyone who owns a house built during the specified years - not just those listed in the case - are entitled to part of the final award. Mr. Greiber estimated that from 20,000 to 40,000 property owners would share in the refunds.

Both the plaintiffs and the county appealed the ruling on various grounds.

In February, the Court of Special Appeals took issue with several aspects of Judge Caroom's ruling - ultimately changing the amount of the final award.

Attorneys from both sides viewed the ruling very differently, though. Mr. Hodgson interpreted it as a victory for the county, slashing the county's liability in half. However, Mr. Greiber thought it favored the plaintiffs, clearing the way for them to collect $22.1 million after interest.

The confusion led both sides to askthe court for a clarification, which the judges released Wednesday.

In that opinion, the judges acknowledge the county misspent millions in impact fees on improper construction projects. At the same time, the judges said the property owners were not due a full refund because the county designated new money to pay for proper construction projects within the six-year window.

Over the years, the case got nasty at times. For example, the county moved to disqualify Mr. Greiber and his partner, former county attorney Phillip F. Scheibe, from the case. They also tried to stop former county planning chief Robert J. Dvorak from working on the case as an expert witness.

The county Ethics Commission investigated Mr. Scheibe and Mr. Dvorak's involvement in the impact fee case, and in early 2006 ordered them to withdrawal. They appealed to the Circuit Court and in December won the right to continue on with the case, but Judge Rodowsky in his February opinion suggested Mr. Scheibe not get paid for any work after the Ethics Commission ruling.

Mr. Greiber said Judge Rodowsky was not aware of the latest Circuit Court ruling in the case.

What's next

The case is not over, as attorneys from both sides hope the state's Court of Appeals will take the case.

Mr. Hodgson maintains the plaintiffs had not exhausted their administrative options when they filed the lawsuit, that the statute of limitations expired, and that the lawsuit was filed under the wrong class of plaintiffs.

"We continue to believe that we owe nothing because of the administrative law put forward in the code," he said. "More fundamental issues remain."

Mr. Greiber took a more general approach in explaining his grounds for appeal.

"I do not understand anything (Judge Rodowsky) wrote in his opinion," Mr. Greiber said of the latest ruling. He said it is impossible for the county to use funds it already misspent to pay for future construction projects.

"It's completely inconsistent with the logic of his first opinion," he said.

Regardless, Mr. Greiber said, the marathon lawsuit may be entering its final stretch.

"Rightly or wrongly, it's got to end someplace," he said. "I ultimately have faith in the Court of Appeals."