Ingleside Equity Group, LP v. City of St. Albans, VT

Filing 56

MEMORANDUM OF DECISION. Signed by Judge William K. Sessions III on 3/3/2015. (law)

UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT

INGLESIDE EQUITY GROUP, LP,
Plaintiff,
v.
CITY OF ST. ALBANS,
Defendant.

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Case No. 2:13-cv-53

Memorandum of Decision
Plaintiff Ingleside Equity Group, LP (“Ingleside”) brought
this suit against the City of St. Albans (“City”) because the
City refused to grant a water and wastewater allocation to
service a parcel of its property in the Town of St. Albans
(“Town”).

The City denied Ingleside’s request on the basis of a

2011 moratorium on new allocations outside of the City limits.
The moratorium, however, has an exception for a specific
district within the Town referred to as the “sewer district.”
Ingleside’s parcel is located in the Town but outside of that
district.
Ingleside initially asserted that 1) the City unlawfully
discriminated against Ingleside in violation of Chapter 1
Article 7 of the Vermont Constitution and its equal protection
rights under the Fourteenth Amendment, 2) the City’s actions
amounted to unlawful extraterritorial zoning and were therefore

1

ultra vires, and 3) the City breached its statutory obligations
under Title 24.
judgment.

The parties filed cross motions for summary

The Court denied Ingleside’s motion for summary

judgment and granted summary judgment to the City with respect
to Ingleside’s state law claims.

The Court denied summary

judgment with respect to Ingleside’s equal protection claim,
which is a “class of one claim” requiring Ingleside to prove
that the City intentionally treated it differently from others
similarly situated and that there is no rational basis for the
difference in treatment.

ECF No. 35.

Ingleside’s “class of

one” claim is the only claim before the Court.
The Court conducted a bench trial on October 28 and 29,
2014.

Based on the testimony of witnesses, all of the evidence

submitted, and arguments of counsel, the Court makes the
following findings of fact and conclusions of law as required by
Rule 52 of the Federal Rules of Civil Procedure.

In brief, the

Court concludes that Ingleside’s property was not similarly
situated to the sewer district, that excepting the sewer
district from the moratorium was justified by a legitimate
governmental policy, and that the City did not intentionally
single out Ingleside’s parcel in any way.

Accordingly, the

Court will enter judgment in favor of the Defendant.

2

I.

Findings of Fact
A. Early Projects and Related Litigation
Over a period of several years, Sam Smith and his wife,

Rachel Smith, have worked together to help Mr. Smith’s1 parents,
Edwin and Avis Smith, develop land that was previously the site
of the family’s dairy farm.2

First, the Smiths developed seven

residential lots located off of the Thorpe Avenue Extension in
1987.

During this process they contacted then City Manager Bill

Cioffi and requested water and wastewater allocations, which Mr.
Cioffi approved.

Mr. Cioffi made clear that the City owned and

controlled the lines and that any lines attached to the City’s
system became City property regardless of whether they were
located in the Town or City.

Mr. Smith did all of the

negotiating with the City on behalf of his parents.
Next in 1987, the Smiths proposed a fourteen-lot
development directly to the east of those first seven lots.
This project was known as Sunset Terrace.
Act 250 jurisdiction.

The project triggered

As part of the Act 250 application, Mr.

Smith once again requested and received a letter from the City
approving the hookups for water and wastewater in December of
1987.

1

The Environmental Board approved the application but

Unless otherwise specified “Mr. Smith” refers to Sam Smith.

2

Ingleside is a limited partnership made up of the heirs of
Edwin and Avis Smith.
3

included a condition stating that prior to any further
development or subdivision the Smiths would be required to
prepare and submit a conceptual master plan for the rest of the
farm.
While Sunset Terrace was in Act 250 proceedings in 1988,
the Smiths began developing a retirement community called Grice
Brook, a forty-eight unit garden-style condominium project on
ten acres.

Mr. Smith once again contacted Mr. Cioffi to tell

him that he was interested in using City water and wastewater
services for this project.

Mr. Cioffi told Mr. Smith that this

time he would have to present the plan to the St. Albans City
Planning Commission even though he had not had to do this
previously for either the Thorpe Avenue Extension project or
Sunset Terrace.

Mr. Smith presented his request for allocations

to the Regular Monthly Meeting of the City Planning Commission
on August 15, 1988.
Peter Deslauriers, a fellow Town resident who lives on
Thorpe Avenue, was a repeat player in the Smiths’ interactions
with the City.

He frequently attempted to thwart their

development plans both before and after he eventually became an
Alderperson because he was concerned about their effect on his
neighborhood.
During the hearing regarding Grice Brook Mr. Deslauriers
spearheaded opposition to the project on behalf of himself and
4

others in the neighborhood.

Originally Mr. Smith proposed

Thorpe Avenue as the point of access to the Grice Brook
development.

Mr. Deslauriers voiced his and other residents’

concern that the development would affect traffic.
was recessed.

The meeting

On August 29, 1988 a Special Meeting of the City

Planning Commission was convened.

It recommended that the City

not allow the Grice Brook project to use Thorpe Avenue.

The

City Council subsequently denied the Smiths use of the water and
wastewater services.

The Smiths returned to the City Council

with a proposal to construct a new road rather than using Thorpe
Avenue to access Grice Brook, which it accepted.

On May 18,

1989 the City issued water and wastewater allocations for the
Grice Brook project.
The construction of the proposed road triggered the need
for the master plan.

After several failed attempts, the Smiths

presented a plan in 1994 that won agreement from the various
agencies involved.

The master plan broke the farm into five

smaller parcels with different zoning designations: the south
parcel (Commercial C zoning district), the west parcel
(Commercial C and Residential zoning district), the east parcel
(Agricultural/Rural and Recreation/Conservation zoning
district), the south central parcel (Commercial C zoning
district) and the central parcel (Commercial/Residential and a
Commercial zoning district).

The south central parcel is the
5

part of the Smiths’ property that is at the center of this
lawsuit.

The City did not assert any objection to the master

plan.
During the Act 250 process for Grice Brook and while
developing the master plan for the rest of the farm, the Smiths
proposed a nine-unit condominium project that was exempted from
the master plan with a company called Hanley Lane.

The Smiths

presented the Hanley Lane project to the City Planning
Commission in the spring of 1989.

Once again Mr. Deslauriers,

now an Alderperson, led opposition to the project, which was in
his neighborhood.

On August 21, 1989 the City Planning

Commission, after holding two meetings, voted not to recommend
approval of water and wastewater allocations for the project to
the City Council.

At the same meeting, the City Planning

Commission voted to recommend approval of another project
seeking a wastewater allocation proposed by Robert Cioffi,
brother to the City Manager at the time.
Many years before the moratorium at issue in this case was
enacted, the City Council discussed a different moratorium on
allocations in 1989 while the Robert Cioffi project was before
it.

The Council approved the Robert Cioffi project and then

recessed without considering the Hanley Lane project.

As a

result, Hanley Lane was affected by the 1989 moratorium while
the Robert Cioffi project was not.
6

That moratorium was to be in

effect until January 1, 1990 and after it was enacted the City
denied the Smiths’ application for a water and wastewater
allocation for the Hanley Lane project.

Mr. Deslauriers did not

recuse himself.
The Smiths filed a lawsuit against the City in state court
claiming that the Board of Alderpersons’ denial of their
application for the Hanley Lane project was improper because: 1)
the denial was an impermissible attempt to impose zoning
requirements outside the City, 2) the City was improperly
attempting to control land use when it did not have a duly
adopted sewer policy, 3) the City acted in a discriminatory
manner in allocating wastewater capacity, and 4) that the denial
was void because of participation of an alderperson with a
conflict of interest.
The Smiths received a favorable ruling on May 17, 1994.
The state court held that the City had discriminated against the
Smiths by granting the application of a similarly situated
applicant, the Robert Cioffi project, while denying their
application.

The City’s expressed reasons did not relate to

wastewater capacity concerns, but rather collateral matters
including traditional zoning concerns of traffic and housing
density.

The City’s attempt to indirectly zone outside of its

borders did not represent a reasonable basis for differentiating
the Smiths’ project and the Robert Cioffi project.
7

The City

Alderpersons, the court held, abused their discretion.

The

Smiths were granted a wastewater allocation for the Hanley Lane
project.

However, they ultimately never used it because the

owner of Hanley Lane had relocated and was no longer interested
in construction in the area.
In light of all the interactions between the Smiths and the
City, the Smiths also filed a second lawsuit for damages related
to the City’s treatment of the Grice Brook project.

The Smiths

sought a reversal of the City’s initial refusal to grant an
allocation for the Grice Brook project.

On September 23, 1997

the court relied on the same reasoning as the first state court
decision and held that the City’s denial was improper because it
was based on the City’s planning and zoning process rather than
concerns related to wastewater capacity.

The state court

awarded damages for the cost of constructing Grice Brook Road,
loss of contracts, loss of income, and interest for that period.
B. Infrastructure Construction at Grice Brook
The Grice Brook project went forward in 1995.

When the

Smiths were ready to hook on to the City lines Mr. Smith
contacted Mr. Cioffi, who arranged to have a preconstruction
meeting on site.

Although the easiest and most direct way to

hook up the sewer line for the Grice Brook project would have
been to connect to lines that ran along Thorpe Avenue, Mr.
Cioffi directed the Smiths to hook on to a manhole that was on
8

Burnell Terrace.
condition.

The line between the two manholes was in poor

Mr. Cioffi wanted the Smiths to reconstruct that

line from Burnell Terrace through private residences to Thorpe
Avenue.

He also wanted them to repair and install a new line to

the four private residences.

These residences then became new

water and wastewater customers of the City.

The Smiths were

required to pay for the final grading and landscaping of those
properties under the supervision of the City’s Public Works
Department.
The existing line on Thorpe Avenue was at a depth of only
seven feet.

The new line the Smiths put in was at twelve feet.

By beginning at twelve feet and replacing the line with a teninch main, the Smiths were able to achieve a depth of fourteen
feet by the time they got to Thorpe Avenue.

The benefit of this

depth was that the manhole could eventually service the entire
farm.

Mr. Smith agreed to go to the extra expense to rebuild

the City’s sewer line in exchange for the ability to achieve
this depth.

If Mr. Smith had intended to hook up the water and

wastewater for only the Grice Brook project, they would not have
had to dig the new line and install the two new manholes.

The

ten-inch main was also not necessary to service Grice Brook’s
needs.
Mr. Smith and Mr. Cioffi discussed Mr. Smith’s desire to
service further development in the future.
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Mr. Cioffi suggested

or recommended the ten-inch pipe based on what Mr. Smith
described as his needs for the future development of the farm.
Mr. Cioffi gave Mr. Smith advice about how to accomplish that
goal.

Mr. Cioffi did not direct Mr. Smith to install a ten-inch

line.
C. The South Central Parcel
The Smiths eventually proposed to develop the south central
parcel defined in the master plan, which is located in a growth
center designated by both the Regional Planning Commission and
the Town of St. Albans.

The Smiths worked with the St. Albans

Cooperative Creamery, a dairy farmer’s co-op that wanted to
build a farm store in the area.
the Milk and Maple project.

This project was referred to as

Once again the Smiths went through

the Act 250 process, but the application covered the entire
south central parcel, not just the Milk and Maple project.

The

Smiths asked for and received an allocation from the City, but
only for the first building in the development.

When Mr. Smith

spoke to Mr. Cioffi about the project he told him that he was
extending the ten-inch line but that the immediate need for an
allocation was only for the one store building.
During the Act 250 process, however, Mr. Smith represented
that the City would provide water and wastewater services to the
whole development on the south central parcel.

The Smiths

received an initial Act 250 Land Use Permit for the south
10

central parcel on March 12, 2003.

The permit covered the

construction of the farm store but also approved another five
buildings.

However, it included conditions on construction that

were not in the direction that the Smiths had envisioned for the
rest of the parcel.

Moreover, the Commission initially approved

only 120,000 square feet of commercial development, which was
less than the Smiths wanted.
The Smiths appealed the permit to the Environmental Board
and requested that they amend it and change the conditions for
all the buildings in the parcel.

They submitted a formal

proposal referred to as a recess memorandum that described the
village concept they originally envisioned.
proposed 268,000 square feet of development.

The Smiths also
The Environmental

Board approved the Smiths proposals on January 23, 2004 and
incorporated their revised landscape and architectural standards
from the recess memorandum into the Land Use Permit.
After all the permitting was in place the Smiths began
construction, including extending water and sewer lines into the
project from the infrastructure leading from Burnell Terrace.
It cost $437,770.76 to extend the infrastructure originally
constructed for Grice Brook, which included maintaining the
fourteen-foot depth for the entire distance and using a ten-inch
pipe.

If the Smiths had envisioned constructing only one

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building they would not have constructed the line at all because
it would not have been cost effective for so little usage.
Mr. Smith did not get water and wastewater allocations that
would satisfy his plans for all the buildings he ultimately
intended to construct in the south central parcel because he did
not know how much capacity he would end up needing in total.
Moreover, if Mr. Smith requested an allocation but did not
immediately use it he would have to pay the interest on the
value of the allocation in the meantime.

If the allocation was

never used at all, then after three years it would revert back
to the City.

In practice, therefore, he only requested an

allocation for a building if he intended to use the allocation
immediately or very soon after he received it.

When the Smiths

had a concrete plan for a new building they intended to amend
the permit to show the actual size and scope of the building and
the allocation needed.

There is no documentation from the City,

however, granting or reserving future allocations for water or
wastewater for the south central parcel, nor did Mr. Cioffi
guarantee any.
D. Creation of the Sewer District
Around the same time that the Act 250 proceedings for the
south central parcel were taking place, the Town sought to
borrow money to service sewer lines along Route 7 North.
Town presented a bond to its voters, which passed.
12

The

After the

bond was approved the Town adopted a sewer ordinance on August
28, 2001.

The ordinance defined the geographic parameters of

the sewer district.
Albans.

The sewer district is in the Town of St.

Like the south central parcel, it is located in another

designated growth center in the Town.
The City initially allocated 100,000 gallons per day of
wastewater capacity to service the sewer district, some of which
was then allocated among the parcels in the district as a base
allocation.

The ordinance provides that property owners can

apply for increases to their base allocations from uncommitted
reserve capacity for individual buildings.
The Town does not own the land in the sewer district.
Landowners pay annually into the repayment of the loan.

Each of

the parcels is assigned a portion of the bond service that it
must carry in order to pay for the sewer infrastructure.

The

Town got an Act 250 permit for the construction of the line to
the sewer district on November 21, 2002.

That infrastructure

cost approximately $600,000 and was installed in 2004, about a
year after the Smiths put their infrastructure in.
The sewer district is, in essence, a way to finance the
extension of the sewer line.
allocation to any parcel.

The Town never granted any

Rather, property owners in the sewer

district receive new or increased allocations by applying
directly to the City.
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E. The 2011 Moratorium
There has been tension between the City and the Town over
water and wastewater services for years.

The two municipalities

engaged in a failed mediation as well as a contentious lawsuit
over the terms under which the City would provide water and
wastewater to the Town.
On April 13, 2011 at a special meeting the City Council
first considered an emergency ordinance enacting a moratorium on
water and wastewater allocations outside of the legal limits of
the City.

The City enacted the emergency ordinance under its

charter authority and then gave the community time to respond.
On May 2, 2011, at another special meeting, the City Council
conducted a public hearing and ultimately accepted the ordinance
enacting the moratorium.

Interested parties were given the

opportunity to be heard but there is no indication that any of
the Smiths attended the public hearing or protested the
moratorium.
The moratorium contains a description of the reasons for
its enactment, which include concerns about: a lack of a long
term equitable agreement for sharing in the capital
infrastructure investment by the receiving community or to share
in the benefits of the increased tax base of the receiving
community, the Town’s lack of any obligation to help upgrade the
plant to accommodate demands of its residents, the demands of
14

regulatory agencies to reduce phosphorous emissions at the
wastewater treatment plant and the associated future upgrade
costs resulting from those demands, and tax base erosion.
The minutes of the City Council meeting indicate that the
moratorium was enacted as a last resort after the failed
mediation between the City and the Town.

It was supposed to be

a temporary solution to a long-term problem in City-Town
relations.

There is some suggestion that the moratorium might

encourage a merger between the two municipalities in the future.
The minutes reflect a clear intention to continue to honor
any other allocations on the books at the time the moratorium
was enacted, including the reserved allocation to the sewer
district.

The City followed through with its intention.

Allocations that had not yet expired were and are still honored
as long as they were renewed prior to their expiration
(including Mr. Smith’s existing allocations).
It is clear that the moratorium itself was not motivated by
any type of animosity or ill will toward the Smiths or any other
individuals.
way.

The Smiths were simply not even considered in any

The City meant to strengthen its negotiating position with

respect to the Town, to encourage development within its limits,
and to improve its overall economic health.

It used the

moratorium as leverage against the Town, not the Smiths.

15

Neither the text of the ordinance enacting the moratorium
nor the minutes of the City Council meetings explain why the
sewer district was excluded.

However, according to City Manager

Dominic Cloud he (or possibly another member of the drafting
staff) recognized the long-standing reserved allocation of
100,000 gallons per day to the sewer district through years of
practice.

The sewer district was excluded because, in his view,

its allocation had been on the books for a decade and should
continue to be honored.

The Town passed a bond and had been

taxing all the people in the sewer district to pay the debt
service on the bond.

There had also been a substantial amount

of private investment under the belief that this was a
legitimate governmental organizational model and the City would
continue to provide service to the sewer district under the
terms of the initial allocation.

The City wanted to redefine

its relationship with the Town but it never wanted to stop
providing water and wastewater in the Town all together.

The

City has therefore granted new allocations to property owners
within the sewer district since the moratorium was enacted.
Mr. Cloud was the City manager when the moratorium was
enacted.

Mr. Cioffi, the City manager at the time the sewer

district was created, was not consulted.

None of the

individuals responsible for enacting the moratorium were
involved or present when the sewer district was created.
16

The

City conducted no investigation into the status of the reserved
allocation to the sewer district.

The City believed that its

existing and ongoing obligation to provide service to the sewer
district under the terms of the City’s initial reservation of
100,000 gallons per day was still valid.
However, during discovery in the course of this litigation
the City realized that its initial allocation had expired two
years after it was issued on December 31, 2002.

When the

moratorium was enacted no one on the City Council knew that the
allocation had expired.

The land use permit for the sewer

district included a requirement that prior to the expiration of
the city’s wastewater reservation that the permittee would file
an updated commitment letter from the City for the 100,000
gallons per day but the City never did so.
No one questioned the legitimacy of the allocation to the
sewer district nor did the City conduct any parcel-by-parcel
analysis of any other property outside of the sewer district,
including the Smiths’ property.

Just as the Smiths were not

considered when enacting the moratorium they were not considered
when creating the exception for the sewer district.

The City

viewed the sewer district as a sui generis creation of another
government for which it had already reserved a very large
allocation.

The moratorium was meant to be a blanket policy

covering new allocations.
17

Mr. Cloud agreed that the City could have in theory charged
extraterritorial users whatever amounts might have been needed
to take care of the City sewer infrastructure but explained that
there were several reasons why the City did not choose to go
that route.

Essentially the City wanted a more equitable

arrangement in their role as a business and a more competitive
position in the economic marketplace.

Until there is an

agreement between the two governmental entities, Mr. Cloud felt
he could not in good conscience recommend that the City continue
to subsidize another community’s growth at the expense of
development within the City.
F. The Hampton Inn Project
As described above, the Smiths invested in the water and
sewer infrastructure for the south central parcel in
anticipation of being able to further develop the lots there.
Eventually the Smiths received an offer on another lot from John
P. Larkin.

Mr. Larkin wanted to use the lot to build a hotel,

specifically a Hampton Inn.

The Smiths informed Mr. Larkin that

the south central parcel was an approved development and had
gone through the Environmental Board.

Mr. Larkin expressed

interest in purchasing a lot in the development and Mr. Smith
set the price at $500,000 for two acres.

Mr. Larkin offered

$475,000, which was much higher than previous sales in the
$150,000 per acre range.

The offer was high because Mr. Larkin
18

wanted to be near the interstate and in all likelihood the
proposed hotel would be the only one in the area.
Mr. Larkin placed contingencies on the contract that
required Town approval and a water and wastewater allocation
from the City.

The contract between Mr. Larkin and Ingleside

was dated July 2012.

When Mr. Smith entered into the contract

he was aware that the moratorium was in place but nevertheless
went forward with Mr. Larkin because he believed that the City
was aware that the Smiths were relying on the use of the water
and sewer line to develop the south central parcel.

Mr. Smith

also knew that the moratorium excluded the sewer district.

He

thought he should not lose the opportunity for the valuable
contract with Mr. Larkin because of a moratorium he believed was
as discriminatory as the previous moratorium over which he
successfully sued the City.
Mr. Smith applied for a water and wastewater allocation for
the Larkin hotel on August 24, 2012 but he never received a
decision.

On January 14, 2013 he sent a certified letter to the

City Manager inquiring into the status of the allocation.

On

January 31, 2013 the City Manager replied by letter denying Mr.
Smith’s request because of the moratorium on new allocations
outside the City limits.

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II.

Conclusions of Law

The Equal Protection Clause has traditionally been applied
to governmental classifications that treat certain groups
differently than other groups.

Fortress Bible Church v. Feiner,

694 F.3d 208, 221 (2d Cir. 2012).

In Village of Willowbrook v.

Olech, 528 U.S. 562, 564 (2000) (per curiam), the Supreme Court
formally affirmed the existence of a “class of one” equal
protection claim in which a single individual can claim a
violation based on arbitrary disparate treatment.

The Court

explained that the “purpose of the equal protection clause of
the Fourteenth Amendment is to secure every person within the
State’s jurisdiction against intentional and arbitrary
discrimination.”

Id. (internal quotation omitted).

Class of

one claims are proper when plaintiffs can demonstrate that they
have been intentionally treated differently from others
similarly situated and that there is no rational basis for the
difference in treatment.

Id.

Class of one plaintiffs must show an “‘extremely high
degree of similarity’” between themselves and the others to whom
they compare themselves.

Ruston v. Town Bd. For Town of

Skaneateles, 610 F.3d 55, 59 (2d Cir. 2010) (quoting Clubside,
Inc. v. Valentin, 468 F.3d 144, 159 (2d Cir. 2006)).
Accordingly, to succeed on a class of one claim, a plaintiff
must establish:
20

(i) no rational person could regard the circumstances of
the plaintiff to differ from those of a comparator to a
degree that would justify the differential treatment on the
basis of a legitimate government policy; and (ii) the
similarity in circumstances and difference in treatment are
sufficient to exclude the possibility that the defendants
acted on the basis of a mistake.
Ruston, 610 F.3d at 60.

The purpose of requiring a comparator

of sufficient similarity is to make sure that no legitimate
factor could explain the disparate treatment.
Church, 694 F.3d at 222.

Fortress Bible

The existence of persons in similar

circumstances who received more favorable treatment provides an
inference that the plaintiff was “intentionally singled out for
reasons that so lack any reasonable nexus with a legitimate
governmental policy that an improper purpose—whether personal or
otherwise—is all but certain.”

Clubside, 468 F.3d at 159.3

The Court must first determine whether the Smiths’ property
and the sewer district are sufficiently similarly situated.
Ingleside argues that two government policies interact to
arbitrarily treat it differently from the sewer district.

The

first policy is the moratorium itself, which was the ultimate
3

Because this case involves a government exercising its power to
regulate as a lawmaker rather than acting as a proprietor to
manage its internal operations, this is not a case involving
inherently discretionary decisionmaking that does not violate
the Equal Protection clause. See Johnson v. Pallito, No. 2:12
CV 138, 2014 WL 1922728, at *2-3 (D. Vt. May 14, 2014).
Moreover, the Court has already held that it will decline to
require Ingleside to prove “vindictive action, illegitimate
animus, or ill will” in order to succeed on its class of one
claim. See ECF No. 35 at 17 n.1.
21

reason that the City denied Mr. Smith’s request for the
allocation at issue in this case.
Ingleside argues that the moratorium violates the
restrictions imposed by 24 V.S.A. § 3616.

According to

Ingleside, the moratorium represents the City’s attempt to
exercise power not within the province of local self-government
and is thus ultra vires and consequently void.

The City does

not address this argument directly except to argue that the
enactment of a moratorium involving sewer allocations is a
governmental, discretionary action within the authority of the
City Council to enact.

The only claim currently before the

Court is Ingleside’s equal protection claim.

See ECF No. 35

(granting summary judgment to the City on Ingleside’s state law
claims but denying summary judgment as to Ingleside’s Equal
Protection claim).

However, the Court does not conclude that

the City only enacted the moratorium in order to divert revenue
from its sewer system into its general fund or to avoid the
restriction in 24 V.S.A. § 3616.

The reasons behind the

moratorium are subtler and more complex.

In particular the City

wanted to attract the kind of development that was previously
taking place in the Town because water and wastewater services
were readily available there.

Accordingly, the Court declines

to find that the moratorium is void.

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There is no evidence suggesting that the Smiths were in any
way involved or even considered when the City enacted the
moratorium; it simply had nothing to do with them.

The

moratorium was enacted for a variety of reasons that pertained
to years of unresolved tension between the Town and the City and
a desire to increase the City’s negotiating power when they
redefined their relationship going forward.
Apart from the exception for the sewer district, which the
Court will address next, there is no evidence suggesting that
the moratorium itself has been applied inconsistently or
discriminatorily.

For example, there is no evidence that any

similarly situated property owners outside of the sewer district
have received a water or wastewater allocation from the City
since it was enacted, nor is there any evidence that any of Mr.
Smith’s or other Town residents’ duly-extended pre-existing
allocations have not been honored.

Although Ingleside might

have preferred the City try to manage its relationship with the
Town by charging extraterritorial users a higher surcharge
instead of enacting the moratorium, the City had rational
reasons for choosing the path it did.

The moratorium itself is

a legitimate exercise of the government’s power.
The second government policy at issue in this case is, of
course, the exception contained within the moratorium.
Ingleside argues that its property is similarly situated to the
23

properties in the sewer district and that excepting the sewer
district but not the Smiths’ property has resulted in the City
treating the Smiths arbitrarily.
The Court acknowledges that there are indeed many qualities
that the sewer district and the south central parcel have in
common.

Both contain multiple lots which are zoned for

commercial use and are located in designated growth districts.
Both required Act 250 approval to build infrastructure.

Both

property owners in the sewer district and Mr. Smith applied to
the City directly to receive individual allocations.

And both

spent a significant amount of money (albeit through different
funding mechanisms) on infrastructure with the expectation that
they would continue to receive water and wastewater service from
the City in the future.
Despite these similarities there is one significant
difference between the Smiths’ property and the sewer district
that prompts the Court to conclude that the two are not
similarly situated.

The sewer district had what the City

believed was a long-standing reservation of an allocation of
100,000 gallons per day.

The City clearly intended to continue

to honor all allocations that pre-dated the enactment of the
moratorium and the sewer district’s allocation was no exception.
Mr. Smith, on the other hand, chose to request allocations
building by building in order to avoid paying interest on an
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allocation he would not use immediately.

The City, through Mr.

Smith’s conversations with Mr. Cioffi, seems to have been aware
that Mr. Smith intended to develop the entire south central
parcel using City water and wastewater connections.

However, he

did not have a large-scale allocation comparable to the sewer
district’s allocation at the time the City considered the
moratorium, nor did the City make any kind of promise with
respect to future allocations.
The unique nature of the reserved allocation to the sewer
district makes its exception from the moratorium reasonable.
The City felt bound to avoid interfering with its longstanding
treatment of that special district and what it believed to be a
valid allocation.

Perhaps the City can be accused of failing in

its due diligence, but the fact the allocation technically
expired is not fatal to the City’s case.
The Court concludes that the sewer district and the Smiths’
property were not similarly situated.

This alone would be

sufficient to find in favor of the Defendant but Olech also
requires a plaintiff to demonstrate that the defendant’s action
was intentional.

Giordano v. City of New York, 274 F.3d 740,

751 (2d Cir. 2001) (explaining a “class of one” plaintiff must
show not only “irrational and wholly arbitrary acts” but also
“intentional disparate treatment”) (quoting Olech, 528 U.S. at
564-65).

There is simply no evidence that the City
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intentionally treated the Smiths differently from any other
property owner.

As discussed above, the Smiths were not even

considered when the moratorium was being drafted or debated.
The Court concludes that the City had a legitimate reason
to exempt the sewer district but not the Smiths’ land from the
moratorium and that the Smiths were not intentionally
discriminated against in any way.

The City’s differential

treatment of the two was the result of a legitimate government
policy and had a rational basis.

Accordingly, the Ingleside’s

equal protection claim must fail.
Dated at Burlington, in the District of Vermont, this 3rd
day of March, 2015.

/s/ William K. Sessions III
William K. Sessions III
District Court Judge

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