The Winthrop Town Council, on a 3-2 vote, authorized a refund to a Cascade Condominium owner, settling a dispute over water and sewer charges that began a year and a half ago.
The council decided the issue last week after the town’s attorney reviewed an appeal that was filed in spring of 2018 by Laura and Casey Ruud, who said they were overcharged for water and sewer fees for two condominium units they own in the Cascade Condominium development at the south end of Winthrop.
The appeal last year prompted the town to revise its water and sewer code to clarify the ordinance. An amended water and sewer code was adopted in May of this year.
The town bases water and sewer charges on different classifications of properties, such as single-family homes, apartments and commercial properties. The classifications reflect different volumes of water use or wastewater discharge for those properties.
The Ruuds’ appeal claimed that town public works staff had reviewed the town code in 2018 and determined that condominium units that are used for nightly rentals should be classified as commercial properties — like hotels and motels — rather than residential. The change in user classification resulted in a higher bill for the Ruuds, who use their Cascade Condominium units for nightly rentals. They contended that nightly rental condominiums should be charged the same as condominiums that are not rented nightly.
The revised Winthrop water and sewer code adopted in May has changed how condominium units are billed, grouping them with duplexes and single family homes.
But under the code as written when the Ruuds were billed last year, the billing was made correctly, according to a review by the town attorney, Mayor Sally Ranzau told council members at last week’s meeting.
“The … amount charged the Ruud condominium was correct per the existing code at the time,” Ranzau said in a memo to the council. The reclassification of the Ruud’s property was based on the town’s decision at the time “to simplify the … code, which had been place for multiple years. This resulted in the Ruuds stating they had been overcharged and their subsequent appeal for refund,” Ranzau said in the memo.
“The question is whether it [the billing] was calculated and charged correctly,” Ranzau said at the meeting.
“I never could figure out how that was determined,” council member Bill McAdow said. As he has during previous discussions of the issue, McAdow questioned why the town would have changed the way it classified condominiums to make them the same as hotels or motels for water and sewer billing purposes. “You can’t rent a house out the same as rooms in a hotel,” he said.
The previous code calculated water and sewer bills for nightly rentals by adding together various factors, including numbers of beds, bedrooms and kitchens. “It was open to interpretation,” Michelle Gaines, town clerk, told council members. “A unit in a house would be the same as a unit in a hotel.”
“I disagree with the way it went down, even if it’s legal,” council member Joseph O’Driscoll said. “The way it [the property classification] got set previously got us where we’re at.”
“Our staff did what they were supposed to do” when they reviewed the town code and reclassified condominiums last year, said council member Kirsten Vanderhalf. If the billing was done correctly based on the existing code last year, “I think it undermines what our staff does” to grant the appeal, she said.
“It’s not that simple,” O’Driscoll said. At past meetings Casey Ruud stated he would take the appeal to court if the town rejected it. “I’m not sure it would hold up in court,” O’Driscoll said. “The option is to not reimburse and have it go to court.”
Ranzau expressed concern that granting the appeal could “open the door to other requests for refund.” However, she noted that appeals must be made within six months of a billing, so the period to appeal any bills from spring of 2018 has expired, and the town did not receive any other appeals.
“If it’s not going to set a precedent, I personally feel it would diffuse the situation,” O’Driscoll said.
McAdow made a motion to grant the appeal of the use class that was assigned to the Ruud properties last year, and provide a refund for the difference in charges that resulted from the way the condos were classified. The refund amount equals $934 for both condominiums, Gaines said, and would be provided in the form of a credit to the Ruuds’ water and sewer account.
Vanderhalf and council member William Kilby voted against the motion, which passed with votes from McAdow, O’Driscoll and council member Ben Nelson.
The Ruuds’ appeal last year prompted town officials to initiate a revision of the water and sewer ordinance, which had been in place since 1993, “in an effort to get it clearer,” Ranzau said. “It was very confusing as far as how charges for nightly rentals [were determined],” she said.
“There’s no ambiguity any longer, no interpretation needed,” Jeff Sarvis, Winthrop public works superintendent, said in an interview after the council meeting. Sarvis became superintendent in June of 2018, after the Ruud’s appeal was filed, and helped write the revisions to the municipal code that were adopted six months ago.
Under the updated code, condominiums are considered the same as duplexes and are in the same use class as single-family residences. A condominium is a form of ownership, “a zoning term, not a structure,” Sarvis said. The code also describes how water and sewer charges will be assessed for “overnight/transient and single-family tourist accommodations,” with charges increasing as the number of bedrooms in the accommodations increase.
In other business, the council approved increases of 1 percent in property taxes and emergency medical service taxes for 2020. Property taxes generated $185,514 in revenue for Winthrop in 2019, and would increase by $1,855 in 2020. Under state law, 1 percent is the maximum annual increase allowed.