Joseph Azar, Frank J. Cumberland, Jr., and Michael A. Letts, Individually and as Class Representatives, Appellants,
City of Columbia, Respondent
Heard: April 7, 2015.
Appeal from Richland County. J. Ernest Kinard, Jr., Circuit Court Judge G. Thomas Cooper, Jr., Circuit Court Judge. Appellate Case No. 2014-000032.
Charles D. Lee, III, of McLaren & Lee, of Columbia, and Gene M. Connell, Jr., of Kelaher Connell & Connor, PC, of Surfside Beach, for Appellants.
M. McMullen Taylor, of Mullen Taylor LLC, of Columbia, for Respondent.
JUSTICE KITTREDGE. TOAL, C.J., PLEICONES, BEATTY, and HEARN, JJ., concur.
The City of Columbia generates approximately $110 million in revenue from user fees each year by providing water and sewer services. For more than a decade, the City has been allocating substantial amounts of this revenue to its General Fund and for economic development purposes. Appellants filed this action contending the City's practices violate sections 6-1-330 and 6-21-440 of the South Carolina Code. The trial court granted the City summary judgment. Because there are genuine issues of material fact as to whether the City's expenditures of water and sewer revenues were lawful, we reverse and remand. Specifically, we remand to the trial court for further proceedings to determine whether the funds transferred into the City's General Fund were properly considered " surplus revenues" under section 6-21-440 of
the Revenue Bond Act and could therefore be spent for unrelated purposes and whether the City's direct economic-development expenditures bore a sufficient nexus to its provision of water and sewer services such that they would be considered " related" expenditures under the terms of section 6-1-330(B) of the South Carolina Code.
The City owns and operates the state's largest water and sewer utility. The City provides water and sewer services to residents and non-residents by way of a service contract. Pursuant to the contract, the customer pays a minimum base rate plus any additional water or sewer use as measured by a meter. The rates the City charges for water and sewer services are set by ordinance. The revenue generated by the City in water and sewer fees is deposited into the Water and Sewer Enterprise Fund (Enterprise Fund). Each year, the City transfers $4.5 million from the Enterprise Fund to its General Fund.
Joseph Azar, Frank Cumberland, Jr., and Michael Letts (collectively, Appellants) brought this action to challenge the City's practice of using water and sewer revenues for unrelated purposes. Specifically, Appellants sought an injunction to prevent the City from transferring revenues from the Enterprise Fund for these uses, and a refund of all such transfers from the past three years.
The parties filed cross-motions for summary judgment. Following a hearing, the trial court issued an order granting summary judgment for the City. Appellants appealed, which this ...