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A resolution authorizing the Metropolitan Department of Law to compromise and settle the Section 1983 class action claims brought by Peyton Pratt on behalf of herself and all other similarly situated property owners against the Metropolitan Government in the amount of $1,450,250.09. The amount of $1,445,250.09 to refund all payments made under Metro Code § 15.64.035 shall be paid from Fund 47335 or Fund 47346. The amount of $5,000 for attorney’s fees shall be paid from the Judgment and Losses Fund.
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WHEREAS, Metro Code of Laws § 15.64.035 (the “SWC Ordinance”) authorized the Metro Water Department to collect a stormwater capacity fee for any project that required a development permit and resulted in 800 square feet or more of impervious surface, as defined in the Code; and,
WHEREAS, the SWC Ordinance was tailored to only apply to those areas served by closed pipes which should establish the required nexus and relationship between the fee charged and the need for frequent capacity upgrades in those areas; and,
WHEREAS, Peyton Pratt, on behalf of herself and other similarly situated property owners filed a lawsuit against the Metropolitan Government alleging that Metro Code § 15.64.035 violated the Fifth Amendment’s Takings Clause; and,
WHEREAS, although the Metropolitan Government contends that the SWC Ordinance is legally defensible, revenues generated pursuant to it from January 1, 2024, through January 2, 2025, were significantly less than projected and the Metro Water Department anticipates seeking approval from the Metropolitan Council to repeal the SWC Ordinance; and,
WHEREAS, the amount of the settlement proposed in Section 1 is equal to the amount collected under the SWC Ordinance, plus $5,000 in attorney fees, and would be refunded to those who paid pursuant to the SWC Ordinance; and,
WHEREAS, after investigation, the Metropolitan Department of Law believes that the settlement listed in Section 1 is fair and reasonable and in the best interest of the Metropolitan Government and recommends that the class claims be compromised and settled in the amount of $1,450,250.09.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY:
Section 1: The Metropolitan Department of Law is authorized to compromise and settle the claims of Peyton Pratt on behalf of herself and other similarly situated property owners in the amount of $1,445,250.09 to refund all payments made under Metro Code § 15.64.035 to be paid from Fund 47335 or Fund 47346 and $5,000 for attorney’s fees to be paid from the Judgment and Losses Fund.
Section 2: This resolution shall take effect from and after its adoption, the welfare of the Metropolitan Government of Nashville and Davidson County requiring it.
Agenda Analysis
Analysis
On March 7, 2023, the Metropolitan Council enacted Ordinance No. BL2023-1690, which established a stormwater capacity fee. The effective date of the stormwater capacity fee was extended to January 1, 2024, by Resolution No. RS2023-2388. The Metropolitan Department of Water and Sewerage Services (“Metro Water”) began collecting the fee on January 1, 2024, and stopped collecting the fee on January 5, 2025.
Peyton Pratt brought a class action lawsuit on December 30, 2024, seeking to certify a class of property owners that paid the stormwater capacity fee, declare the fee unconstitutional under the Fifth Amendment, enjoin the collection of the fee, and award “just compensation” to herself and all others that paid the fee.
Metro Water collected $1,445,250.09 over the life of the fee. This is significantly lower than the amount anticipated when the stormwater capacity fee was first contemplated. While the Metropolitan Department of Law believes there is a strong case for the continuation of the fee under the Fifth Amendment, including a nexus and rough proportionality, the Metropolitan Government would be responsible for significant attorneys’ fees if the litigation is successful.
The Metropolitan Department of Law recommends a settlement of $1,450,250.09, representing a full refund of all stormwater capacity fees collected plus $5,000 in attorneys’ fees.
Fiscal Note: This settlement would be paid from the Judgment and Losses Fund in the amount of $5,000 and $1,450,250.09 from Fund 47335 or Fund 47346. This settlement would be the 9th payment after approval by Metropolitan Council from the Self-Insured Liability Fund in FY25 for a cumulative total of $1,930,427. The fund balance would be $16,187,697 after this payment.