The Indiana Court of Appeals recently interpreted a land developer’s contract with an Indiana town in Carroll Creek Development Company Inc. v. Town of Huntertown, 9 N.E.3d 702 (Ind. Ct. App 2014). The contract provided that the developers could recoup nearly five-hundred thousand dollars of their water main construction costs through connection charges levied against land owners in a defined “excess area” if the land owners chose to directly or indirectly connect to the water main within the subsequent fifteen years.
During litigation, both sides agreed that land owners within the excess area would pay the connection charges while landowners outside of the defined area would not pay. The issue was whether and what to charge connecting land owners with property in both locations. This was important because landowners were typically charged by the acre or linear foot of their property. Under the town’s theory, only land within the boundary should be charged. This meant that landowners could connect to the water main and supply water to land outside of the excess area without paying charges on all of their land.
The Appellate Court eventually sided with the land developer holding that landowners would have to pay charges on land that was outside of the excess area. Therefore, when drafting land development contracts, it is important to discuss the parameters of all connection charges.
Jeremy Fetty is a partner in the law firm of Parr Richey Frandsen Patterson Kruse with offices in Lebanon and Indianapolis. He often advises businesses and utilities (for profit, non-profit and cooperative) on organizational, human resources, and transactional matters and drafts and reviews commercial contracts.
The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.