$30 million class action claims Spokane overcharged out-of-city water customers

A $30 million class-action lawsuit filed Thursday claims the city of Spokane has for years overcharged thousands of water customers who live outside city limits.

The city, meanwhile, maintains that its higher rates for out-of-city water consumption are not only legal but also common across the state.

The class action is the second lawsuit to emerge from a long-standing dispute between the city and Fairways Golf Course on the West Plains, which recently had its water shut off over an outstanding bill of $40,740. A judge earlier this month ordered the city to restore water service to the golf course, which claims it was overcharged despite meeting conservation targets.

Attorney Bob Dunn is representing both the golf course and the plaintiffs in the class action. The lead plaintiffs in the class action are Fairways club professional Kris Kallem and two neighbors of the course, John Durgan and Tawndi Sargent. Durgan’s family managed the course for 15 years before the current owner took over.

Spokane currently has about 5,300 out-of-city water customers. For residential customers, out-of-city rates are 50 percent higher. Commercial rates are more complex but also about 50 percent higher.

“For a long time the city has been getting half a point more for each unit we use,” said Durgan, who’s lived near the golf course for nearly two decades.

In his complaint, Dunn calls those higher rates “discriminatory,” “excessive” and “arbitrary and capricious.” He also contends they amount to a “surcharge.” And in an interview, he said the class action could benefit up to 6,000 water customers, including some who have moved from the city’s service area.

City spokeswoman Marlene Feist provided a written statement defending the rate disparity.

“The city’s citizens rightfully benefit from their long-term investment with inside-city rates,” the statement says. “State law and court decisions support this approach, which has been in place in the city for more than 50 years and in cities around the state including Tacoma, Seattle and Kennewick. It would be unfair to ask city residents to pay more now to accommodate lower rates for outside developments.”

The cost of pumping water generally increases with the distance it must travel. Dunn notes in both lawsuits that the Fairways Golf Course and surrounding neighborhood, developed by Robert “Buster” Heitman, were responsible for installing their own pipes and infrastructure.

Dunn also has asserted that some out-of-city customers have been improperly billed at double the rate of city residents. But Feist wrote in an email that there is no “sliding scale” for rates based on distance from the city.

“However, in all cases, if you’re using more water than your neighbor, your bill would be larger,” she wrote.