AGH, Berlin work together to settle problematic suit

(Aug. 8, 2014)  After several months of dialogue, Atlantic General Hospital settled a potentially problematic lawsuit over stormwater fees with the town of Berlin last month.

Berlin and AGH recently settled a lawsuit over stormwater fees out of court. AGH’s most recent expansion included approximately $50,000 in stormwater improvement near the east entry to the emergency department, including the pervious pavement, grading and water handling to feed into the two nearby manmade ponds.

The suit, filed in October 2013, alleged the town unfairly charged AGH more than $9,000 in annual fees. The hospital, which operates as a nonprofit, manages its stormwater onsite and does not believe it causes or contributes to any stormwater problems in Berlin.

Both sides settled out of court on July 14. Berlin Mayor Gee Williams said there were two steps to the settlement.

“One was in the spring or the early summer,” he said. “Our water resources people and our stormwater engineer met with AGH’s engineer and they reviewed every detail of the way in which the fee had been computed originally, for the first year, and we both looked for any reasonable way to make sure that no pervious surfaces were being charged. They went through everything with a fine-toothed comb and they were able to reduce the rate.”

After review, AGH and the town of Berlin agreed upon a $3,200 annual rate for the existing property. If the hospital adds additional property or additional pervious surfaces, AGH would pay “the going rate at the time,” according to Williams.

“I think we have successfully gone from being adversaries over this issue to the beginning of a very permanent and fruitful partnership,” Williams said.

In the second part of the agreement, Williams met with AGH Board of Trustees Chair John H. “Jack” Burbage, Jr., and the town agreed to pay an annual grant of $10,000 to AGH.

“We followed up with a couple of phone calls as I informed the Berlin Council at an executive session and he had a meeting with his board of directors to share with them the agreement that we had worked out, and all parties were very supportive,” Williams said. “We were, before the suit was filed, making grants to the hospital from time to time when they specifically requested it for some need.”

Williams said Berlin had not made any grants during the last few fiscal years.

The town paid the FY ’15 grant last month. Williams said the amount would become an annual minimum, and that the town may be willing to provide additional funding if a special need occurred.

Berlin also agreed not to raise the annual rate more than 5 percent.

“Quite frankly, I don’t anticipate any increases in the stormwater fee in the foreseeable future,” Williams said.

AGH may also pursue additional stormwater credits as a nonresidential nonprofit organization thanks to a recent change in the town code.

AGH President/CEO Michael Franklin said the suit was about the principle more than the dollar amount.

“It was nice, but in the scheme of things it’s a nominal dollar amount,” he said. “It’s about how key agencies in this community are considered in these types of decisions that are being made by the town. In consideration for the not-for-profits and making sure they give consideration and build a system of credits for those who are actually doing things to manage their own stormwater – it was important that it was specifically stated in there as opposed to the broader statements that were in the original ordinance.”

During a July 14 Mayor and Council meeting, the town approved Ordinance 2014-03, amending Chapter 26 of the town code and enacting Section 26-273 establishing a stormwater fee credit policy. In the policy, nonresidential nonprofits can receive credits if they have an existing system set to current standards that they enhance, or if they retrofit a system built to earlier standards. The town’s stormwater engineer must approve and verify each case.

The maximum credit is a 50 percent deduction of stormwater fees. Franklin said the ordinance was an essential component of the overall resolution.

“Taking into consideration all the work that we’ve done – we do all the things we’ve been asked to do, and having an ongoing budgetary consideration because we’ve had difficulty getting grants to support the work that we do – all of that stuff worked together for us,” said Franklin. “I think it was very important that the ordinance was modified to recognize not-for-profits and the importance of those in the community and the difficulty of functioning in the community and not just being able to pay those types of taxes.

“We’ve always had a good dialogue, and I think it increased the sensitivity – particularly for them – of when they are considering doing something that could have potentially a significant impact on us,” Franklin continued. “It would be very nice if they would sit down with us in advance of that and helping us to understand what all this means to us and how to also be part of the influence on what happens.”

AGH Director of Marketing Sarah Yonker said the hospital invests heavily in stormwater management in every construction project they undertake. Most recently, AGH spent approximately $50,000 on stormwater improvements near the east entry to the emergency department, including the pervious pavement, grading and water handling to feed into the two nearby manmade ponds.

“We had already done and completed a number of the items (the town) had requested through construction projects with stormwater,” said AGH Vice President of Public Relations Toni Keiser. “That was never considered when the (original) ordinance went into place, so I think subsequent conversations that we had from the time the ordinance was put into place through to the settlement allowed for greater consideration of all of those elements – what had already been done that was not taken into consideration.

“They kind of came to a ‘one-size-fits-all’ solution in the ordinance without taking into consideration all those different elements,” Keiser continued. “The settlement allowed us to bring everything to the table, including looking at organizations individually as to what they’ve already done and how that should impact the ordinance as well as the not-for-profits. If I’m a donor in the area that is wanting to see an expansion of services and equipment to better the health of our community, I want to make sure those dollars that I’m giving are going to that purpose – not coming back for the stormwater issue that we’ve already addressed.”

Franklin, who pointed out that AGH is the largest employer in Berlin, said the settlement ultimately makes accommodations for all nonprofits operating in the town.

“I think this was pretty straightforward, and I think it ended up in a good result,” he said.

“This was an amicable end,” said Williams. “I don’t think there’s any member of the (Berlin) council or any member of the board officers of the AGH foundation that have any hard feelings about this. “We’ve always had a good relationship with AGH – this is the first adversarial relationship we’ve ever had and it’s hopefully the last – but the through this discussion an added benefit that I’m confident will come from it is a closer working partnership between the town and AGH in promoting not only the hospital, but of health and wellness within the community and beyond. Unfortunately it took a disagreement to open up a dialogue, but I’m very happy with the way it all turned out.”

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