Court of Appeals of Indiana | Opinion 18A-MI-2123 | September 11, 2019 Page 1 of 20

ATTORNEYS FOR APPELLANTS

J. Christopher Janak

Paul D. Vink

Bradley M. Dick

Bose McKinney & Evans LLP

Indianapolis, Indiana

ATTORNEY FOR AMICI CURIAE THE 

NATIONAL ASSOCIATION OF HOME 

BUILDERS AND INDIANA BUILDERS 

ASSOCIATION

Jason A. Lopp

McNeely Stephenson

New Albany, Indiana 

ATTORNEYS FOR APPELLEE

L. Rachel Lerman

Barnes & Thornburg LLP

Los Angeles, California

Nicholas K. Kile

Barnes & Thornburg LLP

Indianapolis, Indiana 

Kristi L. Fox 

Fox Law Offices, LLC

New Albany, Indiana

ATTORNEYS FOR AMICI CURIAE

ACCELERATE INDIANA 

MUNICIPALITIES AND INDIANA 

MUNICIPAL LAWYERS, INC.

Douglas D. Church

Alexander P. Pinegar

Church Church Hittle & Antrim

Noblesville, Indiana

I N T H E

COURT OF APPEALS OF INDIANA

Knob Hill Development LLC;

ASB LLC; RPO Construction, 

Inc.; Written Builders LLC;

Appellants-Petitioners,

v.

September 11, 2019

Court of Appeals Case No.

18A-MI-2123

Appeal from the Floyd Superior

Court

The Hon. Susan L. Orth, Judge
Court of Appeals of Indiana | Opinion 18A-MI-2123 | September 11, 2019 Page 2 of 20

Town of Georgetown, Indiana,

Appellee-Respondent.

Trial Court Cause No.

22D01-1803-MI-307

Bradford, Judge.

Case Summary1

[1] Knob Hill Development LLC; ASB LLC; RPO Construction, Inc.; and 

Written Builders LLC (“Builders”) are all real-estate developers who

appeal from the trial court’s refusal to invalidate a 2018 ordinance passed 

by the Town of Georgetown (“the Town”) setting charges for new 

customers of the Georgetown Municipal Sewage Works (“the System”). 

Builders contend that the system development charge (“SDC”), a/k/a 

connection fee, in the ordinance is arbitrary, capricious, and contrary to law. 

Builders also contend that a provision of the ordinance that automatically 

increases the SDC 2% each year is contrary to law. Because we disagree with 

Builders’ first contention but agree with the second, we affirm in part, reverse in 

part, and remand with instructions. 

Facts and Procedural History

1

 We heard oral argument in this case on August 21, 2019, in the Court of Appeals courtroom in 

Indianapolis. We would like to commend all counsel on the high quality of their written and oral advocacy. 
Court of Appeals of Indiana | Opinion 18A-MI-2123 | September 11, 2019 Page 3 of 20

[2] Builders each own property that is or will be connected to the System, which 

was constructed in the early 1990’s and had its flow treated by the City of New 

Albany at the time. In 1994, the Town received approximately $3.8 million in 

grants (“the 1994 Grant”) and, in 1998, the federal government forgave 

approximately $1.25 million in loans to the Town (“the 1998 Loan 

Forgiveness”). In 2004, the Town adopted an ordinance to finance expansions 

to the System, which began charging SDCs per equivalent dwelling unit 

(“EDU”) upon connection. The SDCs were initially set at $2300 and $4800 per 

EDU for new in-town and out-of-town connections, respectively, to increase 

$100 per year after 2004. 

[3] In or around 2011, the Town determined that it should build its own treatment 

plant, which it did, with the plant having an initial capacity of 350,000 gallons 

per day. The Town received a $3.5 million grant pursuant to the American 

Recovery and Investment Act (“the ARRA Grant”) to fund construction of the 

treatment plant. In the years since, the Town has almost outgrown the plant’s 

original capacity and is in the process of expanding it to treat 700,000 gallons 

per day. The Town has devoted $3.1 million borrowed from the Indiana State 

Revolving Fund and over $900,000 in Town funds to the expansion. On 

February 20, 2018, the Town adopted Ordinance Nos. G-18-03 and G-18-04, 

which established monthly sewer user fees and new SDCs, respectively. 

Ordinance No. G-18-04 imposed a new SDC of $7140 per EDU for both intown and out-of-town customers with the SDC to increase 2% each year. 
Court of Appeals of Indiana | Opinion 18A-MI-2123 | September 11, 2019 Page 4 of 20

[4] On March 1, 2018, Builders filed a petition objecting to the rates and charges 

set in Ordinance Nos. G-18-03 and G-18-04. On June 19, 2018, the trial court 

conducted an evidentiary hearing. Doug Baldessari had advised the Town 

regarding the SDCs in Ordinance No. G-18-04 and testified at the hearing. 

Baldessari relied on the Water Environment Federation manual, “Financing 

and Charges for Wastewater Systems,” (“the WEF Manual”) which included 

the following guidance for setting SDCs:

Increasingly, in response to the stated goal to charge new

customers for the full cost of growth, and thereby avoid the 

subsidization of new customers by existing customers, many state 

laws allow utilities to implement a combined fee approach. This 

approach is rapidly gaining favor in many jurisdictions. It

generally applies when the current system facilities could serve 

future customers and a portion of the wastewater capital 

improvement program is also related to growth. The combined fee 

approach includes two separate elements

(1) System reimbursement component. Includes a portion for 

new customer to pay for an equitable share of existing 

facilities.

(2) Incremental new capacity component (also referred to as 

growth-related improvement component). Includes future 

facilities that will be constructed to accommodate growth.

Plaintiff’s Ex. 3 p. 192. 

[5] With this guidance in mind, Baldessari testified that he had used a combined 

method in which the new SDC would be determined by adding (1) the value of 

the utility divided by the number of existing EDUs to (2) the net cost per EDU 

to finance new development. Baldessari’s calculations, dated February 8, 2018,

are shown below: 
Court of Appeals of Indiana | Opinion 18A-MI-2123 | September 11, 2019 Page 5 of 20

GEORGETOWN (INDIANA) MUNICIPAL SEWAGE 

WORKS

CALCULATION OF EQUIVALENT DWELLING UNITS 

AND NET EQUITY PER EDU

Equivalent Dwelling Unit - Current:

Annual Operating revenues (12 months ended 10/31/17 

unaudited)

Collection and treatment $1,064,200

Divided by l2 months 12

Monthly revenues 88,683

Divided by average residential bill 

(4,000 gallons per month) 58.30

Equivalent Dwelling Units - Current 1,521

Existing System Equity

Total estimated existing system 

equity at 12/31/17 $8,607,778

Divided by existing number of 

Equivalent Dwelling Units (EDUs) 1,521

Equity per existing EDU $5,659

[....]

GEORGETOWN (INDIANA) MUNICIPAL SEWAGE 

WORKS

CALCULATION OF ESTIMATED COSTS PER EDU

TO SERVE NEW DEVELOPMENT

(Per Consulting Engineers)

Capacity and Growth Projects

Projects Necessary to Increase Capacity:

Future WWTP Expansion (add 350,000 gpd) $3,000,000

Future Upgrades to East Lift Station 200,000

Future Upgrades to West Lift Station 200,000

Future Upgrades to Misc. Small Lift Stations 200,000
Court of Appeals of Indiana | Opinion 18A-MI-2123 | September 11, 2019 Page 6 of 20

Net cost of projects to serve new development 3,600,000

Divided by estimated number of proposed EDUs (l) 1,145

Net Cost Per EDU to Serve New Development $3,144

[....]

GEORGETOWN (INDIANA) MUNICIPAL SEWAGE 

WORKS

SUMMARY OF CALCULATED CAPACITY FEES

Equity per existing user $5,659

Net cost per EDU to serve new development 3,144

Calculated System Development Charge $8,803

Rounded (Use) $8,800

Current Fee - Inside Town 2018 $5,100

Current Fee - Outside Town 2018 $7,140

Proposed Fees - Inside and Outside Town $7,140

Plaintiff’s Ex. 5 pp. 2–4. 

[6] When calculating the total value of the utility, Baldessari testified that grants 

given to a utility for the purposes of keeping rates down at the time, such as the 

1994 Grant, the 1998 Loan Forgiveness, and the ARRA Grant (collectively, 

“the Grants”), did not have to be left out. Baldessari testified that the SDC set 

by Ordinance G-18-04 “doesn’t make the inside-of-town customers pay for

growth that they don’t share in[,]” Tr. Vol. II p. 91, and that leaving items such 

as the ARRA Grant out of the calculations would likely leave the Town short of 

the SDCs needed for growth-related improvements in the future. While

Baldessari’s calculations indicated that the new SDC should be $8800, he

ultimately recommended a new SDC of $7140 for all new users. 
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[7] On August 13, 2018, the trial court (1) upheld Builders’ objection to Ordinance 

No. G-18-03 because it failed to specify the percentage rate differential between 

in-town and out-of-town users as required by Indiana Code section 8-1.5-3-8.1 

and (2) overruled Builders’ objection to Ordinance No. G-18-04 on the basis 

that the Town had a rational basis for setting the SDCs as they did. The 

Builders appeal, claiming that Ordinance No. G-18-04 is arbitrary, capricious, 

and contrary to law in setting the base SDC and violates due process because it 

provides for an automatic 2% yearly increase in the SDC. 

Discussion and Decision

[8] Builders requested that the trial court enter findings of fact and conclusions of 

law pursuant to Indiana Trial Rule 52(A). (Appellants’ App. Vol. II p.41.). In 

such cases, our standard of review is two-tiered. In re Paternity of B.M., 93 

N.E.3d 1132, 1135 (Ind. Ct. App. 2018). “First, we determine whether the 

evidence supports the findings, and second whether the findings support the 

judgment.” Id. “The trial court’s findings and conclusions will be set aside only 

if they are clearly erroneous.” Id. “In reviewing the trial court’s entry of special 

findings, we neither reweigh the evidence nor reassess the credibility of the 

witnesses.” Id. “Rather we must accept the ultimate facts as stated by the trial 

court if there is evidence to sustain them.” Id. “Conclusions of law are 

reviewed de novo.” 11438 Highway 50, LLC v. Luttrell, 81 N.E.3d 261, 265 (Ind. 

Ct. App. 2017), trans. denied.

[9] As the Indiana Supreme Court recognized some time ago, 
Court of Appeals of Indiana | Opinion 18A-MI-2123 | September 11, 2019 Page 8 of 20

rate-making is a legislative, not a judicial function, and even if a 

statute attempted to lodge such power in a court it would be 

unconstitutional. Although we have a constitutional system of 

government in which the judiciary is said to be supreme in 

determining the jurisdiction and limits on the powers of the other 

branches of the government, as fixed by the constitution and laws, 

yet this supremacy does not extend to the point where we may 

substitute our judgment for, or control the discretionary action of 

the executive or legislative branches, so long as their action is 

within the sphere and jurisdiction fixed by the statutes and 

constitution.

Pub. Serv. Comm’n v. City of Indpls., 131 N.E.2d 308, 312 (Ind. 1956). 

[10] It is well-settled that we will invalidate a rate-making ordinance only if it is 

arbitrary, capricious, or contrary to law. Bd. of Dirs. of Bass Lake Conservancy 

Dist. v. Brewer, 839 N.E.2d 699, 701 (Ind. 2005). We will find a municipal 

entity’s legislative action arbitrary or capricious only if it is “patently 

unreasonable.” S. Gibson Sch. Bd. v. Sollman, 768 N.E.2d 437, 441 (Ind. 2002). 

“Judicial review of whether a governmental agency has abused its rulemaking 

authority is highly deferential[,]” Ind. High Sch. Athletic Ass’n, Inc. v. Carlberg, 694 

N.E.2d 222, 234 (Ind. 1997), and we “will not intervene in a local legislative 

process[if it is] supported by some rational basis.” Borsuk v. Town of St. John, 

820 N.E.2d 118, 122 (Ind. 2005). “A court is not permitted to substitute its own

judgment for the municipality’s discretionary authority; it may only determine 

whether the municipality is acting within its statutory authority.” Bass Lake 

Conservancy Dist., 839 N.E.2d at 701 (citation omitted). 
Court of Appeals of Indiana | Opinion 18A-MI-2123 | September 11, 2019 Page 9 of 20

[11] “A municipality may [...] acquire, construct, improve, operate, and maintain 

sewage works under this chapter[.]” Ind. Code § 36-9-23-2. As for setting rates,

Indiana Code subsection 36-9-23-25 provides, in part, as follows:

[T]he municipal legislative body shall, by ordinance, establish just 

and equitable fees for the services rendered by the sewage works, 

and provide the dates on which the fees are due.

[....]

(d) The municipal legislative body may use one (1) or more of 

the following factors to establish the fees:

(1) A flat charge for each sewer connection.

(2) The amount of water used on the property.

(3) The number and size of water outlets on the property.

(4) The amount, strength, or character of sewage discharged 

into the sewers.

(5) The size of sewer connections.

(6) Whether the property has been or will be required to pay 

separately for any part of the sewage works.

(7) Whether the property, although vacant or unimproved, 

is benefited by a local or lateral sewer because of the 

availability of that sewer. However, the owner must have 

been notified, by recorded covenants and restrictions or 

deed restrictions in the chain of title of the owner’s property, 

that a fee or assessment for sewer availability may be 

charged, and the fee may reflect only the capital cost of the 

sewer and not the cost of operation and maintenance of the 

sewage works.

(8) The cost of collecting, treating, and disposing of garbage 

in a sanitary manner, including equipment and wages.

(9) The amount of money sufficient to compensate the 

municipality for the property taxes that would be paid on 
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the sewage works if the sewage works were privately 

owned.

(10) Any other factors the legislative body considers 

necessary.

Ind. Code § 36-9-23-25. 

[12] Of note, it is undisputed that the System is not subject to the jurisdiction of the 

Indiana Utility Regulatory Commission (“IURC”). “Nothing in the case law 

or in the applicable statutes mandates a certain type of rate-making method for 

municipal utilities that have removed themselves from the jurisdiction of the 

IURC.” In re City of Clinton Water Works Rate Schedule Adopted Sept. 9, 1997, 707 

N.E.2d 807, 810 (Ind. Ct. App. 1999), trans. denied. “Indeed, when a municipal 

utility removes itself from that jurisdiction, [...] the IURC’s authority is 

replaced by local control.” Id. (citing Stucker Fork Conservancy Dist. v. IURC, 600 

N.E.2d 955, 959 n.9 (Ind. Ct. App. 1992)). Utilities that are not subject to 

IURC jurisdiction are not limited to methodologies generally accepted by the 

IURC when setting rates. See id. (“Thus, we conclude that the City in support 

of its rate increase was not limited to methodologies generally accepted by the 

IURC.”). 

[13] Builders contend that (1) the 2018 SDC is arbitrary and capricious because it 

took into account the Grants and previously-paid SDCs, (2) the methodology 

for calculating the 2018 SDC violates relevant Indiana case law, and (3) the 

2018 SDC impermissibly provides for an automatic yearly increase without a 

hearing on each increase. 
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I. Whether the 2018 SDCs Included 

Improper Costs Passed on to New Users

[14] Builders contend that including the Grants and previously-paid SDCs in the 

total value of the utility when calculating the 2018 SDCs was arbitrary, 

capricious, and contrary to law. The Town argues that it was appropriate to 

include those items when calculating the total value of the utility. 

A. The Grants

[15] Builders argue that inclusion of the Grants in the calculations of the 2018 SDCs 

was arbitrary and capricious. Specifically, Builders argue that including the 

Grants in the calculations (1) is essentially a double recovery for the Town and 

(2) conflicts with Indiana law because the grants are not “costs” that can passed 

on to users of new connections. 

[16] As for Builders’ double-recovery argument, inclusion of the Grants is a method 

of determining the value of the utility for purposes of calculating the equity 

portion of the combined method for setting the SDC, a method which 

Baldessari testified was appropriate. While it is true that a higher total value for 

the System results in a higher SDC using the combined method, Baldessari

testified that this was not double payment. Baldessari testified that requiring 

new customers to pay for all of the new plant, as well as putting them on an 

equal equity footing with existing customers, constitutes “paying their fair 

share” and is consistent with the WEF Manual. Tr. Vol. II p. 80. The trial 

court was entitled to credit this expert testimony and did, a decision we will not 

second-guess. See, e.g., Hopkins v. State, 579 N.E.2d 1297, 1303–04 (Ind. 1991) 
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(“Any battle of qualified experts, as in the instant case, or other conflict as to 

the reliability of evidence is to be resolved by the trier of fact, whose finding in 

this regard will be upheld on review as long as the favorable evidence 

adequately supports it, as with any sufficiency question.”) (citations omitted). 

[17] As for Builders’ argument that Indiana law stands for the proposition that the 

Grants are not costs that can be passed on to the new customers, they cite to 

Indiana Code subsection 36-9-23-25(e), which provides that 

[t]he municipal legislative body may exercise reasonable discretion 

in adopting different schedules of fees, or making classifications in 

schedules of fees, based on variations in:

(1) the costs, including capital expenditures, of furnishing 

services to various classes of users or to various locations; or

(2) the number of users in various locations.

[18] Builders argue that the Town is impermissibly making new customers pay the 

Town for the Grants while exempting existing customers, claiming that this is 

not a valid variation in the cost of furnishing service that can justify the 2018 

SDC. This argument is little more than a variation on the double-payment 

argument, and, as mentioned, Baldessari opined that including the grants in the 

connection-fee calculation was not considered double payment. We conclude 

that including the Grants when calculating the 2018 SDC did not violate 

Indiana Code section 36-9-23-25(e). 

B. The Previously-Paid SDCs

[19] Builders argue that the approximately $1.26 million in previously-paid SDCs 

were contributions in aid of construction (“CIAC”) and should not have been
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used to calculate the 2018 SDC. The Town, however, argues that the 

previously-paid SDCs were properly considered revenue, not CIAC, and were 

therefore rightfully included in the calculations. The Town also argues that any

requirement that SDCs must be treated as CIAC only applies in cases governed

by the IURC, which all agree has no jurisdiction in this case. 

[20] “CIAC has been described as ‘donations provided at no cost to the utility.’ 

CIAC may come from state or local governments, customers, or developers as 

incentives to upgrade utilities to accommodate larger customers without 

burdening existing customers.” Ind. Office of Util. Consumer Counselor v. Lincoln 

Utils., Inc., 834 N.E.2d 137, 143 (Ind. Ct. App. 2005) (citation omitted), trans.

denied. In support of their argument that previously-paid SDCs must be treated 

as CIAC, Builders cite to Indiana Code subsection 8-1-2-6(b), which provides 

that, in general, “no account shall be taken of construction costs unless such 

costs were actually incurred and paid as part of the cost entering into the 

construction of the utility” when valuing a utility. Builders also cite to several 

cases in which it was held that previously-paid SDCs were CIAC and could not 

be used in calculating future SDCs. Section 8-1-2-6, however, only applies to 

utilities under the jurisdiction of the IURC, and all of the cases arose in contexts 

governed by the IURC. As mentioned, it is undisputed that the System is not 

subject to the jurisdiction of the IURC. Consequently, the law relied upon by 

Builders does not stand for the proposition that the Town must abide by the 

same restriction. 
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[21] That said, Builders also argue that Baldessari’s testimony that previously-paid 

SDCs are not CIAC was unsupported by any authority. Baldessari, however,

testified that previously-paid SDCs were not considered CIAC for municipallyowned utilities like the System and that “the WEF [Manual] even states that 

that’s generally considered that they’re user charges.” Tr. Vol. II p. 50. 

Baldessari’s reliance on the WEF Manual to support his conclusion on this 

point was not challenged at the hearing. Again, Builders are requesting that we 

reweigh the evidence on this point, which we will not do. See Hopkins, 579 

N.E.2d at 1303–04. 

C. Whether Imposing an SDC that Places the Burden of 

Improvements on New Users is Contrary to Indiana Law

[22] Builders also argue that imposing an SDC that does not spread the burden of 

improvements to current System users is contrary to Indiana law. Builders rely 

on one non-IURC case to support this argument, Common Council of City of 

Crown Point, Lake Cty. v. High Meadows, Inc., 173 Ind. App. 138, 362 N.E.2d 

1166 (Ind. Ct. App. 1977). In High Meadows, landowners challenged the city’s 

ordinance which sought to increase fees charged to connect to the city’s sewer 

system. Id. at 138, 362 N.E.2d 1167. The trial court sustained the challenge. 

Id. On appeal, we noted that while municipal sewage connection charges were 

not necessarily limited to recoupment of the cost of the inspection and the 

actual work performed, the charges levied under the ordinance in question 

exceeded the city’s statutory authority. Id. at 139, 362 N.E.2d 1166, 1167. 

Specifically, we concluded that although the city could have established a 

connection rate or charge that included amounts to be used for future 
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improvements to the system, such charges could not have been levied only 

upon new users when there was an established group of users of the same 

system who would not have been subject to the charges. Id. at 143, 362 N.E.2d 

1166, 1169. 

[23] As the Town points out, however, High Meadows was based on statutes which 

have been superseded by subsequent legislation, including the Home Rule Act, 

as recognized by more recent judicial analysis. In the 1998 case of Taylor v. Fall 

Creek Regional Waste District, 700 N.E.2d 1179 (Ind. Ct. App. 1998), trans. denied, 

we recognized that the statute at issue in High Meadows, former Indiana Code 

section 19-2-5-20, afforded less discretion to sewage utilities than the one at 

issue in Fall Creek, Indiana Code section 13-26-11-2(a), which applies to 

regional sewage utilities, was enacted in 1996, and allows the utility to 

determine rates based on a number of factors, including “(7) A combination of 

these or other factors that the board determines is necessary to establish 

nondiscriminatory, just, and equitable rates or charges.” 

[24] A few years after High Meadows was decided, the General Assembly replaced 

Indiana Code sections 19-2-5-19 through -21 with Indiana Code section 36-9-

23-25, the statute at issue in this case. As was the case with the statute at issue 

in Fall Creek, section 36-9-23-25 provides a municipality with more discretion 

than section 19-2-5-20 afforded. Indeed, subsection 36-9-23-25(d) allows even 

more discretion to municipalities than subsection 13-26-11-2(a) does to regional 

authorities, as the municipal legislative body may use one or more of several
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listed factors, including “[a]ny other factors the legislative body considers 

necessary.” 

[25] Moreover, High Meadows predates the Indiana Home Rule Act, enacted in 1980.

High Meadows was decided pursuant to the so-called “Dillon Rule,” which 

presumed that local governments possess only those powers expressly 

authorized by statute. 

Like many other states, Indiana historically adhered to the Dillon 

Rule that a municipal corporation could exercise only the 

following powers:

First, those granted in express words; second, those 

necessarily or fairly implied in, or incident to, the powers 

expressly granted; third, those essential to the declared 

objects and purposes of the corporation—not simply 

convenient, but indispensable.

Tippecanoe Cnty. v. Ind. Mfr.’s Ass’n, 784 N.E.2d 463, 465 (Ind.

2003) (citing Dillon, Municipal Corporations (1st ed. 1872) 

(emphasis in original)). A corollary rule of construction required 

that a court resolve any reasonable doubt concerning the existence 

of a power against the corporation and enjoin the corporation 

from exercising it. See id.

Under the Dillon Rule, a person who simply found himself on the 

wrong side of some local action could easily challenge that action 

by essentially arguing that it was ultra vires. See, e.g., City of S. Bend 

v. Chicago, S.B. & N.I. Ry. Co., 179 Ind. 455, 458, 101 N.E. 628, 629 

(Ind. 1913) (“[T]he charter of South Bend delegated no power for 

the enforcement of the ordinance in controversy....”). The 

resulting legal landscape handcuffed municipal corporations, 

preventing them from taking a wide range of governmental actions 

we might find commonplace today. See, e.g., Pittsburgh, C., C. & St. 

L. Ry. Co. v. Town of Crown Point, 146 Ind. 421, 45 N.E. 587 (1896) 

(town could not enforce ordinance requiring railroad to post 
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watchmen and maintain gates at crossings at railroad’s expense 

because statute authorizing ordinances to prevent nuisances did 

not provide so specifically). 

Recognizing the disadvantages of the Dillon Rule, the Legislature 

abrogated it in 1971, when it passed the Indiana Powers of Cities 

Act. Act of April 14, 1971, P.L. 250–1971, § 1, 1971 Ind. Acts 

955, 967. The Legislature expanded the applicability of this 

reforming principle in 1980, when it passed the Indiana Home 

Rule Act. Act of February 27, 1980, P.L. 211–1980, § 1, 1980 Ind. 

Acts 1657, 1659–62 (codified as amended at Ind. Code §§ 36-1-3-1 

to -9 (2007)). In addition to reaffirming the abrogation of the 

Dillon Rule, the Home Rule Act provides that in general, a unit is 

presumed to possess broad powers of local government, unless the 

Indiana Constitution or a statute expressly denies the unit that 

power, or expressly grants it to another entity. Ind. Code § 36-1-3-

5 (2007)[.] 

Kole v. Faultless, 963 N.E.2d 493, 495–96 (Ind. 2012). Since 1980, then, the

presumption has been that any doubt as to the existence of a power “shall be 

resolved in favor of its existence.” Ind. Code § 36-1-3-3(b). 

[26] Given the greater discretion granted to the Town by Indiana Code subsection 

36-9-23-25(d), along with the presumption that a municipality is presumed to 

have a power that has not been expressly taken away, we conclude that High 

Meadows no longer stands for the broad proposition that the burden of future 

growth in a sewer system cannot be placed primarily on new users. It seems to 

us that when the Town was deciding what the 2018 SDC would be, planning 

for future growth easily qualifies as “[a]ny other factor[] the legislative body 

considers necessary.” Ind. Code § 36-9-23-25(b)(10). 
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II. Annual Increase in the SDC

[27] Finally, Builders contend that the automatic yearly 2% increase in the SDC in 

Ordinance No. G-18-04 violates Indiana law. Indiana Code section 36-9-23-26 

provides, in part, as follows: 

(a) After the introduction of the ordinance establishing fees under 

section 25 of this chapter, but before it is finally adopted, the 

municipal legislative body shall hold a public hearing at which 

users of the sewage works, owners of property served or to be 

served by the works, and other interested persons may be heard 

concerning the proposed fees. 

[....]

(b) After the hearing, the municipal legislative body shall adopt the 

ordinance establishing the fees, either as originally introduced or 

as modified. 

[....]

(d) The municipal legislative body may change or readjust the fees 

in the same manner by which they were established.

As the Indiana Supreme Court has recognized, the statute requires that “a 

municipal legislative body must hold a public hearing before revising sewer 

rates.” Farley Neighborhood Ass’n v. Town of Speedway, 765 N.E.2d 1226, 1231 

(Ind. 2002). 

[28] We have little trouble concluding that Builders are correct on this point. The 

2% annual increase in the SDC is a revision of a fee, one that occurs without a 

public hearing. The Georgetown Town Council, even though it passed only 

one ordinance, is nonetheless revising the fee each year without a hearing. “If 

there is a constitutional or statutory provision requiring a specific manner for 

exercising a power, a unit wanting to exercise the power must do so in that 
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manner.” Ind. Code § 36-1-3-6. So, the Georgetown Town Council may only 

“change or readjust the fees in the same manner by which they were 

established[,]” Indiana Code section 36-9-23-26(d), i.e., following a public 

hearing. We conclude that the automatic 2% annual increase in the SDC in 

Ordinance No. G-18-04 violates Builders’ due process rights and is invalid. 

[29] The Town argues, without reliance on authority, that the Builders’ challenge to 

the automatic increase in the SDC should be rejected as speculative because the 

Town could enact a new ordinance at some point in the future. The Town also 

argues that the automatic-increase clause is not yet ripe for review because it set 

the 2018 SDC lower than Baldessari’s original proposed SDC and it will take 

several years of automatic increases for the SDC to reach that figure. We find 

neither of these arguments to be compelling. Put simply, whether there may be 

a new ordinance in ten years or whether Builders should count themselves 

lucky that the SDC was not set higher in the first place are things that have 

nothing to do with whether the Town has the authority to revise the SDC

without a hearing, which it does not. 

Conclusion 

[30] We conclude that the base SDC set by Ordinance No. G-18-04 is neither 

arbitrary, capricious, nor contrary to Indiana law. Ordinance G-18-04’s 

automatic 2% yearly increase in the SDC, however, violates relevant Indiana 
Court of Appeals of Indiana | Opinion 18A-MI-2123 | September 11, 2019 Page 20 of 20

law because it provides for a fee increase without a hearing.2 It is not disputed 

that one such automatic increase has already occurred, so we remand with 

instructions for the trial court to enjoin the Town from collecting the additional 

2% unless and until an increase in the SDC has been approved and enacted 

following a public hearing.3 

[31] The judgment of the trial court is affirmed in part and reversed in part, and we 

remand with instructions. 

Altice, J., and Tavitas, J., concur. 

 

2

 Our disposition of the claim regarding the automatic increase has no effect on the other provisions of 

Ordinance No. G-18-04. “If any section of this code now enacted or subsequently amended or its application 

to any person or circumstances is held invalid, the invalidity does not affect other sections that can be given 

effect without the invalid section or application.” GEORGETOWN, IND., CODE OF ORDINANCES § 10.06(A).

3

 In addition to nine enumerated powers (which do not include ordering an injunction), Indiana Rule of 

Appellate Procedure 66(C)(10) empowers us to “grant any other appropriate relief” in disposing of an appeal.