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The original item was published from 8/17/2017 4:49:56 PM to 9/18/2017 12:00:01 AM.

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Posted on: August 17, 2017

[ARCHIVED] Federal court issues ruling on Maze LLC v City of Hot Springs, et al – No. 6:16-CV-6029

By an Order and Opinion issued today by Honorable P.K. Holmes, III, Chief U.S. District Judge, the court has dismissed all federal claims against the City of Hot Springs in connection with its Municipal Utility Connection and Extension Policy brought by the Plaintiff, Maze LLC. In so ruling, the court made the following findings:

“Beginning in 2004, the City of Hot Springs began experiencing capacity issues with its sewer system and the Arkansas Department of Environmental Quality (ADEQ) became involved to get the situation under control.”

“….the City of Hot Springs began experiencing occasional water demand that exceeded 80% of its daily supply capacity.”

“In response to these issues, the City of Hot Springs developed a policy whereby it would prioritize service to residents of the city and existing users.”

“Maze entered into an agreement to sell land to Wal-Mart Real Estate Business Trust.” “Later the sale fell through and Wal-Mart backed out of the deal.”

“Maze seeks a declaratory judgment, an injunction under a theory of promissory estoppel, and an injunction and damages for 42 U.S.C. §§1983 and 1988 claims damages under an inverse condemnation claim”

“The classification here has to do with different treatment of property located inside versus outside of the city limits of the City of Hot Springs. Thus, the classification is subject to rational basis review. The challenged policy passes constitutional muster because Defendants rationally could have considered the reported water and sewage problems to be true and acted to address these problems. It is a legitimate government purpose to avoid overextending the obligations to supply water and waste water treatment with systems that have shown signs of nearing their capacity. Additionally, it is a legitimate government purpose for a municipality to encourage growth within its own geographic borders.

“… reasonable jury could return a verdict for Maze based on the theory that there was no rational basis for the government action.”

Hot Springs City Attorney Brian W. Albright stated that pendent state claims may still be pursued by the plaintiff. However, he stated that Judge Holmes’ opinion is sound and makes it clear that the policy adopted by the city promotes a legitimate governmental purpose.

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