Bloomington doesn’t budge on sewer extension denial, sticks to annexation-related policy
At its regular Monday (July 29) meeting, Bloomington’s utilities service board (USB) upheld the denial of a requested sewer connection for a piece of property west of town, at the intersection of Airport Road and SR 45.
The denial of sewer service to the parcel was made by interim CBU director Katherine Zaiger. The appeal was made to the USB.
The voice vote was nearly, but not quite unanimous, as USB president Megan Parmenter dissented.
The current city of Bloomington utilities (CBU) policy, enacted by the USB in August 2022, stems from pending litigation that eventually arose from Bloomington’s original 2017 plan to annex several territories around the city on an involuntary basis.
The basic CBU policy is now for the CBU director not to grant extension of any additional sewer service outside the city boundaries, unless there is a valid petition for voluntary annexation in place.
In August 2022, Parmenter was also the sole vote of dissent on the USB policy against extending sewer service.
The land in question is slated to become a convenience store, gas station and office, if Monroe County commissioners approve a rezone—from the current split zoning of limited business (LB) and general business (GB), to just general business for the whole property.
The rezone request, from owner Heri, Inc., is supposed to appear on this Wednesday’s meeting agenda for the county commissioners. The rezone request got a unanimous recommendation of approval from the county plan commission.
Heri, Inc. president Rajesh Patel attended Monday’s USB meeting on the Zoom video conference platform, who was represented by attorney Michael Carmin, who appeared in person.
Carmin told the USB that the commercial development of the property can, and will, take place. That’s because the county will support the rezone, Carmin said, and because a septic system can be installed. But he added that sanitary sewer is better because of the environmental and public health risks associated with septic systems.
Carmin put it like this: “If he’s forced to do it on septic, then it never is gonna go on sewer, and it ought to be on sewer—long range, reasonable responsible development would put it on sewer.”
Carmin said, “If we view sewer-versus-septic as a public health issue, I find it hard-pressed to say, why public health should suffer because of other battles.”
By “other battles” Carmin meant the pending annexation litigation.
USB member Kirk White, as well as other members, expressed some sympathy with the public health angle that Carmin pursued. But White and others ultimately saw it as precedent setting in a way that essentially overturned the whole policy.
White put it like this: “In general terms, I’d have to fall on the side of us providing sanitary sewer service as much as we can, in closely contiguous areas.”
The notion of contiguity is crucial to the question of whether Heri, Inc. could submit a valid petition for voluntary annexation into the city of Bloomington, even if it wanted to. As assistant city attorney Chris Wheeler pointed out at Monday’s USB meeting, an area to be annexed has to be contiguous to the city.
But the Heri, Inc. parcel is not contiguous with the city of Bloomington—in fact, it’s about a mile drive east on SR 45 to reach the Bloomington boundary. The length of the sewer extension would not be that long—maybe half a mile.
The parcel is contiguous to annexation Area 1A, which is one of two areas that were subject to an annexation trial on the merits, which concluded in early May. A ruling from judge Nathan Nikirk could come in the next few weeks.
During the annexation trial on the merits, Parmenter testified on behalf of the remonstrators.
Parmenter is a member of Bloomington’s utilities service board (USB), even though she’s not a city resident. She’s eligible to serve, because she’s a utilities rate payer—her home is connected to city of Bloomington utilities (CBU) water and sewer service. Parmenter was appointed to the USB by the city council.
When Parmenter testified during the annexation trial, she said that she is opposed to the August 2022 policy, because CBU operates on a cost-for-service model. Rate payers pay the actual cost of the service and the maintenance of the infrastructure. That means that by extending service outside the city limits, CBU is not agreeing to subsidize sewer service there. Parmenter noted that CBU customers outside the city limits pay a higher rate than inside the city.
At Monday’s USB meeting, Parmenter hit some of the same points as she did in May from the witness stand.
Wheeler responded to a USB question about the idea that the extension of sewer service to the Heri, Inc. parcel would be cost neutral. Wheeler noted that the extension of sewer service to the parcel does not necessarily mean that the developer would pay the cost of that extension—because the burden of the cost would be subject to negotiation.
If the USB’s August 2022 sewer connection policy requires a valid petition for voluntary annexation, but such a petition is impossible for Heri, Inc. to submit, then on what grounds did Carmin and Patel appeal the denial by CBU director Zeiger?
Carmin pointed out that there is room in the policy for the CBU director to exercise discretion, to still grant a sewer extension, even absent a valid petition for voluntary annexation. The alternative is for the property owner to sign a remonstrance waiver that would apply if the city initiates an involuntary annexation, and for the director to exercise discretion by giving consideration to several different factors.
The factors include the capacity of CBU’s treatment facilities to treat the additional wastewater, and whether the planned use of the land is industrial, commercial or residential. Carmin noted that for the planned use factor, the policy does not say how the uses are supposed to be weighed. But he interprets it to mean it weighs in favor of the appeal, if the use is commercial as opposed to residential.
Carmin said that he is unsure what new Bloomington mayor Kerry Thomson’s position actually is on the CBU’s August 2022 policy. Thomson was sworn into office at the start of this year (2024). But Wheeler gave some insight into the topic by saying that when a request comes in for extension of sewer service outside the city, it goes “up the chain of command” to the corporation counsel and to the mayor.
According to Wheeler, the mayor’s position has been to identify a single rare circumstance under which the CBU director’s discretion should be exercised. That rare circumstance is when a “will serve” letter was already sent to a property owner, before the August 2022 policy was enacted.
As far as the sewer system’s capacity goes, Carmin said Bloomington’s city council had effectively determined that there is adequate capacity for CBU to accept the additional waste water—when it enacted the annexation ordinances in the fall of 2021.
On Monday, as the non-voting city council representative to the USB, Matt Flaherty drew out from Wheeler the basis for enacting the August 2022 policy. The annexation litigation involving Area 1C, Area 2, Area 3, Area 4, and Area 5, hinges on the legal status of annexation remonstrance waivers. Judge Nikirk has ruled in favor of remonstrators in that case—that after 15 years the waivers are not valid, based on a 2019 state law—but the city of Bloomington has appealed that ruling.
Wheeler told Flaherty that the USB’s policy is based on the pending litigation and the “uncertainty of what it even means to receive a waiver.” The point of the litigation, Wheeler said, is to determine “whether the waivers that we receive have any benefit to the city.”
Flaherty said he does not think it’s possible to fully remove the question of sewer extensions from non-CBU considerations like annexation. Utilities are “one piece of a broader puzzle,” Flaherty said, adding: “And the more of those pieces you give away, it undermines the case for annexation, which harms the fiscal health of the city potentially over time.”
