Updated at 5:28 p.m.
A Superior Court judge issued a scathing ruling against the town of Colchester Tuesday, writing that town officials acted in bad faith and against the public good when the town attempted to seize waterfront property in an eminent domain proceeding.
The property owner sued Colchester in 2022, after town officials started eminent domain proceedings to seize the land. Aaron Frank, Colchester’s town manager, said in an email the town pursued condemnation of the property “for environmental and liability reasons.”
The 885 East Lakeshore Drive property, owned by Mongeon Bay Properties, is not used as a permanent residence but is part of a larger unsubdivided parcel that hosts a mix of rental housing, seasonal housing and single-family homes, according to AJ LaRosa, an attorney for Mongeon Bay Properties.
The town sought to condemn the property to build a treatment facility that would remove phosphorus and other contaminants from stormwater before discharging it into Malletts Bay, according to court documents.
The town has long held an easement on the site to operate and maintain a decades-old stormwater drainpipe and catch basin underneath the property, court documents show.
“The town did not believe this was a sound situation due to the certainty of need for future repairs and replacement of the pipe,” Frank said. “Having a seasonal rental property on the side of a steep slope, and on top of a large stormwater pipe presents a significant financial burden to the town and its taxpayers.”
But Superior Court Judge Samuel Hoar Jr., in a decision issued this week following an October trial, suggested the town undertook the eminent domain proceeding in an act of retaliation.
Following an October 2019 storm, the town-owned stormwater drainpipe underneath the property ruptured “due to corrosion and deterioration, in turn a result of a lack of maintenance,” Hoar wrote. This in turn caused damage to the foundation footings of the property at 885 East Lakeshore Drive, LaRosa said.
Colchester refused to accept responsibility for the rupture and its subsequent damages, Hoar wrote. Mongeon Bay Properties sued the town, and the two parties later settled out of court for an undisclosed amount of money, according to LaRosa.
While that court case was underway, town officials initiated proceedings to condemn the property, according to court documents. Mongeon Bay Properties challenged that move in court, and has maintained ownership of the site as the case unfolded.
Hoar, in his decision on the latter case, wrote that, “Coincidentally, Mongeon’s filing of the… lawsuit was followed closely by the town’s initiation of condemnation proceedings. Or perhaps there was no coincidence.”
The judge wrote in the ruling that a town attorney had threatened the property owner in 2020, saying, “if you sue the town we will take your house by eminent domain.”
The evidence in the case, Hoar wrote, “compels the conclusion that this is a bad faith, pretextual taking, driven not by the careful analysis of costs and benefits and consideration of alternatives… but by the desire to remove what at least the then-director of public works and the town’s counsel felt was a thorn in the town’s side.”
Frank, in an email, said that the town’s attorneys “will need weeks to carefully review the decision and consider options before advising the town on future actions.”
The property in question has had a long, litigious history. In 2017, the Vermont Supreme Court sided with Mongeon Bay Properties in a case forcing the eviction of tenants on the property.
The en mass eviction of members of the Malletts Bay Homeowners Association soured the relationship between the property owner and town officials, LaRosa said.
“It was clear that this did not make certain officials at the town of Colchester happy,” he said.
The relationship further deteriorated following the damage to the town-owned stormwater drainpipe on the property in 2019.
Mongeon Bay Properties reached out to the town to discuss solutions following the storm damage. But during subsequent conversations, legal counsel for Colchester conveyed that the town was not happy with the property owner because of the earlier evictions, according Hoar’s ruling.
Communications presented during the trial showed that town counsel “threatened that Mongeon could either sell the property to the town, or the town would take it,” Hoar wrote in his ruling.
No mention was made of a proposed treatment facility at that time, Hoar wrote.
“Rather, it was clear from these communications that the only reason the town wanted to acquire the property was to resolve Mongeon’s claims for property damage arising out of the prior year’s outflow pipe failure,” Hoar concluded.
The town, the judge wrote, did not undertake any studies or engage experts to determine whether this was a feasible site for a treatment facility.
“The credible evidence establishes that the town undertook no careful analysis of either the costs or anticipated benefits of stormwater treatment at the property — much less a comparison of those costs and benefits with those associated with other treatment options,” he wrote.
Mongeon Bay Properties, during the October trial, presented as evidence more cost-effective and more efficient treatment methods the town could have pursued at other locations.
Those alternative designs, Hoar wrote, would provide “far greater benefit to the taxpayer than the project, by any measure.”
Colchester, the judge wrote, failed to demonstrate that it had considered other more cost-effective alternatives, and instead focused exclusively on the property at 885 East Lakeshore Drive.
“Instead, the proposal appears tailored to scratch a particular itch, completely unrelated to the stated purpose,” Hoar wrote. “And even if scratching that itch could be considered a proper public purpose, the town has made no showing that amputating the limb on which the itch is found and replacing it with a very expensive prosthetic is the best and most cost-effective solution.”
