COA: Drain reconstruction project can be paid by excess maintenance funds

The denial of a petition brought by several angry landowners against a multi-county drainage board has been affirmed by the Indiana Court of Appeals after it concluded that concerns about using 75% of a maintenance fund for a local reconstruction project were unwarranted.

Tipton and Atlanta, Indiana landowners Kip Bergman, Scot Gasho, Jane Harper, Philip Overdorf, Brent Snow and George Tebbe filed a petition for judicial review of the Big Cicero Creek Joint Drainage Board’s 2017 decision to fund a $4.7 million partial reconstruction of the Big Cicero Creek Open Drain System. The project would be paid by public or private sources and then repaid using 75% of the annual maintenance assessment.

The landowners alleged the board acted without observing procedure required by law and its decision is unsupported by substantial evidence, also asserting that it was improperly formed in 1991 and must therefore be disbanded.

The Tipton Circuit Court, however, denied the landowners’ petition, concluding among other things that the board’s transfer of 75% of the maintenance assessments to the reconstruction fund was lawful under Indiana drainage law and did not render the board’s decision arbitrary, capricious, unlawful or not supported by substantial evidence.

An appellate panel affirmed in Kip Bergman, et al. v. Big Cicero Creek Joint Drainage Board, 19A-MI-01486, finding that the trial court did not err in affirming the board’s decision. It first acknowledged the landowners’ assertion that the trial court misinterpreted the Indiana Drainage Law when it found that the Board was authorized “to obligate future anticipated excess maintenance funds to fund a current reconstruction project.” However, the panel rejected those contentions, noting that they “miss the mark.”

[A]s the trial court correctly found, nothing in the statute prohibits the Board from intentionally creating a surplus in a maintenance fund for the express purpose of ultimately transferring up to seventy-five percent of the money in the fund to a reconstruction fund,” Judge Edward Najam wrote for the panel. “And, because the Board can only transfer the funds when the maintenance fund ‘has’ excess funds, the Board’s funding plan does not violate Indiana Code Section 36-9-27-45.5.

“… Landowners apprehend that the board’s scheme for financing the reconstruction project and repaying the loan using up to seventy-five percent of the maintenance fund annually risks a future lack of funds for maintenance projects. But Landowners ignore the legislature’s clear intent to grant the Board authority to transfer up to seventy-five percent of the maintenance fund to a reconstruction fund,” the panel continued. “As the Board points out, such a transfer can only be made if a surveyor advises the Board that the maintenance fund ‘has a balance in excess of the amount reasonably needed in that fund for maintenance work in the foreseeable future.’ Thus, Landowners’ fear of a maintenance fund shortfall is unwarranted.”

The appellate panel also found that the Board was not required to determine what it could  “conveniently pay” and was not required to sell bonds to finance the reconstruction. It additionally rejected the landowners’ assertions concerning the Board’s formation 27 years prior, concluding the claim was barred by the doctrine of laches.

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