The ruling is bad news for property owners who paid full price for sewer hookups while others escaped with partial payment.
Indianapolis for decades has funded sewer projects using the state's 1889 Barrett law, which allowed cities to apportion costs equally among all abutting lots. On a project's completion, the city would issue a final lot-by-lot assessment. Lot owners could choose to pay the assessment in a lump sum or over time in installments.
After the city completed the Brisbane/Manning Sanitary Sewers Project, it sent affected homeowners formal notice of their payment obligations. Of the 180 affected homeowners, 38 chose to pay the lump sum while the rest chose longer-term installments.
But the next year, the city abandoned the Barrett law and adopted the Septic Tank Elimination Program, which financed projects in part through bonds. In implementing STEP, the city's Board of Public Works enacted a resolution forgiving all assessment amounts still owed under Barrett law financing.
Homeowners who had paid the Brisbane/Manning lump sum received no refund and homeowners who had chosen to pay in installments were under no obligation to make further payments.
When the city refused to refund any money to the 38 homeowners, 31 filed suit in state court.
A judge ruled summarily for the landowners and a state appeals court agreed. But the Indiana Supreme Court reversed, saying the city's actions were rationally related to its legitimate interests in reducing administrative costs, providing hardship relief to homeowners, transitioning from the Barrett to STEP and preserving its limited resources.
The U.S. Supreme Court, in an opinion written by Justice Stephen Breyer, agreed, saying "the city has not violated the [Constitution's] Equal Protection Clause."
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