The North Idaho Building Contractors Association has filed a lawsuit against the city of Hayden challenging the legality of a fee paid in order to get a building permit.

The nonprofit trade association said in the lawsuit, filed last week in 1st District Court in Kootenai County, that a sewer capitalization fee is being used to generate revenue for the city and expand the city's sewer system. The fee, the organization argued, should only be used to pay for operation and maintenance of the existing system.

The lawsuit said the sewer capitalization fee has "dramatically increased" in recent years and is a "disguised tax."

The lawsuit also said the fee was not approved by an ordinary resolution or through a formal procedure.

Boise attorneys representing the association didn't return a message seeking comment Monday.

Tim Timmins, a newly elected Hayden city councilman, said during his campaign he was a director on the board of the association. He didn't return a call seeking comment. The association's website shows he remains a "life" director.

Hayden City Attorney Nancy Stricklin said outside legal counsel would be handling the case.

"Obviously, we don't agree with (the association's) position," she said Monday.

She shared two letters sent from her office, Mason and Stricklin LLP, in Coeur d'Alene, to attorneys for the association.

In the letters, her law partner, Jerry Mason, said Hayden has moved to conduct a review of its current fees. Mason said the association has declined to take part in the process, and hasn't described its concerns directly to the mayor or City Council.

City ordinance does authorize the fee, and there is a resolution authorizing the specific amount. A public hearing was conducted on the fees.

Mason wrote that the association is "tackling how utility system capacity has been provided across this state for the past 30-plus years."

He said the approach has been developed over time to accomplish public policy goals that have produced mutual benefit to communities and to the building and development community.

To the association's argument that the fee is a tax, Mason wrote, "Just saying that something is a tax, rather than a fee, doesn't make it so."

He added, "No municipality of which I am aware commingles any capacity replacement fee revenue with any tax-supported fund or undertaking."

Mason also disagreed with the association's argument that the city can't use money collected through the sewer capitalization fee to expand the system.

He wrote, "When any new user arrives seeking a 'place at the table,' someone before him has paid fees to create the capacity that is ready and waiting for him. Our fee systems operate on the basis that each newcomer owes it to the utility system to fund the replacement value of the capacity that a new customer consumes."

The lawsuit was filed April 12 and assigned to Judge John Mitchell.