Woody Creek Tavern sues metro district for overbilled wastewater treatment

Hunter S. Thompson’s primary watering hole claims a local government entity is overcharging for wastewater treatment. 

The Woody Creek Tavern filed a lawsuit in December against the Woody Creek Metro District, the local government entity billing the tavern, alleging the district is imposing “undue financial burden” by disproportionately charging them for the treatment.

The tavern, which shares a wastewater system with the Woody Creek Mobile Home Park, claims the metro district imposed $18,000 total wastewater fees in 2023, $30,000 in 2024, and assigned $40,000 for 2025, a disproportionate bill given their usage — which sparked the lawsuit.

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“The wastewater fees at issue are unrelated to any reasonable approximation of actual effluent loads (amount of pollutants in the wastewater) originating from the Tavern,” wrote the tavern’s attorneys in the complaint. 

Lucas Van Arsdale, a JVAM Law attorney fighting for the plaintiff, said the metro district has violated their 2017 agreement with the tavern land parcel owners, which gave them discretion to charge for wastewater usage. 

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“And when the government is a party to a contract, it’s governed by contract law, which includes that where it has discretion, it’s required to exercise that discretion reasonably and consistent with the party’s reasonable expectations,” Arsdale said.

The metro district originally gained the discretion to determine water and wastewater rates rather than water usage volume as a billing baseline after a 2017 agreement between the tavern parcel land owners and the district. The agreement was made to account for estimates of actual pollutant load in the water rather than non-polluted water discharge, according to the complaint.

For example, a water user who fills a drinking glass would produce a different pollutant load than a water user who flushes a toilet or does laundry, according to the complaint.

Arsdale added that the metro district, as a government power, cannot make arbitrary or capricious actions, which the fee-increase violated.

But the metro district claims they were within their legislative right to establish the bill of their choice, referencing a previous lawsuit between the Denver County and wastewater treatment users, according to the motion to dismiss filed by the district’s attorneys.

The tavern, however, claims the bills did “not reflect metered water use, industry standard effluent (pollutant) loads, … or any other intelligible, data-driven approach,” breaching an implied agreement of good faith, as they charged for non-wastewater services.

The tavern alleged that the increased bills were to help fund an estimated $7 million wastewater system upgrade, as the current system cannot handle the amount of usage between the tavern and the mobile park, causing persistent noxious odors from the treatment plant, according to the complaint.

The tavern also accused the metro district of imposing higher charges for unrelated services, as the tavern is located inside the metro district service area but outside the metro district’s taxation boundaries.

The increase in wastewater charges were “at rates approximately what they might pay if they were within the Metro District’s boundaries for taxation,” wrote the attorneys in the complaint.

Additionally, they claimed the district overcharged because their board members are owners in the mobile home park, creating a conflict of interest.

“… (A)nd in setting fees and allocating budgets, are incentivized to keep their fellow Park Parcel (mobile park land) owners’ own bills lower at the expense of the Tavern,” wrote the attorneys in the complaint.

In the motion to dismiss, the defense did not address the tavern’s claims that the district raised the bill to help fund a new wastewater treatment system and to compensate for non taxable services; nor did they address the claims that the district shifted the charges onto the tavern because metro district board members are owners in the mobile home park.

Though attorneys wrote in the complaint they could sue for an amount to be proven at trial, Arsdale said they would rather work with the metro district to find a resolution.

“And we’re hopeful we can do that,” he said. 

They decided to sue because they had only a 28-day window to challenge government action under Colorado law. The district imposed the 2025 charge of $40,000 in late November.

“The only reason we’re in litigation right now is because it’s a tight deadline that forced our hand,” Arsdale said.

The Woody Creek Metro District declined comment for this story, while its attorneys could not be reached for comment by deadline.

Skyler Stark-Ragsdale can be reached at 970-429-9152 or email him at sstark-ragsdale@aspentimes.com.