Loomis v. City of Hailey

• Docket Number: 18321.
• Decision Date: 21 March 1991
• Citation: 119 Idaho 434,807 P.2d 1272
• Parties: Ned LOOMIS and C.A. Grubb, suing on behalf of themselves and others similarly situated, Plaintiffs-Counterdefendants-Appellants, v. CITY OF HAILEY, a municipal corporation of the State of Idaho, Defendant-Counterclaimant-Respondent.
• Court: Idaho Supreme Court

119 Idaho 434

807 P.2d 1272

Ned LOOMIS and C.A. Grubb, suing on behalf of themselves

No. 18321.

Supreme Court of Idaho, Boise

October 1990 Term

March 21, 1991

E. Lee Schlender, Hailey, for plaintiffs-counterdefendants-appellants.

Hogue, Speck & Aanestad, P.A., Ketchum, for defendant-counterclaimant-respondent. J. Stephen Crabtree, argued.

Lindsay, Hart, Neil & Weigler, Boise, for amicus curiae Ass'n of Idaho Cities. Michael C. Moore, argued.

BOYLE, Justice.

In this appeal from entry of summary judgment we are required to determine whether the City of Hailey's particular system of charging an initial sewer and water connection fee of $1,800.00 under a city ordinance violates the Idaho Constitution and applicable portions of the Idaho Revenue Bond Act.

FACTS

In 1969 the voters of the City of Hailey approved a $940,000.00 revenue bond to create a more efficient and more sanitary water and sewer system. Ordinances were adopted to collect user and connection fees and to establish water and sewer system funds to pay for the maintenance, operation, upkeep and repair of the system and maintain a sinking fund to pay the revenue bond indebtedness. A separate fund was created into which all revenues from the water and sewer systems were deposited. In 1981 the City of Hailey adopted an ordinance to increase the water and sewer connection fees. Because of the increasing demand another revenue bond in the amount of $490,000.00 was authorized in 1982 for the "acquisition, construction and installation of improvements and betterments to the city's water storage system."

An ordinance was passed which provided that hookup and use of the city's water and sewer systems was mandatory for all residents of the city. An ordinance was passed which increased the amount of the connection fee and imposed an additional charge for future expansion of the water and sewer systems. In 1983 a suit against the city entitled Redman, et al. v. Hailey, Blaine County Case No. 11855 was filed claiming that the city was collecting an illegal tax and that the connection fees were void. The district court in that case held that the connection fees were in violation of the Idaho Constitution and void because the city was collecting fees for future expansion and enlargement of the system.

Thereafter, the City of Hailey hired JUB engineers to conduct a study and an analysis of the city's water and sewer system fees and to compute a formula for charges that would not be in contravention of the district court's mandate pronounced in Redman v. Hailey. After receiving the engineer's report, the city adopted Ordinance 495 in 1985 providing for the new water and sewer connection fees.

Following the adoption of Ordinance 495, appellants Loomis and Grubb, residents of the city of Hailey, filed this action challenging the constitutionality of the ordinance and the legality of the procedures utilized by the city in charging sewer and water connection fees as violative of the Idaho Revenue Bonding Act. I.C. § 50-1027.

The connection fees imposed by Ordinance 495 are based upon the replacement value minus the remaining bond principal and cumulative unfunded depreciation. This formula, termed "equity buy-in," allows the new user to buy into the system at the current dollar value which is presently charged at about $1,800.00 per connection. The city is required by the ordinance to revalue the connection fee annually pursuant to the replacement value formula. All revenue from the connection fees is placed in a separate special account and used only for replacement of existing system facilities and equipment. None of the connection fee generated funds are used for expansion or improvement of the existing systems, although reserves are accumulated periodically in both the connection fee and monthly user fee funds. The connection fees collected by the City of Hailey are inadequate to provide for the total replacement of the existing systems as those systems wear out, and any future expansion of the existing water and sewer system will require additional funding from other sources of revenue. No funds collected pursuant to Ordinance 495 are placed into or used by the general operating fund of the city, and the monthly user fees are used for normal expenses of operation, including repair and maintenance not requiring replacement of system components as well as for payment of principal and interest on the revenue bonds.

At the time this case was filed in district court, the connection fee was about $1,800.00 per connection. Since Ordinance No. 495 was adopted in 1985, the city has collected approximately $300,000.00 in connection fees and expended approximately $200,000.00 of that amount.

I.

SUMMARY JUDGMENT: STANDARD OF REVIEW

This case comes before us on appeal from the district court's granting of a motion for summary judgment in a non-jury civil action. "A motion for summary judgment shall be rendered forthwith if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." I.R.C.P. 56(c); Rawson v. United Steelworkers of Am., 111 Idaho 630, 726 P.2d 742 (1986); Schaefer v. Elswood Trailer Sales, 95 Idaho 654, 516 P.2d 1168 (1973). Standards applicable to summary judgment require the district court and Supreme Court upon review, to liberally construe facts in the existing record in favor of the party opposing the motion, and to draw all reasonable inferences from the record in favor of the nonmoving party. Brown v. Matthews Mortuary, 118 Idaho 830, 801 P.2d 37 (1990); Tusch Enters. v. Coffin, 113 Idaho 37, 740 P.2d 1022 (1987); Doe v. Durtschi, 110 Idaho 466, 716 P.2d 1238 (1986); Anderson v. Ethington, 103 Idaho 658, 651 P.2d 923 (1982); Kline v. Clinton, 103 Idaho 116, 645 P.2d 350 (1982); Palmer v. Idaho Bank & Trust of Kooskia, 100 Idaho 642, 603 P.2d 597 (1979). If the record contains conflicting inferences or reasonable minds might reach different conclusions, a summary judgment must be denied. Kline v. Clinton, 103 Idaho 116, 645 P.2d 350 (1982); Farmers Ins. Co. of Idaho v. Brown, 97 Idaho 380, 544 P.2d 1150 (1976); Stewart v. Hood Corp., 95 Idaho 198, 506 P.2d 95 (1973); Lundy v. Hazen, 90 Idaho 323, 411 P.2d 768 (1966). Summary judgment should be granted only if there is no genuine issue of material fact after the pleadings, depositions, admissions and affidavits have been construed in a light most favorable to the opposing party. Palmer v. Idaho Bank & Trust of Kooskia, 100 Idaho 642, 603 P.2d 597 (1979).

When an action will be tried before the court without a jury, the judge is not constrained to draw inferences in favor of the party opposing a motion for summary judgment but rather the trial judge is free to arrive at the most probable inferences to be drawn from uncontroverted evidentiary facts. Riverside Dev. Co. v. Ritchie, 103 Idaho 515, 650 P.2d 657 (1982); Blackmon v. Zufelt, 108 Idaho 469, 700 P.2d 91 (Ct.App.1985).

In the present action neither party has claimed that any genuine issues of material fact exist. We have reviewed the entire record including the affidavits on file and find that no genuine issue of material fact exists, therefore, summary judgment as a matter of law may be entered.

II.CONNECTION FEES AS A TAX

First, we must determine whether the connection fee constitutes an impermissible tax. Secondly, we must determine whether the connection fee is appropriately and reasonably assessed.

In Brewster v. City of Pocatello, 115 Idaho 502, 768 P.2d 765 (1989), we held that the Idaho Constitution, art. 7, § 6 "allows the legislature to 'invest in the corporate authorities . . . the power to assess and collect taxes for all purposes of such corporation.' " Id. at 503, 768 P.2d at 766 (quoting from Sun Valley Co. v. City of Sun Valley, 109 Idaho 424, 427, 708 P.2d 147, 150 (1985)). While the Idaho Constitution permits municipal corporations to impose taxes, such authority is limited by the taxing power granted by the legislature. Id.

Municipalities may impose fees pursuant to its "police powers" to enact regulations for the furtherance of the public health, safety or morals. Brewster v. City of Pocatello, 115 Idaho 502, 768 P.2d 765 (1989); see also Caeser v. State, 101 Idaho 158, 610 P.2d 517 (1980); Rowe v. City of Pocatello, 70 Idaho 343, 218 P.2d 695 (1950). It is well established that fees imposed under this "police power" must bear some reasonable relationship to the cost of enforcing the regulation. Brewster v. City of Pocatello, 115 Idaho 502, 768 P.2d 765 (1989). There is, however, a difference between the exercise of the police power and the proprietary functions of a municipality. In Schmidt v. Village of Kimberly, 74 Idaho 48, 256 P.2d 515 (1953), we stated this difference as follows:

There is no inconsistency between the holding herein that in the operation of a public utility the village exercises a proprietary function, and the holding that in requiring connections to be made with the sewage system the village is exercising its police power, which is a governmental function. The fact that an ordinance, providing for the establishment and operation of a municipal water and sewage system, may also contain regulations within the police power, is not conflicting, inconsistent, or an improper co-mingling of the two recognized functions of a municipality. The one is regarded as complimentary of the other. If the water and sewage system were privately owned and operated, unquestionably the municipality could by ordinance regulate the operation in the interest of public health, and, in so doing, require residents to connect with and use the system.

Id. at 63, 256 P.2d at 524.

Pursuant to this proprietary function municipalities may construct and maintain certain public works. The Idaho Constitution, art. 8, § 3¹ allows municipalities to impose rates and charges to provide revenue for...