Amherst Builders Assn. v. City of Amherst

• Decision Date: 26 March 1980
• Docket Number: No. 79-543,79-543
• Citation: 61 Ohio St.2d 345,402 N.E.2d 1181,15 O.O.3d 432
• Parties: , 15 O.O.3d 432 AMHERST BUILDERS ASSN., Appellant, v. CITY OF AMHERST et al., Appellees.
• Court: Ohio Supreme Court

Page 345

61 Ohio St.2d 345

402 N.E.2d 1181, 15 O.O.3d 432

AMHERST BUILDERS ASSN., Appellant, v. CITY OF AMHERST et al., Appellees.

No. 79-543.

Supreme Court of Ohio.

March 26, 1980.

Syllabus by the Court

In attempting to equalize the burden of the cost of constructing an adequate sewage system between present users and new users of the system, a municipality, pursuant to Section 4, Article XVIII of the Constitution of Ohio, may impose upon new users a tap-in or connection fee which bears a reasonable relationship to the entire cost of providing service to those new users. (State ex rel. Waterbury Development Co. v. Witten, 54 Ohio St.2d 412, 377 N.E.2d 505, distinguished.)

Appellant, Amherst Builders Association, initiated this action in the Court of Common Pleas challenging, inter alia, the validity of city of Amherst Codified Ordinance 913.07, which imposed a tap-in charge upon anyone desiring to connect to the city sewage system. The schedule of fees included in this ordinance was based on average sewage flow for various types of structures, as estimated by the Environmental Protection Agency. The schedule imposed a fee of $1 per gallon of flow, which resulted in a charge of $400 for single family homes. Since these tap-in connections were normally made by the builder, the administrative cost to the city was limited to an inspection of the tap, approximately $140. The trial court judgment invalidated the fee to the extent it exceeded this administrative cost, and ordered a refund of the difference to appellant. In so doing, that court also held that appellant need not have paid the fee under protest in order to receive a refund.

The Court of Appeals found that, pursuant to the broad grant of power conferred by Section 4, Article XVIII of the Ohio Constitution, ¹ a city could impose "a tap-in fee that bears a reasonable relationship to the entire cost of providing sewage service to the new user * * *." (Emphasis sic.) Concluding that the fees imposed by Ordinance 913.07 met its test of reasonableness, the Court of Appeals reversed the trial court's judgment. Although not essential to its final judgment, the appellate court also determined that the subject fee was an "assessment," so that R.C. 2723.03 required that an aggrieved party file a written protest with his payment in order to be entitled to a refund, had one been forthcoming.

The cause is now before this court pursuant to the allowance of a motion to certify the record.

Elden & Ford Co., L. P. A., and Edward Kancler, Cleveland, for appellant.

Squire, Sanders & Dempsey and James H. Woodring, Cleveland, for appellees.

SWEENEY, Justice.

The primary issue presented by this appeal is whether a municipality has the authority to exact from a new user of its sewage system a charge which exceeds the administrative cost to the city of making the connection. In answering this question in the negative, the Court of Common Pleas relied heavily on its interpretation of State ex rel. Waterbury Development Co. v. Witten (1978), 54 Ohio St.2d 412, 377 N.E.2d 505. While the village therein, at page 413, 377 N.E.2d at page 506, had argued, as does appellee herein, that the purpose of a tap-in fee was "to apportion the cost of the * * * system equitably between prior users and new users," it had attempted to sustain the validity of the charge as a valid exercise of either its police power or its revenue-raising power. This court was not persuaded by either attempt. As an exercise of the village's police power, the fee could not exceed the actual cost of ensuring a secure and reliable connection; and since collection of the fee did not comply with statutes relating to taxes and special assessments, it was not a valid revenue-raising measure. However, Waterbury is distinguishable because that opinion did not address the question presented herein: whether such a charge could be collected pursuant to a municipality's plenary power under Section 4, Article XVIII of the Ohio Constitution. ²

It is well-settled that Section 4, Article XVIII, grants a municipality broad power to own and operate public utilities, ³ and that a municipal sewage system is a type of "public utility" envisioned by that constitutional provision. ⁴ There can be no doubt that, in order to exercise that power, a municipality must be able to impose charges upon the users of the system to defray the costs of both its construction and operation.

Appellee asserts that this constitutional power allows it to impose a tap-in fee on new users, which attempts to "equalize the burden" of the cost of creating an adequate sewage system with present users. This contention is based on the premise that, while construction of the present sewage system was presumably financed by the existing users, ⁵ unimproved property within the service area received a benefit from the mere existence of the system. When this unimproved land is developed, the tap-in charge is imposed so that these new users will now assume a fair share of the original construction costs, thereby reimbursing the community for the previous benefit received.

While this court has not previously addressed this specific issue, courts in other states have sustained the validity of such connection fees. See, e. g., Home Builders Assn. of Greater Salt Lake v. Provo City (1972), 28 Utah 2d 402, 503 P.2d 451; Hayes v. Albany (1971), 7 Or.App. 277, 490 P.2d 1018; Airwick Industries, Inc. v. Carlstadt Sewerage Authority (1970), 57 N.J. 107, 270 A.2d 18; and Associated Homebuilders v. Livermore (1961), 56 Cal.2d 847, 366 P.2d 448. The New Jersey Supreme Court in Airwick Industries, supra, at page 122, 270 A.2d at page 26, adopted and aptly summarized the concept espoused by appellee, when it concluded that " * * * the installation and construction costs * * * should in the first instance be financed by the actual users but should ultimately be borne by all the properties benefited, including the unimproved lands. For that reason there was provided a charge in the nature of a connection charge to be imposed upon unimproved properties in order that they assume a fair share of the original construction costs when they become improved properties."

In State ex rel. Stoeckle v. Jones (1954), 161 Ohio St. 391, 119 N.E.2d 834, we endorsed this concept of cost equalization in an analogous situation. There the municipality had partially funded the construction of a sewage system by levying special assessments. However, the assessments on unimproved property were only a fraction of those on improved property. In order to rectify this inequity, the village adopted an ordinance which established a $300 tap-in charge on subsequently improved property. Quoting from Hermann v. State ex rel. Cooper (1896), 54 Ohio St. 506, 43 N.E. 990, the Stoeckle court observed, 161 Ohio St. at page 394, 119 N.E.2d at page 836:

" 'The rule in question was adopted and properly conditioned to require that those who had not paid assessments should, when desiring to use the sewer, accept an equal burden with those who had. We cannot say that the rule is unreasonable.' " (Emphasis added.)

A tap-in provision, very similar to the instant ordinance was sustained as a legitimate exercise of municipal power under Section 4, Article XVIII, in Englewood Hills v. Englewood (1967), 14 Ohio App.2d 195, 237 N.E.2d 621. The court therein found that the only limitation on this power was that the charges must be fair and reasonable and bear a substantial relationship to the per unit cost of providing the sewer service. While we agree with this view of municipal authority under Section 4, Article XVIII, it should also be added that the fees...