Arborwood Idaho, LLC v. City of Kennewick

Citation113 Wash. App. 875,55 P.3d 1170
Decision Date10 September 2002
Docket NumberNo. 20523-1-III.,20523-1-III.
CourtCourt of Appeals of Washington
PartiesARBORWOOD IDAHO, LLC, a foreign limited liability company, Appellant, v. CITY OF KENNEWICK, a municipal corporation of the State of Washington, Respondent.

Daryl D. Jonson, Terri L. Tomich-Salinas, Cowan, Walker, Jonson & Moore, Richland, WA, for Appellant.

John S. Ziobro, City Attorney, Kennewick, WA, for Respondent.

KURTZ, J.

The City of Kennewick assesses a monthly charge on each household, business, and industry served by emergency and medical services. Kennewick Municipal Code (KMC) 9.36.050. At the time relevant to this appeal, the ambulance charge was referred to as an "excise tax," and both owners and occupants were "jointly responsible for this excise tax." Former KMC 9.36.050(a) (1989).1 Arborwood Idaho, LLC, ("Arborwood"), the owner of an apartment complex in Kennewick, challenged the validity of this assessment. After Arborwood's challenge was denied by the Kennewick Appeals Commission, Arborwood appealed to the superior court, which granted summary judgment in favor of Kennewick. On appeal, Arborwood contends: (1) the ambulance charge is not a valid excise tax because it exceeds the taxing authority granted by RCW 35.21.768; and (2) the ambulance charge is an unconstitutional tax upon the ownership of property in violation of article VII, sections 1 and 5 of the Washington Constitution. We conclude the ambulance charge is not a tax and, therefore, RCW 35.21.768 does not apply. We further conclude the Kennewick ambulance charge is a valid regulatory fee and, for that reason, affirm the judgment of the superior court.

FACTS

Kennewick has established an emergency medical and ambulance service for the use, health, and welfare of city residents. KMC 9.36.010. To cover the cost of providing this service, a monthly charge is levied and collected on "all households, businesses and industries served by emergency medical and ambulance services." KMC 9.36.050. At the time relevant to this appeal, the ambulance charge was described as an "excise tax." Former KMC 9.36.050. Moreover, former KMC 9.36.050(a) provided:

That each industry, business and household shall be assessed the emergency medical and ambulance service charge monthly and billed not less than bi-monthly, as an excise tax. The owner and the occupant of industries, businesses and households are jointly responsible for this excise tax. Taxes will be billed only to that person whose name appears on the utility account.

Clerk's Papers (CP) at 41.

The version of KMC 9.36.050 at issue here refers to the ambulance charge as an "excise tax." This provision has been amended to change the words "excise tax" to "utility charge." The nature of a tax is determined by its incidents, not its name. Harbour Village Apartments v. City of Mukilteo, 139 Wash.2d 604, 607, 989 P.2d 542 (1999) (citing Jensen v. Henneford, 185 Wash. 209, 217, 53 P.2d 607 (1936)).

Pursuant to KMC 9.36.050, Kennewick imposes a monthly ambulance charge on each occupied apartment and collects the tax from the owner if the units are not separately metered for utility services. If an owner refuses to pay, Kennewick can discontinue all utility service to the apartments under KMC 9.36.050(3). All revenue generated from the ambulance tax and service fee is used for the operation, maintenance, and capital needs of the emergency medical and ambulance service. The fund is also used to pay the cost of providing ambulance service to Kennewick residents who are underinsured or uninsured. Kennewick collected $733,000 from the ambulance tax in the year 2000; the cost of providing ambulance service was $1.4 million.

Arborwood purchased an apartment complex in Kennewick in September 1992. The apartment complex consists of 33 buildings containing a total of 188 apartment units. The apartments receive water and sewer utility service from Kennewick. These utilities are billed to Arborwood through four separate accounts. Electricity is not provided by Kennewick, but is provided and billed through the Benton County Public Utilities District ("PUD").

Since 1989, the occupancy for multi-unit accounts served by one water meter has been determined on a monthly basis by cross-referencing Kennewick's water/sewer utility records with PUD's records for electrical service. Because the PUD has individual electric meters or accounts for each unit, vacant or inactive accounts with the PUD are subtracted from the total number of units on the water utility account. This method permits the ambulance charge to be billed based on occupancy.

Arborwood does not have individual meters. As a result, Arborwood was billed for the ambulance charge based on occupancy as determined under this cross-reference system. All businesses and residences within Kennewick were assessed a monthly charge of $2.60 for each industry, business, and residential unit within the city limits. Hence, Arborwood was billed $2.60 a month for each occupied apartment in the complex.

Arborwood challenged Kennewick's collection of the ambulance charge from the apartment owners rather than directly from the tenants. This matter was referred to Kennewick's Support Services Director who rejected Arborwood's claims. Arborwood filed an appeal to the Kennewick Appeals Commission. The appeals commission concluded that the ambulance tax had been appropriately assessed under chapter 9.36 KMC. Arborwood then filed a notice of appeal, a petition for a writ of review, and complaint for declaratory judgment. The parties filed cross-motions for summary judgment.

The superior court granted summary judgment in favor of Kennewick. In its lengthy memorandum opinion, the trial court did not directly discuss the applicability of RCW 35.21.766 and .768. Instead, the trial court determined that the question to be decided was whether the ambulance charge was a regulatory fee or a tax. The trial court concluded that Kennewick's ambulance charge was a valid regulatory fee and did not address the validity of the ambulance charge under RCW 35.21.768. Arborwood appeals.

ANALYSIS

STANDARD OF REVIEW. When reviewing an order granting summary judgment, this court engages in the same inquiry as the trial court, considering all facts and reasonable inferences in the light most favorable to the nonmoving party. Kahn v. Salerno, 90 Wash.App. 110, 117, 951 P.2d 321 (1998). Summary judgment is appropriate only when no questions of material fact exist. CR 56(c).

The interpretation of a statute or municipal ordinance is a question of law for the court. Ball v. Smith, 87 Wash.2d 717, 722, 556 P.2d 936 (1976). A statute is presumed constitutional and the party attacking the statute bears the burden of establishing its unconstitutionality beyond a reasonable doubt. Leonard v. City of Spokane, 127 Wash.2d 194, 197-98, 897 P.2d 358 (1995) (citing Dep't of Ecology v. State Fin. Comm., 116 Wash.2d 246, 253, 804 P.2d 1241 (1991)). Municipal ordinances are afforded the same presumption of constitutionality. Brown v. City of Yakima, 116 Wash.2d 556, 559, 807 P.2d 353 (1991). Whenever possible, an enactment must be interpreted in a manner which upholds its constitutionality. City of Tacoma v. Luvene, 118 Wash.2d 826, 841, 827 P.2d 1374 (1992).

STATUTORY AUTHORIZATION. A taxing statute must be construed as a whole to ascertain the intent of the Legislature. Group Health Coop. v. Dep't of Revenue, 106 Wash.2d 391, 401, 722 P.2d 787 (1986). The words of the statute, unless otherwise defined, should be given their ordinary meaning. Id. "If a tax statute is ambiguous the statute must be construed most strongly against the taxing authority." Id.

RCW 35.21.766 provides as follows:

Whenever the legislative authority of any city or town determines that the city or town or a substantial portion of the city or town is not adequately served by existing private ambulance service, the legislative authority may by appropriate legislation provide for the establishment of a system of ambulance service to be operated as a public utility of the city or town or operated by contract after a call for bids.

RCW 35.21.768 authorizes municipalities to impose an excise or additional tax to operate and maintain these ambulance services. However, there is no requirement that a municipality must fund its ambulance service through the use of an excise tax. RCW 35.21.768 reads, in part, as follows:

The legislative authority of any city or town is authorized to adopt ordinances for the levy and collection of excise taxes and/or for the imposition of an additional tax for the act or privilege of engaging in the ambulance business. Such business and occupation tax shall be imposed in such amounts as fixed and determined by the legislative authority.
The excise taxes other than the business and occupation tax authorized by this section shall be levied and collected from all persons, businesses, and industries who are served and billed for said ambulance service owned and operated or contracted for by the city or town in such amounts as shall be fixed and determined by the legislative authority of the city or town.

In short, RCW 35.21.766 and .768 authorize municipalities to operate ambulance services and, if need be, to fund these services by imposing and collecting an excise tax on "all persons, businesses, and industries who are served and billed" for ambulance services. RCW 35.21.768 (emphasis added). While these provisions contain fairly expansive language, RCW 35.21.768 may place a limitation on the manner in which this tax is imposed and collected. In effect, the tax must be "levied and collected" from "all" entities "served and billed." However, the use of the word "all" seems to suggest a very broad reading of the word "served."

Arborwood suggests that the ambulance charge is not authorized by RCW 35.21.768 for several reasons. First, Arborwood...

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1 cases
  • Arborwood Idaho v. City of Kennewick
    • United States
    • Washington Supreme Court
    • May 6, 2004
    ...appealed. The Court of Appeals affirmed, characterizing the ambulance charge as a regulatory fee. Arborwood Idaho, L.L.C. v. City of Kennewick, 113 Wash. App. 875, 889, 55 P.3d 1170 (2002). The court also held that the ambulance charge was neither an unconstitutional property tax nor an exc......

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