Bloom v. City of Fort Collins

Decision Date18 December 1989
Docket NumberNo. 88SA162,88SA162
Citation784 P.2d 304
PartiesArvid R. BLOOM and Beverly T. Bloom, Plaintiffs-Appellees, v. CITY OF FORT COLLINS, Defendant-Appellant.
CourtColorado Supreme Court

Stephen J. Roy, Asst. City Atty., and Hale, Smith & Williams, Dave Williams, Fort Collins, for defendant-appellant.

Arthur E. March, Jr., J. Brad March, Harden, Schmidt, Hass & Zier, Rick Zier, Hasler & Fonfara, Joseph H. Fonfara, and James P. Johnson, Fort Collins, for plaintiffs-appellees.

Chief Justice QUINN delivered the Opinion of the Court.

The City of Fort Collins appeals from a district court judgment invalidating a city ordinance that imposes upon owners or occupants of any developed lots or parcels of land within the city a "transportation utility fee" for the purpose of providing revenues for the maintenance of local streets and that authorizes the city council to transfer any excess revenues collected under the ordinance to any other fund of the city. The district court held that the transportation utility fee constituted an invalid property tax that did not conform to the uniformity requirement of article X, section 3 of the Colorado Constitution. 1 We hold that the transportation utility fee is not a property tax but rather is a special fee imposed upon owners or occupants of developed lots fronting city streets and that such fee, considered independently of the so-called "transfer" provision, is reasonably related to the expenses incurred by the city in carrying out its legitimate goal of maintaining an effective network of city streets. We also conclude that the "transfer" provision of the ordinance, to the extent it might be implemented by the city council, would have the effect of transforming the special fee into an impermissible tax but that the transfer provision is severable from the remainder of the ordinance. We accordingly reverse the judgment of the district court and remand the case for further proceedings on any remaining claims not resolved by this opinion.


Fort Collins is a home-rule city organized under article XX of the Colorado Constitution. On January 17, 1984, the city council enacted a transportation utility ordinance. Fort Collins City Code §§ 108A-1 to 108A-14 (1984). 2 The purpose of the ordinance is set forth in section 108A-1 as follows:

The Council hereby finds, determines and declares the necessity of providing maintenance and upkeep of the city's local streets and related facilities as a comprehensive Transportation Utility, with such maintenance to include, without limitation, the following activities: patching, crack sealing, seal coating, overlaying and other activities as are necessary in order that local streets and related facilities may be properly maintained and that the health, safety, and welfare of the city and its inhabitants may be safeguarded.

Section 108A-3 authorizes the city council to establish a transportation utility fee "to be paid by the owners or occupants of property within the corporate limits of the city," such fee to be in amounts "which will provide sufficient funds to properly maintain local streets."

The transportation utility fee is based upon the following factors, all of which are set out in section 108A-7 of the ordinance: "the amount of frontage in linear feet that each lot or parcel has on the right-of-way of an accepted street; the base rate maintenance cost of each foot of frontage; and the developed use of the property (which includes the amount of vehicular traffic generated by the property)." The frontage is determined by measuring the frontage of each lot or parcel along the right of way of the street on which the property is located. Fort Collins City Code § 108A-7(A) (1984). The base rate maintenance cost is set at $0.0143 per foot of frontage per month for all developed properties within the city. Fort Collins City Code § 108A-7(B) (1984). The ordinance requires the Director of Public Works to place each lot in a specific category of development, based on the actual land use of the lot. Fort Collins City Code § 108A-7(C) (1984). The categories of developed use include single-family residential, multi-family residential, and nonresidential. Id. For each developed use there is a "traffic generation factor", which is as follows:

                Category of Use            Generation Factor
                Single-family residential   1.00
                Multifamily residential     0.65
                Nonresidential              4.00

Fort Collins City Code § 108A-7(D) (1984). The monthly fee for each lot or parcel is calculated in accordance with the following formula:

Monthly fee = (base rate) x (frontage) x

(traffic generation factor).

Fort Collins City Code § 108A-7(E) (1984). The minimum charge for any lot or parcel is $.75 per month, and in the case of a multifamily residential lot, the monthly fee is not less than $.75 per month per dwelling unit nor more than $1.50 per month per dwelling unit. Fort Collins City Code § 108A-7(F) (1984). 3

The fee is billed with the monthly utility bill for those lots utilizing city utilities, and is billed separately for lots not using such utilities. Fort Collins City Code § 108A-8 (1984). The owner of every lot or parcel subject to the fee is obligated to pay the fee, but in the event a tenant in possession pays the fee, the owner is relieved of the fee obligation. Fort Collins City Code § 108A-10 (1984). 4 Nonpayment of the fee subjects the user of city utilities to discontinuance of utility service. Fort Collins City Code § 108A-9 (1984). 5 All fees constitute a lien upon the property against which the fee is imposed. Fort Collins City Code § 108A-10(A) (1984).

Section 108A-13 of the ordinance provides for the disposition of the fees as follows:

The fees paid and collected by virtue of this chapter shall not be used for general or other governmental proprietary purposes of the city, except to pay for the equitable share of the cost of accounting, management and government thereof. Other than as described above, the fees and charges shall be used solely to pay for the cost of operation, administration, maintenance, repair, improvement, renewal, replacement and reconstruction of the local street network of the city and costs incidental thereto; provided, however, that if there are amounts in excess of the amount required to satisfy the purpose of the fund, the City Council may, by ordinance, authorize the transfer of such excess amount to any other fund of the city (emphasis added).

On or about April 1, 1984, the city began assessing the transportation utility fee. The fee generated between $450,000 and $500,000 per year, but street maintenance expenditures significantly exceeded the fees paid and collected. On April 3, 1985, Arvid and Beverly Bloom and several other owners or occupants of developed real property within the city filed a class action seeking declaratory and injunctive relief, as well as restitution of any monies paid pursuant to the ordinance, on the basis that the transportation utility fee was an invalid and unconstitutional tax. In its answer, the city claimed that the fee was validly enacted under the city's home-rule authority.

The district court certified the action as a class action in order to determine the validity of the ordinance in relation to the various categories of plaintiffs affected by the transportation utility fee. The plaintiffs and the city filed motions for summary judgment. The district court entered summary judgment in favor of the plaintiffs on the basis that the ordinance, although having a rational basis in fact and a valid purpose, nonetheless constituted a property tax in violation of the uniformity requirement of article X, section 3 of the Colorado Constitution. The court accordingly enjoined the city from collecting the transportation utility fee and ordered the city to submit a plan for refund of all fees previously collected.

The city thereafter filed this appeal and basically contends that the transportation utility fee created by the ordinance does not constitute a property tax but, rather, is a special fee which is closely analogous to other municipal fees previously approved in prior decisions of this court. 6


There are several measures for generating revenue available to a municipality for the purpose of deriving funds to carry out the city's public functions. The more common types, and the ones against which the transportation utility fee in this case must be measured, are an ad valorem tax, an excise tax, a special assessment, and a special fee.

An ad valorem tax is a tax upon various classes of real and personal property located within the territorial limits of the taxing authority. See Cherry Hills Farms v. City of Cherry Hills, 670 P.2d 779, 782 (Colo.1983); Ochs v. Town of Hot Sulphur Springs, 158 Colo. 456, 459, 407 P.2d 677, 679 (1965). Its purpose is to provide revenues in order to defray the general expenses of government as distinguished from the expense of a specific function or service. See Zelinger v. City and County of Denver, 724 P.2d 1356, 1358 (Colo.1986); Western Heights Land Corp. v. City of Fort Collins, 146 Colo. 464, 469, 362 P.2d 155, 158 (1961); Ochs, 158 Colo. at 459, 407 P.2d at 679.

Traditionally, the ad valorem property tax has been one of the mainstays of municipal revenue-raising. The Colorado Constitution expressly grants home rule municipalities "all powers necessary, requisite or proper for the government and administration of its local and municipal matters," including the power to legislate upon "[t]he assessment of property in such city or town for municipal taxation and the levy and collection of taxes thereon for municipal purposes." Colo. Const. art. XX, § 6(g). Article X, section 3 of the Colorado Constitution requires any direct tax upon real or personal property to be "uniform," which means that the tax must be imposed uniformly or in like manner upon both real and...

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