Bolt v. City of Lansing

Citation221 Mich.App. 79,561 N.W.2d 423
Decision Date13 January 1997
Docket NumberDocket No. 192944
PartiesAlexander BOLT, Plaintiff, v. CITY OF LANSING, Defendant.
CourtCourt of Appeal of Michigan (US)
Jeffrey Zoeller, East Lansing, for Alexander Bolt

James D. Smiertka, City Attorney, and Jack C. Jordan, Associate City Attorney, Lansing, for the City of Lansing.

Amicus curiae Honigman Miller Schwartz and Cohn by William C. Whitbeck, Lansing, for Edward Rose Associates, Inc., Huron Development Limited Partnership, and Edward Rose Realty, Inc.

Amicus curiae R. Bruce Laidlaw, Ann Arbor, for the Michigan Municipal League.

Amicus curiae Dykema Gossett PLLC by Stewart L. Mandell and Zora E. Johnson, Detroit, for Lansing Regional Chamber of Commerce.

Before SAAD, P.J., WAHLS and MARKMAN, JJ.

SAAD, Presiding Judge.

In this original action under Const. 1963, art. 9, § 32, plaintiff, a taxpayer by virtue of his ownership of real estate located in the City of Lansing, challenges the city's storm water service charges as being a disguised tax. The question presented is whether Lansing may charge landowners for the cost of separating the storm water and sewage systems, and treating the storm water runoff, without submitting the question to the taxpayers for a vote. The answer is "yes" if the charge is a user fee; "no" if it is a tax.

I FACTS

The existing Lansing wastewater disposal system combines sewage with storm water. During periods of heavy precipitation, the capacity of the city's sewage treatment is such that combined storm water and sewage flows untreated into the Grand and Red Cedar Rivers, two navigable waterways. However, the Federal Water Pollution Control Act, commonly referred to as the Clean Water Act, 33 U.S.C. § 1251 et seq., requires the separation of storm water from sewage and that the storm water be treated to prevent pollution caused by surface water runoff. 1

In its effort to comply with the Clean Water Act, in 1995, the City of Lansing adopted Ordinance No. 925, which added a new Chapter 1043 to the Ordinances of the City of Lansing, which provides for the creation of a storm water enterprise fund to defray the cost of improvements to the city's storm water disposal system. Ordinance 925 will effectuate complete separation of the storm water and sewage systems, and provide for treatment of storm water to remove pollutants before the water is discharged into navigable waterways, at an estimated cost of $176,000,000 over the next thirty years. The ordinance was adopted by the Lansing City Council and was not submitted for approval to the electors of the city.

The ordinance establishes a storm water enterprise fund and provides that associated storm water treatment system costs will be financed through an annual storm water service charge. This charge is imposed on each parcel of real property in the city in accordance with a formula, developed with engineering consultation, designed to roughly estimate each parcel's storm water runoff.

Expected storm water runoff is calculated in terms of equivalent hydraulic area (EHA) units based upon the amount of pervious and impervious surface soils 2 within each parcel. Residential parcels with two acres or less of surface area are not individually measured but are charged according to certain flat rates set forth in the ordinance, based upon a predetermined number of EHA units per 1,000 square feet.

Ordinance 925 provides for a system of administrative appeals by property owners who contend that their properties are unfairly assessed. Under this process, a property owner may reduce or, theoretically, eliminate the storm water fee by showing that an individual property produces no storm water runoff, or that its actual runoff is less than the city's methodology suggests. Thus, a property owner can receive a fee reduction for creating a retention system, and a property owner whose property is topologically concave, with sufficient depth to exceed any anticipated level of precipitation, could, in theory, avoid the storm water charge, except for an availability charge.

The city began billing property owners under Ordinance 925 in December 1995, with a March 15, 1996, due date for the storm water charge. Plaintiff was billed $59.83 for his 5,400-square-foot-parcel. Ordinance 925 provides for the addition of certain late payment fees for storm water charges paid after March 15 and for the creation of a lien against the property affected in the event any charges remain unpaid for more than six months.

On March 4, 1996, plaintiff filed his complaint claiming that Ordinance 925 violates Const. 1963, art. 9, §§ 25 and 31. After considering plaintiff's complaint and defendant's answer, this Court, pursuant to MCR 7.206(D)(3), ordered the matter to proceed in the same manner as an appeal of right or on leave granted and invited interested parties to file amicus curiae briefs. Amicus curiae briefs were filed by the Michigan Municipal League and the Lansing Regional Chamber of Commerce in support of the ordinance, and by Edward Rose Associates, Inc., Edward Rose Realty, Inc., and Huron Development, Limited Partnership, and Citizens to Abolish the Rain Tax Ordinance 3 in support of plaintiff's position.

II ANALYSIS

Although both parties raise jurisdictional and administrative issues, we note simply that with regard to the legal issues presented, this Court has concurrent jurisdiction with the circuit court, Waterford School Dist. v. State Bd. of Ed., 98 Mich.App. 658, 296 N.W.2d 328 (1980), but that the administrative issues presented are not cognizable under Const. 1963, art. 9, §§ 25-31, and therefore, they are not within this Court's original jurisdiction under art. 9, § 32. Grosse Ile Committee for Legal Taxation v. Grosse Ile Twp., 129 Mich.App. 477, 486, 342 N.W.2d 582 (1983).

The sole issue here is whether the charge to landowners for the cost of separating the storm water and sewage systems and treating the storm water runoff is a "tax" or a "user fee." If it is a tax, it is unquestionably a tax increase as well as a tax that was not in effect on December 23, 1978, the effective date of the Headlee Amendment, Const.1963, art. 9, §§ 25-34, and thus would be a tax that requires voter approval pursuant to Const.1963, art. 9, § 31. In other words, Ordinance 925 would run afoul of the Headlee Amendment. If, however, the charge is a user fee, as the city contends, then it is simply unaffected by Article 9.

The difficulty we face here is that the Headlee Amendment fails to define or redefine a tax or a fee, and historically, there is no bright-line test that distinguishes the two. In general, a fee is exchanged for a service rendered or a benefit conferred, and there must be some reasonable relationship between the amount of the fee and the value of the service or benefit. Merrelli v. St. Clair Shores, 355 Mich. 575, 584-588, 96 N.W.2d 144 (1959); Northgate Towers Associates v. Royal Oak Charter Twp., 214 Mich.App. 501, 503-504, 543 N.W.2d 351 (1995); Foreman v. Oakland Co. Treasurer, 57 Mich.App. 231, 237-238, 226 N.W.2d 67 (1974).

For example, if a landowner opts to sign up for a city snow removal service and is charged accordingly, this would clearly constitute a user fee. 4 Conversely, a charge against the property of a landowner based solely on the value of the land (such as an ad valorum property tax) represents the other end of the spectrum--a tax. 5 Sewage disposal and treatment, therefore, falls somewhere between these two ends of the spectrum.

Our Supreme Court has answered this question insofar as sewage treatment is concerned. Sewage disposal charges to landowners constitute a user fee, not a tax. Ripperger v. Grand Rapids, 338 Mich. 682, 686, 62 N.W.2d 585 (1954). In Ripperger, the Court looked to established law (that charges for furnishing water to city residents were a fee and not a tax), and concluded by analogy that charges for provision of sewage disposal similarly constituted a fee rather than a tax. From this analysis in Ripperger, we conclude that, here, charges for storm water collection, detention, and treatment (which even plaintiff concedes was properly subject to a fee and not a tax when combined with sewage disposal) do not lose their character as a fee by virtue of being separated from sewage collection and disposal. Therefore, for the reasons stated in Ripperger, we hold that the result does not change by separating the systems--the charge here is a user fee, not a tax. 6

With regard to the argument that municipalities may abuse the "user fee" concept to avoid the Headlee Amendment, the answer lies in reviewing such challenged conduct case by case or in an additional constitutional amendment that addresses more clearly this precise issue. Unless a particular fee, however, violates the constitution, the judiciary has no role to play in resolving such political questions. Const. 1963, art. 3, § 2.

The complaint being without merit, defendant is entitled to a judgment of no cause of action and to tax its costs. It is so ordered.

WAHLS, J., concurred.

MARKMAN, Judge (dissenting).

I respectfully dissent. The people of the State of Michigan presumably enacted the Headlee Amendment, Const. 1963, art. 9, §§ 25-34, because they believed their liberties were as much threatened by governmental spending and taxing decisions as they were by governmental decisions concerning other subjects addressed in the Michigan Constitution, such as the regulation of speech, Const. 1963, art. 1, § 5, and the treatment of criminal suspects, Const. 1963, art. 1, § 20. Section 31 of the Headlee Amendment states in relevant part:

Units of Local Government are hereby prohibited from levying any tax not authorized by law or charter when this section is ratified ... without the approval of a majority of the qualified electors of that unit of Local Government voting thereon. 1

Cl...

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6 cases
  • Bolt v. City of Lansing
    • United States
    • Michigan Supreme Court
    • 28 de dezembro de 1998
    ...in Ripperger, we hold that the result does not change by separating the systems--the charge here is a user fee, not a tax. [221 Mich.App. 79, 87, 561 N.W.2d 423 (1997).] There is no bright-line test for distinguishing between a valid user fee and a tax that violates the Headlee Amendment. A......
  • Bolt v. City of Lansing, Docket No. 192944.
    • United States
    • Court of Appeal of Michigan — District of US
    • 25 de janeiro de 2000
    ...certain property owners was not a tax subject to the requirements of the Headlee Amendment,1 but rather a user fee. Bolt v. Lansing, 221 Mich.App. 79, 561 N.W.2d 423 (1997). Our Supreme Court reversed and held that the service charge was, in fact, a tax, and that Lansing Ordinance No. 925 w......
  • County of Saginaw v. John Sexton Corp. of Michigan
    • United States
    • Court of Appeal of Michigan — District of US
    • 16 de outubro de 1998
    ...and some reasonable relationship exists between the amount of the fee and the value of the service or benefit. Bolt v. Lansing, 221 Mich.App. 79, 86, 561 N.W.2d 423 (1997), lv gtd 456 Mich. 946, 576 N.W.2d 169 (1998); Northgate Towers Associates v. Royal Oak Charter Twp., 214 Mich.App. 501,......
  • Jackson Cnty. v. City of Jackson, Docket Nos. 307685
    • United States
    • Court of Appeal of Michigan — District of US
    • 1 de agosto de 2013
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