Bud-Kal v. City of Kalispell

• Decision Date: 26 March 2009
• Docket Number: No. DA 08-0318.,DA 08-0318.
• Citation: 2009 MT 93,204 P.3d 738
• Parties: BUD-KAL, a partnership, et al., Plaintiffs and Appellants, v. CITY OF KALISPELL, et al.; the Downtown Business Improvement District, et al.; and the Flathead County Treasurer, Defendants and Appellees.
• Court: Montana Supreme Court

204 P.3d 738

2009 MT 93

BUD-KAL, a partnership, et al., Plaintiffs and Appellants, v. CITY OF KALISPELL, et al.; the Downtown Business Improvement District, et al.; and the Flathead County Treasurer, Defendants and Appellees.

No. DA 08-0318.

Supreme Court of Montana.

Submitted on Briefs February 19, 2009.

Decided March 26, 2009.

For Appellants: James C. Bartlett; Attorney at Law, Kalispell, Montana.

For Appellees: Angela K. Jacobs, Bryce R. Floch; Hammer, Hewitt, Jacobs & Floch, PLLC, Kalispell, Montana (for Appellees City of Kalispell, et al.) Diane Conradi, Law Office of Diane Conradi, P.C., Whitefish, Montana (for Appellees the Downtown Business Improvement District, et al.).

Chief Justice MIKE McGRATH delivered the Opinion of the Court.

¶ 1 This is an appeal from the District Court's June 12, 2008, Order and Rationale on Cross-Motions for Summary Judgment, granting summary judgment in favor of the City of Kalispell and the other defendants and denying the motion for summary judgment by Bud-Kal and the other plaintiffs. We affirm.

PROCEDURAL AND FACTUAL BACKGROUND

¶ 2 This action arose from the creation of a downtown business improvement district (BID) in the City of Kalispell in 2003. Creation of a BID is exclusively a statutory process set out in §§ 7-12-1101 through -1151, MCA. A BID can only be created by action of the local governing body after public notice and the opportunity for affected property owners to file protests. These statutes governing the powers of a city must be liberally construed. Stevens v. City of Missoula, 205 Mont. 274, 280, 667 P.2d 440, 443-44 (1983).

¶ 3 The BID process begins when the governing body, in this case the City of Kalispell, receives petition signatures requesting creation of a district or expansion of an existing one. The petitions must be signed by the owners of more than 60% of the property in the area that the organizers propose to include in the district. Section 7-12-1111(1), MCA. When petitions are filed, the governing body must begin the process to create a BID. Section 7-12-1111(1), MCA. The governing body's first step after receiving a sufficient number of petitions is to pass a resolution of intent to create the BID, and to designate its boundaries. Section 7-12-1112(1), MCA.

¶ 4 The governing body must give public notice of its resolution of intent by publication and specific notice by mail to every real property owner within the proposed district. Section 7-12-1112(2), MCA. The notice must describe the general purposes of the BID and the time and place where the governing body will hear and pass upon any protests to the creation or expansion of the district. The notice must refer to the description of the boundaries of the proposed BID found in the resolution of intent. Section 7-12-1112(3), MCA. Any real property owner liable to be assessed may file a written protest with the governing body. Section 7-12-1113(1), MCA.

¶ 5 The governing body must evaluate any protests in a two step process. First, the governing body must decide whether the creation or expansion of the district can proceed. By law the governing body may not take any further action to create the BID if protests are received from:

(a) owners of property within the proposed district or area of a proposed expansion having a taxable valuation, when aggregated, representing not less than 50% of the total taxable valuation of property within the district or within the area of a proposed expansion;

(b) not less than 50% of the owners of property within the district or area of a proposed expansion; or

(a) owners of property within the proposed district or area of a proposed expansion having projected assessments, when aggregated, representing not less than 50% of the total projected assessments for property within the district or within the area of proposed expansion.

Section 7-12-1114(3), MCA. If there are sufficient protests to satisfy one of the subsections of § 7-12-1114(3), MCA, then the process must stop regardless of the substance of the protests. If not, then the governing body must then hear and pass upon the substance of all protests. Section 7-12-1114(1), MCA.

¶ 6 When the protests are resolved the governing body "has jurisdiction to order the creation" of a BID, which it does by passing a resolution creating the BID "in accordance with the resolution of intention." Section 7-12-1115, MCA. After creating the district, the governing body appoints a board of directors, § 7-12-1121, MCA, to carry out the functions of the district, § 7-12-1131, MCA. The board must adopt and submit a work plan, § 7-12-1132, MCA, and an annual budget and method of levying an assessment, § 7-12-1133, MCA. The work plan, budget and assessment method must be approved by the governing body after public notice and a hearing on any objections. Section 7-12-1132(3), MCA.

¶ 7 This statutory process was invoked in 2002 when property owners in downtown Kalispell solicited support and petition signatures from other property owners to request that the City of Kalispell create a downtown BID. The BID promoters sent mailings and made visits to property owners in the proposed district. In the spring of 2003, the BID promoters delivered their signed petitions and a map of the proposed BID to the Kalispell City Attorney. The City Attorney reviewed the petitions and map, and determined that the petitions had been signed by owners of more than 60% of the property that the promoters proposed for inclusion within the BID.

¶ 8 The City Attorney reported the petition results to the Kalispell City Council, and on May 19, 2003, the Council passed a resolution of intent to create the BID. The boundaries of the BID were indicated on a map attached to and incorporated in the City's resolution. The City published notice of the resolution of intent and mailed notice to all owners of real property located in the proposed BID. The notice referenced the City's resolution of intent, described the general purposes of the BID, stated that a map of the BID could be obtained from the City Clerk, set the time for filing written protests, and set the time and place where protests would be heard. The notice contained a written description of the boundaries of the proposed BID.

¶ 9 Twelve property owners filed written protests against creation of the BID. The City Attorney reviewed the protests under § 7-12-1114(3), MCA, to determine whether they were sufficient to prohibit further action by the City. He calculated that protests had not been filed by the owners of property representing 50% or more of the total taxable value of the proposed BID (§ 7-12-1114(3)(a), MCA) and that protests had not been filed by the owners of 50% or more of the area of the property within the proposed BID (§ 7-12-1114(3)(b), MCA). The City Attorney did not determine whether protests were filed by owners of property having projected aggregated assessments of 50% or more of the total projected assessments of the BID (§ 7-12-1114(3)(c), MCA) because there was no projected assessment at that point of the process.

¶ 10 The City Attorney reported the results of his evaluation of the protests to the City Council which proceeded to hear the substance of the protests at a public hearing on June 16, 2003. The Bud-Kal property owners appeared at the hearing and supported their protests, including their argument that they would not receive sufficient benefit from the proposed BID. The City Council determined that the substance of the protests was insufficient to bar creation of the BID and passed a resolution creating the district using the same boundaries that had appeared in the prior resolution of intent. At that time the City did not appoint a board of directors.

¶ 11 A few months later there was a second petition drive seeking to expand the area of the BID to make it more economically viable. The City, as before, received and evaluated petitions and then passed a resolution of intent to expand the district. The City provided notice and opportunity for protests but none was filed. On December 1, 2003, the City Council passed a resolution creating the expanded BID. On December 15, 2003, the City appointed a Board of Trustees for the BID, and the Board developed a proposed budget and method of assessment. The City Council gave public notice, held a hearing on the Board's proposals, and approved the plan, budget and method of assessment in a subsequent resolution on May 17, 2004.

¶ 12 Bud-Kal and the other plaintiffs below are property owners in the downtown Kalispell area who object to being included in the BID. On February 28, 2005, they filed suit seeking to void the BID; seeking an injunction preventing any action by the City with regard to the BID; and seeking a refund of all assessments paid. In 2006 Bud-Kal moved for summary judgment on the ground that the original petitions were defective because they did not contain a proposed assessment for the district and for each affected property owner. In an opinion dated September 5, 2006, the District Court denied Bud-Kal's motion, holding that there was no statutory requirement that the petitions contain projected assessments for the district or for individual parcels of property.

¶ 13 The case sat essentially dormant for over a year until the City requested a scheduling order and moved for summary judgment in December, 2007. Bud-Kal then filed a second motion for summary judgment. The parties submitted briefs and affidavits in support of their motions and on June 12, 2008, the District Court entered its Order and Rationale on Cross-Motions for Summary Judgment. The District Court found that the evidence showed that there was a proposed boundary map submitted with the petitions and that there was nothing in the statutes that invalidated the petitions. The District Court found that the City followed the required statutory process for forming the BID and that the City's determination of what property was...