City of Gainesville v. State

• Decision Date: 04 September 2003
• Docket Number: No. SC02-1696.,SC02-1696.
• Citation: 863 So.2d 138
• Parties: CITY OF GAINESVILLE, Appellant/Cross-Appellee, v. STATE of Florida, et al., Appellees/Cross-Appellants.
• Court: Florida Supreme Court

863 So.2d 138

CITY OF GAINESVILLE, Appellant/Cross-Appellee, v. STATE of Florida, et al., Appellees/Cross-Appellants.

No. SC02-1696.

Supreme Court of Florida.

September 4, 2003.

Marion J. Radson, City Attorney, and Elizabeth A. Waratuke, Litigation Attorney, City of Gainesville, Gainesville, FL; and Steven L. Brannock of Holland & Knight LLP, Tampa, FL, for Appellant/Cross-Appellee.

William P. Cervone, State Attorney, and Lee C. Libby, Assistant State Attorney, Eighth Judicial Circuit, Gainesville, FL; and Pamela S. Leslie, General Counsel, and Marianne A. Trussell, Deputy General Counsel, Department of Transportation, Tallahassee, FL, for Appellees/Cross-Appellants. James R. English, City Attorney, and Linda R. Hurst, Assistant City Attorney, Tallahassee, FL, for City of Tallahassee, Florida, Amicus Curiae.

Harry Morrison, Jr. and Rebecca A. O'Hara, Tallahassee, FL, for Florida League of Cities, Inc., Amicus Curiae.

Alan S. Zimmet and Elita D. Cobbs, Clearwater, FL, for City of Largo, Florida, Amicus Curiae.

Erin L. Deady, Miami, FL; and C. Allen Watts and Ty Harris of Cobb & Cole, Daytona Beach, FL, for Florida Stormwater Association, Inc., Earthjustice, Inc., Audubon of Florida, Inc., and Environmental Confederation of Southwest Florida, Inc., Amici Curiae.

CANTERO, J.

The City of Gainesville appeals a circuit court order dismissing its complaint, which sought validation of a proposed bond issue. We have jurisdiction. See art. V, § 3(b)(2), Fla. Const. The issue is whether the City's stormwater fees constitute a user fee, which are authorized under Florida Statutes, or a special assessment, which generally may not be charged to state agencies. The issue is relevant to the bond validation because the City pledged the stormwater fees as collateral for the bonds. Thus, if the fees are invalid, the bonds cannot be approved. See, e.g., Keys Citizens for Responsible Gov't, Inc. v. Florida Keys Aqueduct Auth., 795 So.2d 940, 947 (Fla.2001)

(noting that where the municipality's fees are tied to the financing agreement on which the bonds will be secured, the validity of the fees are part of the court's inquiry into whether the public body has the authority to issue the bonds). For the reasons stated below, we find that the stormwater fees constitute valid user fees. Therefore, we reverse the order and remand with directions to enter a judgment validating the bonds.

I. FACTS

Stormwater runoff may cause flooding and threatens water quality in urban areas. See § 403.031(16), Fla. Stat. (2002) (noting that the objective of a stormwater management system is to prevent or reduce flooding and pollution). Therefore, stormwater must be collected, conveyed, treated, and disposed of. Florida law requires local governments to establish stormwater management programs. § 163.3202(2)(d), Fla. Stat. (2002); § 403.0891, Fla. Stat. (2002). To fund such programs, local governments may "[c]reate one or more stormwater utilities and adopt stormwater utility fees sufficient to plan, construct, operate, and maintain stormwater management systems set out in the local program required pursuant to s. 403.0891(3)." § 403.0893(1), Fla. Stat. (2002). A stormwater utility is defined as

the funding of a stormwater management program by assessing the cost of the program to the beneficiaries based on their relative contribution to its need. It is operated as a typical utility which bills services regularly, similar to water and wastewater services.

§ 403.031(17), Fla. Stat. (2002).

The City created a stormwater utility. It based the rate structure for the utility fee on the "impervious area" of land. Impervious area means that part of the land through which stormwater cannot permeate, thus creating stormwater runoff.¹ The vast majority of stormwater utilities across the country establish their rate structures by measuring impervious area.

Instead of calculating the exact amount of impervious area on each residential parcel, the City used statistical estimates. The most common unit that stormwater utilities use to measure impervious area is the Equivalent Residential Unit (ERU). An ERU is generally established as the average or median impervious area of a single-family home. In this case, the City determined that the median single-family property in the City included 2300 square feet of impervious area. Based on this calculation, the City established 2300 square feet as one ERU. It then created three classes of users and assigned different ERUs to each class. Most single-family properties are assigned one ERU. The City found that the impervious area of multi-family residential units was generally lower than for single-family homes. It therefore assigned .6 ERUs for apartments and mobile homes and 1.0 ERU for condominiums and duplexes.

For nonresidential properties, the City measured each property individually (over 3000 total) and assigned an ERU value to each. The ERU value is determined by measuring the square footage of impervious area on the property and dividing by 2300.

Under the City's rate structure, properties that do not use the stormwater system—that is, that retain all stormwater on-site—are not charged a fee.² For example, the City does not impose the fee on undeveloped properties because they contain no impervious area. Also, the University of Florida campus drains into a lake for which the University provides all stormwater management services.

The City charges the fees on a monthly basis. It uses the revenue generated exclusively for stormwater management services. Gainesville, Fla., Code art. V, § 27-242. Delinquent charges may be referred to a collection agency, or to the city attorney. Id. The Code does not permit placement of a lien on property to collect delinquent charges.

The Department of Transportation (DOT) refused to pay the City's stormwater fees, arguing that it was exempt from such charges because the fees constituted either a tax or a special assessment.³ The City filed a complaint seeking a judgment declaring that the stormwater fees constituted valid user fees and not special assessments, and claiming damages for unpaid fees. The circuit court dismissed the complaint on the DOT's motion, ruling as a matter of law that the City's stormwater fees constituted a special assessment. The First District Court of Appeal reversed. In a thorough opinion, the court held that the City's ordinance, "if it operates as the City has alleged"—that is, if it assesses the cost of the program to the beneficiaries based on their relative contribution to its need and operates as a typical utility which bills services regularly—"imposes utility service fees rather than special assessments." City of Gainesville v. State Dep't of Transp., 778 So.2d 519, 527 (Fla. 1st DCA 2001). The City, however, did not pursue that litigation and eventually filed a voluntary dismissal.

The issue of DOT's obligation to pay the stormwater fees arose again in 2001, when the City Commission approved issuance of revenue bonds to fund capital improvements to the stormwater system. Revenues from the stormwater fees will pay for the bonds. The City filed a complaint under section 75.04, Florida Statutes (2001), seeking to validate its proposed bond issue. The State and the DOT opposed validation. The DOT again argued that the stormwater fees were invalid—or at least did not apply to state agencies— because they constituted a tax or special assessment. All parties agreed that the only impediment to issuing the bonds was the validity of the underlying ordinance.

The circuit court held an evidentiary hearing. The court dismissed the complaint, finding that the City's fee was not based on the amount of stormwater a customer contributes to the system and that the fee was not voluntary. The court concluded that "the City of Gainesville does not have the authority to incur the obligations which are the subject of this action." The court denied the City's motion for rehearing and clarification. This appeal follows.

II. SCOPE AND STANDARD OF REVIEW

We have previously explained the scope of a bond validation proceeding: "[C]ourts should: (1) determine if a public body has the authority to issue the subject bonds; (2) determine if the purpose of the obligation is legal; and (3) ensure that the authorization of the obligation complies with the requirements of law." State v. City of Port Orange, 650 So.2d 1, 2 (Fla. 1994). "Subsumed within the inquiry as to whether the public body has the authority to issue the subject bond is the legality of the financing agreement upon which the bond is secured." Id. at 3. In this case, the stormwater fees are pledged to repay the bonds. The validity of those fees is the only issue. We review the trial court's findings of fact for substantial competent evidence and its conclusions of law de novo. City of Boca Raton v. State, 595 So.2d 25, 31 (Fla.1992) (upholding trial court findings that were based on competent substantial evidence); Panama City Beach Cmty. Redev. Agency v. State, 831 So.2d 662, 665 (Fla.2002) ("It is clear that this Court's review of the trial court's conclusions of law is de novo.").

III. ANALYSIS

To determine the legality of the financing agreement we must address two issues: (A) whether the City's fee is a user fee or a special assessment; and (B) the propriety of the City's fee structure. We address these issues in turn.

A. User Fee or Special Assessment?

DOT does not argue that the stormwater fees constitute a tax. Therefore, in determining the validity of the bonds, we must decide whether the City's stormwater fee constitutes a user fee or a special assessment. If the stormwater fee is a user fee, the fee is valid and the State and DOT, as beneficiaries of the system, can be charged. If the fee is a special assessment, however, the State and DOT cannot be assessed the fee absent statutory authorization. See City of Gainesville,778 So.2d at 521-22 (noting that state agencies may not...