City of Gary v. Indiana Bell Tel. Co.

• Decision Date: 30 June 2000
• Docket Number: No. 45S03-0006-CV-393.,45S03-0006-CV-393.
• Citation: 732 N.E.2d 149
• Parties: CITY OF GARY, INDIANA, Appellant (Defendant below), v. INDIANA BELL TELEPHONE COMPANY, INCORPORATED, d/b/a Ameritech Indiana, Appellee (Plaintiff below).
• Court: Indiana Supreme Court

732 N.E.2d 149

CITY OF GARY, INDIANA, Appellant (Defendant below), v. INDIANA BELL TELEPHONE COMPANY, INCORPORATED, d/b/a Ameritech Indiana, Appellee (Plaintiff below).

No. 45S03-0006-CV-393.

Supreme Court of Indiana.

June 30, 2000.

Rehearing Denied September 25, 2000.

Gilbert King, Jr., Gary, IN, William Malone, Miller & Van Eaton, P.L.L.C., Washington, D.C., Attorneys for Appellant.

Stanley C. Fickle, Michael R. Fruehwald, Daniel W. McGill, Nicholas K. Kile, Barnes & Thornburg, A. David Stippler, Ameritech Indiana, Indianapolis, IN, James L. Wieser, Randy H. Wyllie, Wieser & Sterba, Schererville, IN, Attorneys for Appellee.

ON PETITION TO TRANSFER

SULLIVAN, Justice.

Ameritech Indiana sought declaratory and injunctive relief to prevent the City of Gary from imposing a "requirements-based fee" on telecommunications providers using City rights-of-way. The trial court declared the fee void as an improper tax issued beyond the City's powers. We reverse in part, finding that the City was initially entitled to charge compensation for the private, commercial use of its real estate, until the legislature affirmatively said otherwise.

Background

On January 6, 1998, the City of Gary enacted Ordinance Nos. 6970 & 6971, which were signed by the Mayor two days later. Ordinance No. 6970 establishes a telecommunications policy for the City and creates the Gary Access, Information, and Telecommunications Trust ("GAITT") to, inter alia, "[e]nsure that telecommunications is available as a community resource for individuals, organizations, and businesses on an affordable basis." The GAITT is charged with several responsibilities under Ordinance No. 6970, including the development, implementation, and collection of fees comprising fair and reasonable compensation for the commercial use of public rights-of-way.

Ordinance No. 6971 is a companion ordinance that imposes a "requirements-based fee" on all telecommunications providers using the City's rights-of-way. The total "requirements-based fee" for 1998 was to be $20,000,000. This initial aggregate fee represented "approximately fifteen percent of the telecommunications providers' local revenues, based on the national average revenue per capita reported by the U.S. census," with credits for public, educational, and government access, as well as institutional access. Appellant's Br. at 6.

Ameritech Indiana's share of this total initial fee was $3.2 million and was determined by using what Ameritech characterizes as "an intricate scheme for apportioning the $20,000,000 charge among the various telecommunications providers in the rights-of-way, based on the number of kinds of services provided by each." Appellant's Br. at 7 (describing § 4 of Ord. No. 6971). Ordinance No. 6971 contemplates telecommunications providers discharging some or all of their "requirements-based fee" by furnishing in-kind telecommunications services. In future years, the total "requirements-based fee" would be calculated in one of three ways: (1) based upon an assessment of the City's "requirements," (2) based upon a percentage not to exceed 15% of the providers' gross revenues, or (3) based upon a "growth factor" calculated from the providers' telecommunications revenues multiplied by the previous year's "requirements-based fee."

On January 15, 1998, Arlene D. Colvin, the City's Chief of Staff, sent a letter to Ameritech Indiana along with copies of the two ordinances, informing Ameritech that Gary intended to establish "a process for telecommunications vendors affected by the enclosed Ordinances to meet their economic obligations." The letter also indicated that a City representative would contact the company "in February, 1998 to negotiate [its] contribution."

Before any meeting was held, Ameritech Indiana filed a declaratory judgment action, asking that the ordinances be declared void as exceeding the scope of the City's municipal powers. After hearing oral argument on cross-motions for summary judgment, the trial court granted summary judgment in favor of Ameritech Indiana, finding "that City of Gary Ordinances Nos. 6970 and 6971 are and have been from the time of their enactment INVALID and VOID in their entireties." (R. at 292; Final Judgment of June 25, 1998) (emphasis in original). The City appealed.

The Court of Appeals affirmed in part and reversed in part, finding: (1) that the requirements-based fee imposed under Ordinance No. 6971 was void as an impermissible tax assessed in violation of the City's authority under Ind.Code § 36-1-3-8(a)(4) (1993) ("Home Rule Act"); (2) that even if the requirements-based fee was not an impermissible "tax" under the Home Rule Act, it was an impermissible charge by the City as of March 13, 1998, when the Indiana Legislature amended Ind.Code § 8-1-2-101(b), prohibiting municipalities from receiving any form of "payment" other than the "direct, actual, and reasonably incurred management costs" for a utility's occupation of a public right-of-way; (3) that the remaining provisions of Ordinances 6970 & 6971 did not violate Ind. Code § 36-1-3-8(a)(7) as infringing on the jurisdiction of Indiana Utility Regulatory Commission ("IURC"); and (4) that the remaining policy provisions of Ordinances 6970 & 6971 would stand despite invalidation of the revenue-producing, requirements-based fee provisions. City of Gary v. Indiana Bell Telephone Co., 711 N.E.2d 79 (Ind.Ct.App.1999).

Discussion

In this case, the trial judge entered specific findings of fact and conclusions of law, neither of which are required nor prohibited in the summary judgment context. See Dible v. City of Lafayette, 713 N.E.2d 269, 272 n. 2 (Ind.1999)

. Although specific findings aid our review of a summary judgment ruling, they are not binding on this Court. Id. Instead, when reviewing an entry of summary judgment, we stand in the shoes of the trial court. Id. Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). We do not reweigh the evidence, but will consider the facts in the light most favorable to the nonmoving party. See Perry v. Stitzer Buick GMC, Inc., 637 N.E.2d 1282, 1286 (Ind.1994),

reh'g denied.

I

We begin our analysis by looking to Indiana's Home Rule Act. Pub.L. No. 211, 1980 Ind. Acts 1657 (codified as amended at Ind.Code §§ 36-1-3-1 to -9 (1993)). The Home Rule Act abrogated the traditional rule that local governments possessed only those powers expressly authorized by statute and declared that a local government possesses "[a]ll other powers necessary or desirable in the conduct of its affairs." Ind.Code § 36-1-3-4(b)(2); see also City of Crown Point v. Lake County, 510 N.E.2d 684, 685-86 (1987)

(construing the Home Rule Act). This broad grant of authority notwithstanding, the Home Rule Act also specifically withheld certain powers from local governments and reserved them to the State. See Ind.Code § 36-1-3-8.

Here, we are faced with deciding whether the requirements-based fee was within Gary's broad grant of powers conferred on it by the Home Rule Act or whether the fee impermissibly impinged upon those powers reserved to the State. The reserved powers implicated in this case are: first, the "power to impose a tax," id. § 36-1-3-8(a)(4); second, the "power to impose a service charge or user fee greater than that reasonably related to reasonable and just rates and charges for services," id. § 36-1-3-8(a)(6); and third, the "power to regulate conduct that is regulated by a state agency, except as expressly granted by statute," id. § 36-1-3-8(a)(7).

II

Among the various powers "need[ed] for the effective operation of government as to [its] local affairs," Ind. Code § 36-1-3-2, are those labeled proprietary whereby local governments "act[ ] in a private or proprietary capacity" for the "peculiar and special advantage of its inhabitants, rather than for the good of the State at large," Taylor v. State, 663 N.E.2d 213, 216-17 (Ind.Ct.App.1996) (analyzing Department of Treasury v. City of Evansville, 223 Ind. 435, 440, 60 N.E.2d 952, 954 (1945)).

A local government's specified power to manage the "public grounds" falling within its borders, see Ind.Code § 36-1-3-9(a), includes the unspecified power to operate in a proprietary capacity to charge fair and reasonable compensation for the private, commercial use of these public grounds, irrespective of the label placed on the compensation. See, e.g., City of St. Louis v. Western Union Tel. Co., 148 U.S. 92, 99, 13 S.Ct. 485, 37 L.Ed. 380 (1893)

(recognizing the general right of a city to seek "rental"-like compensation from a user of the city's land/right-of-way);¹

City of Dallas, Texas v. Federal Communications Comm'n, 118 F.3d 393, 397 (1997) (A fee imposed on a telecommunications provider was "not a tax ... but essentially a form of rent: the price paid to rent use of public right-of-ways [sic]."); TCG Detroit v. City of Dearborn, 16 F.Supp.2d 785, 789 (E.D.Mich.1998) (construing the Federal Telecommunications Act, 47 U.S.C. § 253(a), (c), and approving the imposition of a "franchise fee," requiring, inter alia, a percentage fee on gross revenue, costs, and conduit space for the city) (There "is nothing inappropriate with the [City of Dearborn] charging compensation, or `rent', for the City owned property that the [plaintiff telecommunications provider] seeks to appropriate for its private use."), aff'd, 206 F.3d 618 (6th Cir.2000); Bell-South Telecommunications, Inc. v. City of Orangeburg, 337 S.C. 35, 522 S.E.2d 804, 806 (1999) (authorizing the City of Orangeburg to charge a "franchise fee" in exchange for granting BellSouth the "special privilege of using public streets to place its equipment in order to serve [the] City's residents and generate private profit"), reh'g denied;

cf. Federal Telecommunications Act, 47 U.S.C. § 253(a), (c) (Supp. II 1996) (This section does not affect the authority of a...