Greater Franklin Dev. v. Town of Franklin

• Decision Date: 13 January 2000
• Docket Number: P-1032
• Citation: 49 Mass.App.Ct. 500,730 N.E.2d 900
• Parties: (Mass.App.Ct. 2000) GREATER FRANKLIN DEVELOPERS ASSOCIATION, INC., and others <A HREF="#fr1-1" name="fn1-1">1 vs. TOWN OF FRANKLIN & another. <A HREF="#fr1-2" name="fn1-2">2 No.: 98- Argued:
• Court: Appeals Court of Massachusetts

730 N.E.2d 900 (Mass.App.Ct. 2000)

GREATER FRANKLIN DEVELOPERS ASSOCIATION, INC., and others¹ vs. TOWN OF FRANKLIN & another.²

No.: 98-P-1032.

Massachusetts Court of Appeals

Argued: January 13, 2000.

Decided: June 26, 2000.

Norfolk County.

Civil action commenced in the Superior Court Department on December 4, 1995.

Municipal Corporations, By-laws and ordinances, Fees. Constitutional Law, Taxation.

Eric W. Wodlinger & Mark Bobrowski for Town of Franklin & another.

J. Owen Todd for Greater Franklin Developers Association, Inc., & others.

Thomas A. Reed for Home Builders Association of Massachusetts, amicus curiae.

Elaine M. Lucas for City Solicitors & Town Counsel Association, amicus curiae, submitted a brief.

Present: Porada, Greenberg, & Rapoza, JJ.

Motions for summary judgment were heard by Gordon L. Doerfer, J., and entry of a separate and final judgment was ordered by him.

GREENBERG, J.

Sheltered by geography from the bustle of Boston, yet within a reasonable commute to work, the town of Franklin has drastically changed demographics. From 1980 to 1995, the town's population increased by 41 percent from 17,500 to 25,000. Despite the building of a brand new school, completed in 1995, a research group hired by the town that same year projected that growth would cause the town's schools to overflow by the year 2000, with an estimated 320 more pupils than spaces.

On December 4, 1995, the date on which the Greater Franklin Developers Association (association) brought this action, by-law amendment 95-300, adding a new chapter 83 to the town code, had come into effect, under which the town imposed a "school impact fee" to "ensure[] that development bears a proportionate share of the cost of capital facilities necessary to accommodate such development and to promote and protect the public health, safety and welfare." 83-2(2). The association and certain of its individually named members sought declaratory and injunctive relief in the Superior Court to set aside the imposition and collection of those fees. On cross-motions for summary judgment, the judge decided in favor of the association. The judge declared that the fees were "an invalid and unauthorized tax." The town appeals.

The material facts are not disputed. Essentially carrying out the recommendations of the town council's forecast of overcrowding in the public schools, the legislative findings of the by-law amendment state that "Franklin must expand its school systems if new development is to be accommodated without decreasing current [educational] standards." 83-2(1). The findings further state that "[e]ach type of residential dwelling unit [subject to this by-law] will create demand for the acquisition, expansion or construction of school improvements." 83-2(3).

The pertinent part of the by-law reads as follows: "No certificate of use and occupancy for any new or expanded residential building . . . shall be issued unless and until the impact fees hereby required have been paid, unless exempted by this By-Law." By-law 95-300, 83-3(A). The by-law sets out a fee schedule, based on the estimated cost increase imposed by each kind of housing unit. Each single-family house, for example, is estimated to bring .68 children into the public school system, while each condominium brings .25 children. Initially, the town determined how much of the cost to expand the school system would remain after it utilized all other funding sources, and then applied the above formula to cover the deficit, charging proportionately higher school impact fees for single-family homes than for condominiums.³ Money collected under the by-law is funneled into one of two accounts earmarked to cover the cost of expanding schools in either the northern or the southern district, depending on the location of the new housing. 83-3(C)(2), 83-4. The funds may not be used to maintain existing buildings, and after eight years, any remainder not used for expansion will be returned to the payer, if the payer applies for it. 83-3(D)(1), 83-3(F).

Under Massachusetts law, towns do not have the power to tax. See art. 89, 7, of the Amendments to the Massachusetts Constitution ("Nothing in this article shall be deemed to grant to any city or town the power to . . . levy, assess and collect taxes . . . ."); Commonwealth v. Caldwell, 25 Mass. App. Ct. 91, 92 (1987). Towns may, however, exact fees. See G. L. c. 40, 22F ("Any municipal board or officer empowered to issue a license, permit, certificate, or to render a service or perform work for a person or class of persons, may, from time to time, fix reasonable fees for all such licenses, permits, or certificates . . . and may fix reasonable charges to be paid for any services rendered or work performed"). This case turns on whether the by-law imposes an impermissible tax or a permissible fee.

Fees "share common traits that distinguish them from taxes: [1] they are charged in exchange for a particular governmental service which benefits the party paying the fee in a manner 'not shared by other members of society'; [2] they are paid by choice, in that the party paying the fee has the option of not utilizing the governmental service and thereby avoiding the charge; and [3] the charges are collected not to raise revenues but to compensate the governmental entity providing the services for its expenses." Emerson College v. Boston, 391 Mass. 415, 424-425 (1984) (citations omitted).

We apply the analysis developed in the Emerson College case to distinguish valid municipal user fees from unlawful taxes and, more specifically, to determine whether the judge in the case at hand correctly concluded that the purported "impact fee" was invalid because it failed to benefit fee payers in a manner not shared by other members of the community. We agree with the judge that the benefit of expanded school facilities is not particularized to the fee payers. First and foremost, expanded school capacity benefits the entire community. We hardly need state that society as a whole gains with the education of its children and suffers at the lack.

More than that, assuming without deciding that individuals under the by-law are able to demonstrate that their new housing will not contribute to the demand for more schools and thereby exempt themselves from the fee requirement, the benefit of new school facilities still is not limited to fee payers. An example may be illustrative: The funds are earmarked for capital improvements, such as a new cafeteria or an entirely new school. No one has proposed, as we expect no one would, that only students living in homes assessed this fee be granted access to the new cafeteria, while those living in older homes must continue to eat in the gymnasium; nor that children living in homes not assessed the fee be prevented from attending the new school, and instead must be bused to an older facility.⁴ Under the first Emerson College factor, therefore, the school impact fee is better characterized as a tax because it does not benefit the fee payer in a manner not shared by others. See Emerson College v. Boston, 391 Mass. at 424.

As for the second test, that the fee be paid by choice, it is true that developers can decide not to build residences in the town and that homebuyers, if they are the feepayers, can buy elsewhere. See Bertone v. Department of Pub. Util., 411 Mass. 536, 549 (1992); Baker v. Department of Envtl. Protection, 39 Mass. App. Ct. 444, 446 (1995). The motion judge so held,⁵ but correctly noted that this factor is not conclusive. See Berry v. Danvers, 34 Mass. App. Ct. 507, 512 n.6 (1993); Morton v. Hanover, 43 Mass. App. Ct. 197, 202 (1997).

The third test, together with the first, demonstrates the taxing nature of this fee. In true fee situations, charges are collected not to raise general revenue but to compensate the governmental entity for its expenses in providing that particular service. The provision of sufficient school facilities is not a particular service which is unavailable to the general public; it is the government's obligation to provide such facilities to the general public out of general revenue funds. See Jenkins v. Andover, 103 Mass. 94, 96-97 (1869) (noting that since...