Home Builders Ass'n v. City of Maricopa, No. 2 CA-CV 2006-0188.

• Court: Court of Appeals of Arizona
• Writing for the Court: Howard
• Citation: 215 Ariz. 146,158 P.3d 869
• Docket Number: No. 2 CA-CV 2006-0188.
• Decision Date: 18 May 2007
• Parties: HOME BUILDERS ASSOCIATION OF CENTRAL ARIZONA, Plaintiff/Appellee, v. CITY OF MARICOPA, an Arizona municipality, Defendant/Appellant.

158 P.3d 869 215 Ariz. 146 HOME BUILDERS ASSOCIATION OF CENTRAL ARIZONA, Plaintiff/Appellee,
v.
CITY OF MARICOPA, an Arizona municipality, Defendant/Appellant. No. 2 CA-CV 2006-0188. Court of Appeals of Arizona, Division 2, Department A. May 18, 2007.

[158 P.3d 871]

Gammage & Burnham, P.L.C., By Cameron C. Artigue, Phoenix, for Plaintiff/Appellee.

Moyes Storey, Ltd., By C. Brad Woodford, Phoenix, for Defendant/Appellant.

OPINION

HOWARD, Presiding Judge.

¶ 1 After a bench trial, the trial court entered judgment in favor of appellee Home Builders Association of Central Arizona (HBACA) and against appellant City of Maricopa in HBACA's declaratory judgment action. On appeal, Maricopa argues the court erred when it found that Maricopa was Pinal County's successor in interest to development agreements entered into by Pinal County and three members of HBACA.¹ Maricopa also argues that Pinal County lacked the statutory authority to enter into the development agreements waiving Maricopa's development fees. Because we conclude the court correctly decided these issues, we affirm.

BACKGROUND

¶ 2 We view the facts in the light most favorable to upholding the judgment. See Sw. Soil Remediation, Inc. v. City of Tucson, 201 Ariz. 438, ¶ 2, 36 P.3d 1208, 1210 (App. 2001). In August 2000 and March 2003, Pinal County entered into three development agreements with three different developers. At the time of these agreements, the County did not impose development fees. All three agreements required that each developer improve Smith-Enke Road, two of the agreements required improvements to Honeycutt Road, two of the agreements required reservation of one or more school/park sites, and one of the agreements required construction of a wastewater treatment facility and a water distribution facility. All three development agreements contain the following paragraph entitled "Fees":

Except as specifically provided in this Development Agreement, no surcharge or impact fees[²] or exactions or impositions of any kind whatsoever for water, sewer, utilities, streets or other transportation systems, parks, preserves, storm sewers, flood control, public safety or other public services or any other infrastructure cost or expense shall be chargeable to Developer ... by the County in any phase of the constructions of the Development Plan.

The agreements also provide that "rights established under th[e] Agreement and Development Plan are not personal rights but attach to and run with the Property.... Developer and its successors shall have a vested right to develop the Property in accordance with this Agreement and Development Plan." Finally, the agreements provide that "[t]his Agreement and the Development Plan shall be binding upon County and Developer and their respective successors and assigns."

¶ 3 On October 15, 2003, Maricopa was incorporated and the incorporation boundary included property subject to the three pre-existing development agreements. On August 3, 2005, Maricopa enacted Ordinance No. 05-10, which adopted by reference "The City of Maricopa Development Fees Code." Under Ordinance No. 05-10, Maricopa had the authority to assess a general government development fee, library development fee, parks and recreation development fee, public safety development fee, and a transportation

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development fee. Pursuant to this ordinance, Maricopa then sought to assess development fees of approximately $5,000 on each lot in the subdivisions subject to the Pinal County development agreements.

¶ 4 HBACA, a professional association representing residential builders and associated industries including the developers whose agreements are at issue here, filed a complaint seeking a declaratory judgment requiring Maricopa to acknowledge the validity of the development agreements, to recognize that it is a successor in interest to Pinal County under the agreements, and to stop its actions in violation of the development agreements. Maricopa argued that Pinal County lacked the statutory authority to enter into development agreements that "waive" development fees and that it was not bound by the agreements in any event. After a bench trial, the trial court ruled that Maricopa was Pinal County's successor in interest, that Pinal County had the statutory authority to enter into the agreements, and therefore the agreements were binding on Maricopa. Maricopa now appeals.

DISCUSSION

¶ 5 Maricopa first argues the development agreements do not preclude it from imposing development fees because the land subject to the agreements falls under the "exclusive control" of Maricopa and cities and counties are different entities. We agree with Maricopa that Arizona's counties and cities are separate legal entities, whose power is derived from different articles of the Arizona Constitution and from different statutes. See Ariz. Const. art. XIII (municipal corporations); art. XII (counties); A.R.S. Title 9 (cities and towns); A.R.S. Title 11 (counties). We also agree that the counties' and cities' authority is limited to those powers expressly, or by necessary implication, delegated to them by the state constitution or statutes. Ass'd Dairy Prods. Co. v. Page, 68 Ariz. 393, 395, 206 P.2d 1041, 1043 (1949) ("[B]oards of supervisors of the various counties of [Arizona] have only such powers as have been expressly or by necessary implication, delegated to them by the state legislature."); Home Builders Ass'n of Cent. Ariz. v. City of Apache Junction, 198 Ariz. 493, ¶ 10, 11 P.3d 1032, 1037 (App.2000) ("General law cities ... may exercise only those powers expressly granted them by the legislature, together with those powers that arise by necessary implication out of those that are expressly granted."). But Maricopa did not exist at the time Pinal County entered into the development agreements. Consequently, the issue in this case is not whether Pinal County superseded Maricopa's authority by entering into the development agreements, as Maricopa suggests. Rather the issue is whether Maricopa is Pinal County's successor in interest and is therefore bound by the development agreements Pinal County entered into before Maricopa's incorporation.

¶ 6 Maricopa next argues the county exceeded its statutory authority when it agreed to the "Fees" provisions of the development agreements because "the power to waive development fees imposed by cities" "cannot be necessarily implied" under A.R.S. § 11-1101. We review the trial court's factual findings for an abuse of discretion, but review its conclusions of law and issues of statutory interpretation de novo. See Perguson v. Tamis, 188 Ariz. 425, 427, 937 P.2d 347, 349 (App.1996); Brake Masters Sys., Inc. v. Gabbay, 206 Ariz. 360, ¶ 4, 78 P.3d 1081, 1084 (App.2003). "If a statute's language is clear and unambiguous, we apply it without resorting to other methods of statutory interpretation." Hayes v. Cont'l Ins. Co., 178 Ariz. 264, 268, 872 P.2d 668, 672 (1994).

¶ 7 HBACA disputes that any development fees were waived. It notes that, at the time the agreements were entered into, the County had not yet begun to impose development fees on any developer; consequently, there were no fees to waive. We agree with HBACA's analysis but do not find it controlling. If § 11-1101 allowed Pinal County to enter into the development agreements which foreclose imposition of future development fees and bind Maricopa, the terminology used to describe the terms of the agreement is unimportant.

¶ 8 Section 11-1101(B)(7) states: "The development agreement . . . may specify or otherwise relate to . . . [the c]onditions,

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terms, restrictions, financing and requirements for public infrastructure and subsequent reimbursements over time." It also allows the development agreement to cover "[a]ny other matters relating to the development of the property." § 11-1101(B)(10).

¶ 9 The "[c]onditions, terms, restrictions, financing and requirements for public infrastructure" provision of § 11-1101(B)(7) permits development agreements to specify how infrastructure will be provided. This provision includes development fees because development fees are "financing. . . for public infrastructure" assessed to cover future public infrastructure costs. As the supreme court has previously held, "[d]evelopment or impact fees are designed to assist in raising the capital necessary [for public improvements] . . . that surely will arise in the foreseeable future but whose precise details may not at the outset be quite clear." Home Builders Ass'n of Cent. Ariz. v. City of Scottsdale, 187 Ariz. 479, 483, 930 P.2d 993, 997 (1997). But the plain wording of this provision is also broad enough to include in-kind contributions to the infrastructure from the developers. Indeed, in counties that do not impose development fees, in-kind contributions are the most likely type of contribution.

¶ 10 The legislature went further by allowing counties to enter into development agreements that include "[a]ny other matters relating to the development of the property." § 11-1101(B)(10). By enacting subsections 7 and 10, the legislature expressed its intent that the development agreement may cover all matters relating to the development of the property. One of those matters is the imposition of, or preclusion of imposition of, development fees. Based on the plain language of § 11-1101(B), Pinal County has the authority to enter into development agreements that address the developer's obligation to contribute to the public infrastructure. See Hayes, 178 Ariz. at 268, 872 P.2d at 672. And because the legislature placed no restrictions on the counties' power to negotiate the "[c]onditions, terms, restrictions, financing and requirements for public infrastructure," § 11-1101(B)(7), and allows development agreements to include "[a]ny other matters relating to the development of the property," § 11-1101(B)(10), Pinal County acted within its statutory...