Home Builders of Mississippi v. City of Madison, Miss.

• Decision Date: 31 March 1997
• Docket Number: Civil Action No. 3:95-cv-803WS.
• Citation: 10 F.Supp.2d 617
• Parties: HOME BUILDERS ASSOCIATION OF MISSISSIPPI, et al., Plaintiffs, v. CITY OF MADISON, MISSISSIPPI, et al., Defendants.
• Court: U.S. District Court — Southern District of Mississippi

10 F.Supp.2d 617

HOME BUILDERS ASSOCIATION OF MISSISSIPPI, et al., Plaintiffs, v. CITY OF MADISON, MISSISSIPPI, et al., Defendants.

Civil Action No. 3:95-cv-803WS.

United States District Court, S.D. Mississippi, Jackson Division.

March 31, 1997.

Joel W. Howell, III, Jackson, MS, Steven H. Smith, Taylor, Covington & Smith, Jackson, MS, for Home Builders Association of Mississippi, Inc., Mark S. Jordan, Good Earth Development, Inc., Mark S. Jordan, Inc., Highland Ridge Partners, L.P., SMCDC, Inc., Post Oak Place, Locust Lane Partners, L.P., William J. Shanks, WJS & Associates, Inc., South Madison County Development Co., Thomas M. Harkins, Sr., Thomas M. Harkins, Jr., North Place Development, Inc., First Mark Homes, Inc., Thomas M. Harkins, Builder, Inc., THV, Inc., J.F.P. & Co., Inc., J. Parker Sartain, Habitat, Inc., J.P.S. Building Supplies, Inc., Sartain Associates, Inc., Douglas Place Partnerships.

Terry R. Levy, Paul V. Ott, Daniel, Coker, Horton & Bell, Jackson, MS, for City of Madison, Mississippi, Mary Hawkins, Timothy L. Johnson, Lisa Clingan-Smith.

Charles Greg Copeland, William Matthew Vines, Copeland, Cook, Taylor & Bush, Jackson, MS, Paul V. Ott, Daniel, Coker, Horton & Bell, Jackson, MS, for Tommy E. Butler, Charles L. Dunn, Griffin C. Weaver.

MEMORANDUM OPINION AND ORDER OF DISMISSAL

WINGATE, District Judge.

Before the court is the motion of the defendants to dismiss the above-styled and numbered cause for lack of subject matter jurisdiction pursuant to Rule 12(b)(1)¹ of the Federal Rules of Civil Procedure. The plaintiffs' complaint, filed pursuant to Title 28 U.S.C. §§ 2201;² Title 28 U.S.C. § 2202;³ and Title 42 U.S.C. § 1983,⁴ seeks declaratory relief, injunctive relief, an accounting, and monetary damages relating to the City of Madison's policy of collecting "impact fees" only from developers of single-family and multi-family dwellings within the City of Madison to be used for improvements to streets, to fire and police departments, and to parks. According to the plaintiffs, the selective imposition of these impact fees only upon developers of residential dwellings, plus the mismanagement and improper expenditure of the proceeds, comprise an unauthorized and unconstitutional ordinance. Jurisdiction, say plaintiffs, is predicated upon Title 28 U.S.C. § 1331⁵ (federal question) and Title 28 U.S.C. § 1343⁶ (action to remedy deprivation of a constitutional right). Defendants respond that, pursuant to Title 28 U.S.C. § 1341, referred to as the "Tax Injunction Act", this court lacks subject matter jurisdiction over this dispute because the instant municipal ordinance is not merely an assessment but a tax and, as the Tax Injunction Act provides, "[t]he district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State." Thus, say defendants, inasmuch as the plaintiffs may seek a remedy under Mississippi Law, their complaint must be dismissed. This court, having considered the arguments and briefs of the parties on the matter of subject matter jurisdiction, finds that the Tax Injunction Act applies to the instant case and deprives this court of subject matter jurisdiction over this dispute for the reasons which follow.

FACTS

On March 4, 1986, the Mayor and Board of Aldermen of the City of Madison, facing rapidly growing residential development within the City's area of incorporation, adopted a "Public Improvements Plan" (hereinafter the "Plan") which had been prepared by the Local Planning Branch of the Mississippi Research and Development Center. The purpose of the "Plan" was to schedule orderly development of public facilities and physical improvements relating to the building of single-family and multi-family dwellings within the City of Madison for a period of six years.⁷ Additionally, on March 4, 1986, the City of Madison enacted an ordinance establishing the City of Madison Development Impact Fee Account for Capital Improvements (hereinafter "impact fees" or the "ordinance") to be paid by the developers of single-family and multi-family dwellings (see "Exhibit A" attached to the plaintiffs' complaint). According to the provisions of this ordinance, impact fees are paid as a condition precedent to obtaining a building permit. The prospective developer pays $175.00 per residential lot (per residential dwelling in the case of multi-family housing) upon filing a preliminary plat for the proposed subdivision with the City of Madison. Once the developer's proposed plat has been accepted by the City of Madison, the developer must pay an additional $525.00 per residential lot, or per residential dwelling, for the building permit.⁸ In their motion to dismiss, defendants say that from March 4, 1986, to September 30, 1994, the City of Madison collected impact fees in the amount of $1,600,000.00 from residential developers and expended $1,250,000.00 of those funds.⁹ The collection and expenditure of these impact fees by the City of Madison under the putative authority of an impact fee ordinance forms the basis of the instant dispute.

On November 1, 1995, over nine years after the City of Madison enacted and began enforcing its impact fee ordinance, the plaintiffs filed the instant lawsuit in this court seeking a permanent injunction, an accounting, equitable relief and damages, claiming that the impact fees collected by the City of Madison had been converted into an "unrestricted municipal slush fund." According to the plaintiffs' complaint, the ordinance provided that impact fees were to be used to fund the aforesaid "Plan" for improvements in order to provide for the health, safety and public welfare of the citizens of the City of Madison. However, in their complaint, the plaintiffs assert that there is no connection between the City of Madison's use of impact fees and any benefits accruing to any new development. At paragraphs 50 and 51 of the complaint, the plaintiffs assert that, despite being designated for improvement of the City of Madison's police and fire departments, parks, and streets, substantial amounts of impact fees were deposited into the City of Madison's general fund, commingled with other City revenues, and spent on various City improvement projects not necessarily connected to the aforesaid improvement "Plan." Furthermore, at paragraph 55 of the complaint, the plaintiffs contend that the City of Madison's impact fee ordinance is deficient in numerous ways, to include: no method for determining the amount of the fee; no connection between the fee paid by the developer and the developer's specific project; no requirement for timely expenditure; no tie to the actual cost of public facilities required by the development; no requirement measuring the actual burden a new development may create; and no requirement that the impact fees be earmarked for any specific purpose. In summary, the remainder of the plaintiffs' complaint asserts that the imposition of impact fees and the alleged mismanagement of these funds by the City of Madison violate the plaintiffs' rights to substantive and procedural due process under the United States Constitution; comprise an unconstitutional taking without just compensation; and transgress the plaintiffs' rights to equal protection. The plaintiffs also assert that the imposition of impact fees by the City of Madison constitutes an unauthorized and unconstitutional tax under State law.

On December 15, 1995, this court denied the plaintiffs' request for injunctive relief, finding that they had failed to show irreparable harm; that their remedy could be a refund of the impact fees collected, plus interest; and that the City of Madison had agreed to cease transferring impact fees into the City's general fund, thereby meeting the primary object of the plaintiffs' request for injunctive relief. At that time, the defendants informed the court that they intended to file motions to dismiss based upon immunity, standing, statute of limitations, and lack of subject matter jurisdiction. Those motions subsequently were filed and are now before the court. This court first addresses the defendants' motion to dismiss for lack of subject matter jurisdiction.

THE IMPACT FEE ORDINANCE

On March 4, 1986, the City of Madison enacted a Development Impact Fee Ordinance establishing the City of Madison Development Impact Fee Account for Capital Improvements (hereinafter "impact fee ordinance" or the "ordinance") to be paid by developers of single-family and multi-family dwellings. The preamble of the ordinance provides that the City of Madison's purpose for imposing impact fees was to "plan comprehensively for future growth and development within the City, including the providing of municipal services and facilities for its current and future residents...." The preamble further states that "the increase in residential development within the City will have a significant adverse impact on Madison's ability to continue providing essential municipal services and facilities...." The ordinance calls for adoption of a "Public Improvements Plan" (hereinafter the "PIP") which already had been developed and prepared for the City of Madison by the Local Planning Branch of the Mississippi Research and Development Center in Jackson, Mississippi. The PIP provides that the "funds collected and deposited in [a] ... special trust account shall be used for street improvements, fire department improvements, police department improvements, and parks and recreation improvements...."

The ordinance further provides that developers must pay impact fees as a condition precedent to obtaining a building permit. The prospective developer is required to pay to the City of Madison $175 .00 per residential lot (per residential dwelling in the case of multi-family housing) upon filing a preliminary plat for the subdivision proposed for development. Once the developer's...