Homebuilders Ass'n of Charlotte, Inc. v. City of Charlotte

• Citation: 336 N.C. 37,442 S.E.2d 45
• Decision Date: 08 April 1994
• Docket Number: No. 133PA93,133PA93
• Parties: HOMEBUILDERS ASSOCIATION OF CHARLOTTE, INC. v. The CITY OF CHARLOTTE.
• Court: United States State Supreme Court of North Carolina

Page 45

442 S.E.2d 45

336 N.C. 37

HOMEBUILDERS ASSOCIATION OF CHARLOTTE, INC. v. The CITY OF CHARLOTTE.

No. 133PA93.

Supreme Court of North Carolina.

April 8, 1994.

On discretionary review pursuant to N.C.G.S. § 7A-31 from a decision of the Court of Appeals, 109 N.C.App. 327, 427 S.E.2d 160 (1993), reversing judgment entered 18 July 1991 by Lewis, J., in Superior Court, Mecklenburg County. Heard in the Supreme Court 15 October 1993.

Murchison & Paulson by Alton G. Murchison, III, David F. Paulson, Jr., and C. Phillip Wells, Charlotte, for plaintiff-appellant and appellee.

Office of the City Atty. by Henry U. Underhill, Jr., City Atty., and Cynthia Cline Reid, Asst. City Atty., Charlotte, for defendant-appellant and appellee.

J. Michael Carpenter, Raleigh, for North Carolina Homebuilders Ass'n, amicus curiae.

S. Ellis Hankins, Gen. Counsel, and Robert E. Hagemann, Asst. Gen. Counsel, Raleigh, for North Carolina League of Municipalities, amicus curiae.

FRYE, Justice.

In this appeal The City of Charlotte [hereinafter the City] contends that the Court of Appeals erred in reversing the trial court's order of declaratory judgment in its favor and remanding for entry of declaratory judgment in favor of Plaintiff, Homebuilders Association of Charlotte, Inc. [hereinafter the Association]. The Court of Appeals held that the City had no authority to impose "user fees" absent enabling legislation from the General Assembly. "There being no such authority here, user fees shall not be collected under the authority of § 2-4 of the Code of the City of Charlotte from and after the certification date of this opinion." Homebuilders Ass'n of Charlotte, Inc. v. City of Charlotte, 109 N.C.App. 327, 336, 427 S.E.2d 160, 165 (1993). The Association agrees with the Court of Appeals' decision and argues that it should be applied retroactively. We conclude that the trial court correctly held that the City had authority to impose the fees in question and that the Court of Appeals erred in reversing that decision. Accordingly, we need not reach the question of retroactivity.

In February of 1986, a fifteen-member Joint City-County Citizens' Revenue Committee was appointed by the Mayor of the City and the Chairperson of the Mecklenburg County Commission. The Committee requested that the City and Mecklenburg County consider the implementation of user fees for a variety of governmental regulatory services and for the use of public facilities. In response to this request, the City and County hired Arthur Young and Company, an accounting and management consulting firm, to conduct a comprehensive study to determine the cost of certain regulatory services provided by the City and County and to recommend fees for those services where appropriate. On 22 August 1988, the City Council passed a resolution implementing a policy whereby user fees would be charged for a number of city regulatory services and rental of publicly owned facilities. The fee schedule was codified in Section 2-4 of the Code of the City of Charlotte which provides:

There is hereby established a schedule of user fees for services performed by city departments. Fees shall be set by user fee policies established by the city council and shall be computed in accordance with the methodology set forth in the Arthur Young "User Fees Study of August, 1987," a copy of which is available for inspection in the city's budget and evaluation office. This schedule may be revised from time to time by the city manager, or his designee to reflect additional costs to the city for providing these services.

Whenever any user fee on the schedule referred to above may be found to be in conflict with a fee for the same or a similar service set out elsewhere, the fees in the user fee schedule shall supersede any prior existing fee.

The complete schedule of user fees shall be available for inspection in the office of the city clerk, and a schedule of user fees for each department shall be conspicuously posted in the appropriate department. (Ord. No. 2553, § 1. 12-12-88)

On 25 May 1990, the Association filed a complaint seeking declaratory relief pursuant to N.C.G.S. § 1-253 et seq. to declare invalid and unenforceable Section 2-4 of the Code of the City. The Association also sought to permanently enjoin the City from collection of the fees until and unless the North Carolina General Assembly expressly granted such power to the City. Both parties moved for summary judgment and a hearing was held before Judge Robert D. Lewis at the 18 April and 16 May 1991 Civil Sessions of Superior Court, Mecklenburg County. A declaratory judgment order in favor of the City was entered on 18 July 1991 from which the Association appealed. The Court of Appeals reversed the trial court's declaratory judgment order and remanded the cause for entry of declaratory judgment in favor of the Association. On 3 June 1993, we allowed both parties' petitions for discretionary review.

For purposes of this appeal, the parties stipulated the following:

6. User Fees have been imposed and are being collected by the City, on, among others, the following City services:

(a) Commercial Driveway Permit Review

(b) Commercial Drainage Plan Review and Inspection

(c) Commercial Inspection (Building Permit Site Inspection)

(d) Erosion Control Review and Inspection and Issuance of Grading Permit

(e) 100 + 1 Floodplain [sic] Analysis

(f) Rezoning Review

i. Single-family districts

ii. Multi-family districts

iii. All other districts

(g) Right-of-Way Abandonment (Permanent Street Closing)

(h) Right-of-Way Encroachment

(i) Special Use Permit (Minor)

(j) Special Use Permit (Major)

(k) Storm Drainage Problem Study

(l ) Subdivision Reviews

i. Preliminary Review:

Single family (No Streets)

ii. Preliminary Review and Inspection:

Single Family (With Streets)

iii. Preliminary Review and Inspection:

(Non-residential)

iv. Planned Multi-Family Review and Inspection

v. Final Plat Review

vi. Final Plan Revisions

vii. Final Condominium Plat Review

(m) Tree Ordinance Review

(n) UMUD Review

The amount of user fees assessed varies depending upon the type of service provided. For example, the fee schedule with an effective date of 1 July 1990 provides that the cost for commercial drainage plan review and inspection is a flat fee of $80 while a sliding fee based on acreage is charged for services such as grading permits.

The parties have also stipulated that the City has the following express authority:

8. The City has express authority pursuant to N.C.G.S. § 160A-371 and 381 to regulate the zoning and subdivision of land.

9. The City has express authority pursuant to N.C.G.S. § 160A-296 and 299 to regulate its streets and alleys.

10. The City has express authority pursuant to N.C.G.S. § 160A-458 to enact and enforce erosion and sedimentation control ordinances as authorized by Article 4 Chapter 113A of the General Statutes.

11. The City has express authority pursuant to Chapter 115 of the 1975 Session Laws to enact and enforce ordinances regulating removal, replacement, and preservation of trees.

The law is well-settled that "a municipality has only such powers as the legislature confers upon it." Koontz v. City of Winston- Salem, 280 N.C. 513, 520, 186 S.E.2d 897, 902 (1972). In the instant case, the extent of municipal powers granted to the City is at issue; thus, a brief history of the construction of legislative grants of authority to municipalities is in order.

A long-standing rule of construction, generally known as "Dillon's Rule," was applied as early as the mid-1870's by North Carolina courts. See, e.g., Smith v. New Bern, 70 N.C. 14 (1874); Porsh Builders, Inc. v. City of Winston-Salem, 302 N.C. 550, 276 S.E.2d 443 (1981), appeal after remand, 61 N.C.App. 682, 301 S.E.2d 530, rev. denied, 308 N.C. 675, 304 S.E.2d 757 (1983). Judge John F. Dillon stated the rule in his treatise on municipal corporations as follows:

[A] municipal corporation possesses and can exercise the following powers and no others:

First, those granted in express words; second, those necessarily or fairly implied in or incident to the powers expressly granted; third, those essential to the accomplishment of the declared objects and purposes of the corporation,--not simply convenient, but indispensable.

Dillon, Commentaries on the Law of Municipal Corporations, § 237 (5th ed. 1911).

The generally accepted rule today seems to be that the municipal power to regulate an activity implies the power to impose a fee in an amount sufficient to cover the cost of regulation. Lawrence, Local Government Finance in North Carolina, § 311, at 67 (2d ed. 1990); Eugene McQuillen, The Law of Municipal Corporations, § 26.27 (3d ed. 1986 rev. ed.); see also Oak Park Trust & Savings v. Mount Prospect, 181 Ill.App.3d 10, 129 Ill.Dec. 713, 536 N.E.2d 763, appeal denied, 127 Ill.2d 621, 136 Ill.Dec. 591, 545 N.E.2d 115 (1989); Coulter v. City of Rawlins, 662 P.2d 888 (Wyo.1983).

In 1971, the North Carolina General Assembly enacted a comprehensive rewrite of the municipal statutes, codified as North Carolina General Statutes Chapter 160A, effective 1 January 1972. 1971 N.C.Sess.Laws ch. 698. Article 8 of this Chapter is entitled "Delegation and Exercise of the General Police Power." Section 160A-174 of Article 8 sets out the general ordinance-making power of municipalities as follows:

(a) a city may by ordinance define, prohibit, regulate, or abate acts, omissions, or conditions, detrimental to the health, safety, or welfare of its citizens and the peace and dignity of the city, and may define and abate nuisances.

N.C.G.S. § 160A-174(a) (1987).

In section 160A-175, municipalities are given specific powers to enforce their ordinances and section 160A-177 provides that the enumeration of "specific powers to regulate, restrict or prohibit acts, omissions, and conditions shall not be deemed to be exclusive or a limiting factor upon the general authority to adopt...