Idaho Bldg. Contractors Ass'n v. City of Coeur d'Alene

• Citation: 126 Idaho 740,890 P.2d 326
• Decision Date: 22 February 1995
• Docket Number: No. 21231,21231
• Parties: , 63 USLW 2535 IDAHO BUILDING CONTRACTORS ASSOCIATION, an Idaho non-profit corporation, and Rod Underhill, d/b/a Underhill Construction and Remodeling, Plaintiffs-Respondents, v. The CITY OF COEUR D'ALENE, an Idaho municipal corporation, Defendant-Appellant. Boise November 1994 Term
• Court: United States State Supreme Court of Idaho

Page 326

890 P.2d 326

126 Idaho 740, 63 USLW 2535

IDAHO BUILDING CONTRACTORS ASSOCIATION, an Idaho non-profit corporation, and Rod Underhill, d/b/a Underhill Construction and Remodeling, Plaintiffs-Respondents, v. The CITY OF COEUR D'ALENE, an Idaho municipal corporation, Defendant-Appellant.

No. 21231.

Supreme Court of Idaho,

Boise November 1994 Term.

Feb. 22, 1995.

Lukins & Annis, Coeur d'Alene, for appellant. Charles W. Hosack argued.

Penland & Munther, Boise, for respondents. Forrest R. Goodrum argued.

TROUT, Justice.

This is an appeal from a declaratory judgment action in which Idaho Building Contractors Association (IBCA) sought a determination of whether the city of Coeur d'Alene (City) could impose an impact fee as a precondition to the issuance of a building permit. The district court granted summary judgment to IBCA based on a finding that the fee was void as an illegal tax imposed without an enabling statute. The City now appeals the adverse judgment.

I. BACKGROUND

On November 16, 1993 the Coeur d'Alene City Council passed Ordinance No. 2569 entitled "Development Impact Fee Ordinance." "Development impact fee" is defined by the ordinance as "a payment of money imposed as a condition of development approval to pay for a proportionate share of the cost of improvements needed to serve development...." Coeur d'Alene, Idaho, Ordinance No. 2569, § 14.01.020(I) (1993). "Development" is then defined by the ordinance as "any man-made change to improved or unimproved real property, the use of any principal structure or land, or any other activity that requires issuance of a building permit." Id. at § 14.01.020(H). The fees collected are to be spent on capital improvements which are The IBCA filed an action on behalf of its members, and moved for summary judgment based on the assertion that the Idaho Development Impact Fee Act (I.C. §§ 67-8201 to-8216) does not apply to the City, and therefore there is no statute empowering the City to collect the impact fees. The City filed its own motion for summary judgment arguing that the ordinance was a valid exercise of its police powers pursuant to art. 12, § 2 of the Idaho Constitution, and therefore, the ordinance only needed to pass a reasonableness test to be enforceable.

[126 Idaho 742] defined as public facilities, although from the preface to the ordinance the City is apparently referencing facilities and services including libraries, police, fire and circulation (streets). The fees range from $720 to $882 for a single family dwelling.

After a hearing, the district court granted IBCA's motion for summary judgment. The court found that the impact fee was not authorized by the Development Impact Fee Act because this Act applies only to cities in counties with populations greater than 200,000. The City is within Kootenai County which has a population of less than 200,000. The district court also ruled the impact fee was not a regulation which would be authorized under the police power granted by art. 12, § 2 of the Idaho Constitution, but rather was a tax. Determining that the impact fee was a tax, the court held that the legislature must enact a statute giving the City the authority to collect the impact fees.

II. STANDARD OF REVIEW

In reviewing the grant of summary judgment, we review all the pleadings, depositions, and admissions on file together with the affidavits, if any, to determine whether there is a genuine issue as to any material fact, and whether the moving party is entitled to a judgment as a matter of law. Harris v. State Dep't of Health & Welfare, 123 Idaho 295, 298, 847 P.2d 1156, 1159 (1993). In doing so we will construe all facts liberally in favor of the party opposing the motion, and will draw all reasonable inferences from the record in favor of the non-moving party. Id.

III. THE ORDINANCE IS NOT A VALID EXERCISE OF THE CITY'S POLICE POWERS

We begin our analysis with a brief review of the sources of authority by which a municipality can assess charges on the public or particular users. One source is by legislative enactment which specifically permits the municipality to fund a particular project through the assessment of taxes or fees, such as that upheld in Kootenai County Property Ass'n v. Kootenai County, 115 Idaho 676, 769 P.2d 553 (1989). The only legislation which may arguably permit the City to assess the impact fee it seeks here is the Development Impact Fee Act. That Act, as the district court found, is not applicable to this City and county which have a population of less than 200,000. ¹

Further authority is found in art. 7, § 6 of the Idaho Constitution which permits a municipal corporation to assess and collect taxes for all purposes of the corporation. However, that taxing authority is not self-executing and is limited to that taxing power given to the municipality by the legislature. Brewster v. City of Pocatello, 115 Idaho 502, 503-04, 768 P.2d 765, 766-67 (1988). Neither party has asserted, nor have we found, any statutory authority which would permit the assessment of a tax by the City for the public facilities it seeks to fund here.

Finally, it has long been recognized that "municipalities under art. 12, § 2 are empowered to enact regulations for the furtherance of the public health, safety or morals or welfare of its residents." Brewster at 504, 768 P.2d at 767 (citing Caesar v. State, 101 Idaho 158, 610 P.2d 517 (1980); Rowe v. City of Pocatello, 70 Idaho 343, 218 P.2d 695 (1950)). In addition, under its police powers The City argues that it has the power to enact an ordinance requiring impact fees to be paid upon the issuance of building permits, which fees will be used for various capital improvements for public facilities. The City argues that the fact that the fees are to be used for police, health, and safety needs illustrates that the collection of these fees is within the City's police powers granted by the Idaho Constitution.

[126 Idaho 743] the municipality may provide for "the collection of revenue incidental to the enforcement of that regulation." Id. at 504, 768 P.2d at 767 (citing Foster's, Inc. v. Boise City, 63 Idaho 201, 118 P.2d 721 (1941); State v. Nelson, 36 Idaho 713, 213 P. 358 (1923)). However, if the fee or charge is imposed primarily for revenue raising purposes, it is in essence a tax and can only be upheld under the power of taxation. Id.

Art. 12, § 2 of the Idaho Constitution provides:

Local police regulations authorized.--Any county or incorporated city or town may make and enforce, within its limits, all such local police, sanitary and other regulations as are not in conflict with its charter or with the general laws.

This provision only grants a city the limited authority to regulate for the purpose of exercising its police powers. The primary question presented in this appeal is whether this is a proper police power regulation, or is instead a tax.

In Loomis v. City of Hailey, 119 Idaho 434, 807 P.2d 1272 (1991), we articulated a two-part test in determining the propriety of city action. "First, we must determine whether the connection fee constitutes an impermissible tax. Secondly, we must determine whether the connection fee is appropriately and reasonably assessed." Id. at 437, 807 P.2d at 1275. Under the first step of the analysis, we consider whether, on its face, the impact fee is a tax or a regulation. If it at least appears to be a regulation, we then reach the question of whether or not it is reasonably related to the regulated activity. If it is not reasonably related to the regulation, then it is purely a revenue raising assessment, and once again is not permissible without a specific legislative enactment.

In the present case, we find that the first step of the analysis leads to the conclusion that the assessment is a tax, and not a regulatory fee. The City's impact fee ordinance purports to assess a fee to support additional facilities or services made necessary by the development, and to shift the cost of those additional facilities and services from the public at large to the development itself. Unfortunately there is otherwise nothing in the ordinance which in any way limits the use of the revenue created. It is to be used for "capital improvements" without limitation as to the location of those improvements or whether they will in fact be used solely by those creating the new developments. This is antithetical to this Court's definition of a fee. "[A] fee is a charge for a direct public service rendered to the particular consumer, while a tax is a forced contribution by the public at large to meet public needs." Brewster v. City of Pocatello, 115 Idaho 502, 505, 768 P.2d 765, 768 (1988).

The ordinance the City enacted states that the fees will be used for all public facility infrastructures, which again illustrates a shift from the development creating the demand to the public at large. Moreover, the impact fee is charged in addition to other administrative charges associated with building. The impact fee does not include the charge for the administrative or plan review, and does not cover hookup costs, drainage, sewer, water or other services. This demonstrates that the fee is not collected to pay for the individual services associated with a new building, but is for the public at large. The City argues that the impact fees are assessed against the individual applying for the building permit because this individual is responsible for an increase in the demand on public facilities such as police, fire, and libraries. However, the fact that the fee is collected every time a building permit is applied for illustrates the error in this argument. Under the City's ordinance, a Coeur d'Alene resident of forty years, who chooses to build...