Jarvill v. City of Eugene

• Decision Date: 28 May 1980
• Citation: 289 Or. 157,613 P.2d 1
• Parties: Michael F. JARVILL, Petitioner, v. The CITY OF EUGENE et al., Respondents. Kenneth LICHTY, Petitioner, v. The CITY OF EUGENE et al., Respondents. CITY OF EUGENE, a Municipal Corporation of the State of Oregon, Respondent, v. GREAT WESTERN SCHISM, INC., an Oregon Corporation, Petitioner. CA 8516; SC 26299. . *
• Court: Oregon Supreme Court

Page 1

613 P.2d 1

289 Or. 157

Michael F. JARVILL, Petitioner, v. The CITY OF EUGENE et al., Respondents.

Kenneth LICHTY, Petitioner, v. The CITY OF EUGENE et al., Respondents.

CITY OF EUGENE, a Municipal Corporation of the State of

Oregon, Respondent, v. GREAT WESTERN SCHISM, INC., an Oregon Corporation, Petitioner.

CA 8516; SC 26299.

Supreme Court of Oregon, In Banc. ^*

Argued and Submitted Oct. 1, 1979.

Decided May 28, 1980.

[289 Or. 158-A] Larry R. Roloff, Eugene, argued the cause and filed briefs for petitioners.

Leslie M. Swanson, Jr., Eugene, argued the cause for respondents. With him on the briefs were Orval H. Etter and Johnson, Harrang & Mercer, Eugene.

James A. Redden, Atty. Gen., and Ira W. Jones, Sr. Asst. Atty. Gen., Salem, filed an amicus curiae brief for the Dept. of Revenue.

HOWELL, Justice

These three cases, consolidated for trial and appeal, involve a comprehensive challenge to the validity of a charter amendment and various ordinances enacted by the City of Eugene ("City") to revitalize its downtown core area. Eugene, like many other cities, became concerned that its downtown business area was not economically competitive with outlying shopping areas for various reasons, including the lack of adequate parking facilities.

In July, 1973, the voters approved an amendment to the charter conferring on the city council the power

"To establish, and from time to time to change the boundaries of, a downtown development district; for purposes of public parking facilities for vehicles in the district, of public transportation in, to, and from the district, and of economic promotion and development for the district, to tax persons, property, and economic enterprise in the district; and to establish one or more agencies to assist the city in the exercise of those powers." Eugene City Charter, ch. VII, § 48(70) (1973).

Pursuant to the charter amendment, the council enacted ordinances which provided free parking within the Downtown Development District ("District"), but which restricted parking by employers and employees of District businesses, by District residents, and by District hotel or motel guests. In order to finance and administer its economic development and its free parking programs, the City enacted ordinances for the levying of certain taxes. An ordinance allowed for an ad valorem real property tax by the City on real property in the District; ¹ another ordinance provided for a tax of $2.50 per $1,000 of gross retail sales and receipts from nonprofessional businesses within the District; and a third imposed a tax of $40 on professional businesses within the District for each quarter of the year per each professional and each employee of a professional.

In 1974 Jarvill and Lichty filed complaints for declaratory judgments in the Circuit Court of Lane County alleging that the City ordinances are unconstitutional. In 1975 the City sued Great Western Schism, owner of a retail store located within the District, to recover unpaid gross sales and receipts taxes levied in the District. Because Great Western Schism raised defenses identical to the complaints of Jarvill and Lichty, the circuit court consolidated the three cases. ²

In the trial court and in the Court of Appeals the plaintiffs have raised numerous contentions challenging the validity of the charter amendment and the City ordinances relating to the District taxes. Generally, plaintiffs contend that the taxes are unlawful or beyond the City's power. Plaintiffs also contend that the ad valorem property tax and the professional and nonprofessional business taxes violate the separate guarantees of equality found in Article I, sections 20 and 32, of the Oregon Constitution and in the fourteenth amendment to the United States Constitution in two general ways: (1) in that property and businesses within the District are taxed while similar property and businesses in other parts of the city are not subject to similar taxation; and (2) in that not all real property and not all businesses within the District are taxed equally. For these same reasons, and particularly because the taxes apply only to District property, plaintiffs contend that the District taxes violate the Uniformity of Taxation Clause of article I, section 32, of our state constitution. Finally, among a myriad of other less substantial challenges, plaintiffs contend that the restrictions on parking in the District violate art. I, § 20, of the Oregon Constitution and the fourteenth The trial court upheld the charter amendment and the taxing ordinances in all respects. The Court of Appeals affirmed the trial court except that the Court of Appeals sua sponte held that the tax court and not the circuit court had jurisdiction over plaintiffs' challenges to the validity of the ad valorem property taxes. 40 Or.App. 185, 594 P.2d 1261 (1979).

amendment to the United States Constitution. ³

We will first discuss the issue of whether the circuit court or the tax court had jurisdiction over the challenges to the ad valorem real property tax levied by the City on property within the District.

I. CIRCUIT COURT JURISDICTION

The exclusive jurisdiction of the tax court extends to "all questions of law and fact arising under the tax laws of this state." ORS 305.410(1). ⁴ Furthermore, the state legislature has provided that no person may contest in a circuit court any matter within the jurisdiction of the Oregon Tax Court. ORS 305.410(3).

The Court of Appeals reasoned that, because ad valorem property taxation in Oregon is comprehensively governed by state law, the City's property tax was levied under the tax laws of this state, and the challenges to the City's property tax presented questions of state tax law that are within the exclusive jurisdiction of the Oregon Tax Court. ⁵

Unfortunately the tax court jurisdiction statute has never been a picture of statutory clarity. Originally, ORS 305.410 provided that the tax court would be the "sole, exclusive and final authority for the hearing and determination of all questions of The first tax court jurisdictional problem encountered by this court involved the question whether the tax court had authority to issue a writ of mandamus to require a county assessor to extend a particular levy upon the county tax rolls. In Woodburn v. Domogalla, 238 Or. 401, 395 P.2d 150 (1964), we stated:

law and fact arising under the tax laws of the state in cases within its jurisdiction." Or.Laws 1961, ch. 533, § 12 (emphasis supplied). In the same legislation that created the Oregon Tax Court and added ORS 305.410, the legislature amended sections of ORS chapters 306, 308, 311 (all concerned with county property taxation regulated by state law), chapter 314 (state income taxation), and chapters 321 and 528 (state forest taxation) to expressly provide for appellate review of determinations and assessments in the fields of property, income, and forest taxation. See Or.Laws 1961, ch. 533, §§ 41 to 56. The original legislation therefore established a tax court with limited jurisdiction over three fields of taxation.

"The jurisdiction of the tax court is nowhere expressly defined. ORS 305.410 * * * is not helpful in defining the court's jurisdiction. It simply provides that in cases within its jurisdiction, whatever that may be, the tax court has the exclusive and final authority to adjudicate questions arising under the tax laws of this state." 238 Or. at 405, 395 P.2d at 152 (emphasis in original).

We held that the tax court's original jurisdiction to hear tax questions was limited and that mandamus cases were not "cases within its jurisdiction" under ORS 305.410.

The legislature responded to the Woodburn decision by amending the tax court statutes to provide the tax court with general (not limited) jurisdiction and the same powers as a circuit court to exercise all ordinary and extraordinary legal, equitable and provisional remedies. See, e. g., ORS 305.405, 305.435, 34.120; Or.Laws 1965, ch. 6, §§ 1, 6, 10. The legislature also amended the language of tax court jurisdiction to include jurisdiction over "proceedings" to set aside an order of the State Tax Commission, not just "appeals" from the State Tax Commission. See, e. g., ORS 305.425, 305.515, 321.470, 321.660, 321.765; Or.Laws 1965, ch. 6, §§ 3, 8, 13-15.

Presumably to further clarify its expansion of tax court powers, ⁶ the legislature changed the language of ORS 305.410. The phrase, "in cases within its jurisdiction," was deleted, and the legislature added a list of state levied taxes and assessments that "are not tax laws of this state" and therefore not within the exclusive jurisdiction of the tax court. Thus, ORS 305.410 was amended to substantially its present form. Or.Laws 1965, ch. 6, § 2. Two concepts remained, however. First, the legislature separately provided for tax court jurisdiction over specific taxes: the county property tax, the state income tax, and the state forest tax. ⁷ Second, where the legislature did not provide for jurisdiction over a specific tax, it generally provided for tax court jurisdiction over "the tax laws of this state," in ORS 305.410(1).

The City contends that tax laws enacted by a city government are "tax laws of this state," because a city's authority ultimately comes from the state. We do not agree. ORS 305.410(1) says "tax laws of this state." The plain and natural meaning of this phrase is that the tax law must be enacted by the state governmental authority. Cf. Girt et al v. Tri-Met et al, 4 OTR 92, 96-98 (1970).

This conclusion is supported by the legislature's use of the term "tax laws of this state" in ORS 305.410(1) when it listed the several tax laws that "are not tax laws of this state." ORS 305.410(1)(a) to (o). These On the other hand, we find no evidence that the legislature intended that tax laws enacted by a city government are "tax laws of this state" subject to the exclusive jurisdiction of the tax court by virtue of ORS...