Kyrene School Dist. No. 28 of Maricopa County v. City of Chandler, 1
| Decision Date | 03 April 1986 |
| Docket Number | No. 1,CA-CIV,1 |
| Parties | , 34 Ed. Law Rep. 302 KYRENE SCHOOL DISTRICT NO. 28 OF MARICOPA COUNTY, Plaintiff-Appellee. v. CITY OF CHANDLER, an Arizona municipal corporation, Defendant-Appellant. 7615. |
| Court | Arizona Court of Appeals |
On June 21, 1983, Kyrene School District No. 28 (Kyrene), a political subdivision of the State of Arizona pursuant to A.R.S § 15-101(15), filed a complaint against the City of Chandler (Chandler), also a political subdivision of the State of Arizona, to recover $12,600 paid under protest to Chandler as a "water system development fee" and $6,750 paid as a "wastewater system development fee."
Kyrene claimed that these charges were taxes from which Kyrene was exempt under the doctrine of intergovernmental tax immunity. See City of Tempe v. Arizona Board of Regents, 11 Ariz.App. 24, 461 P.2d 503 (1970). Chandler responded that the charges were not taxes but were fees imposed on Kyrene as a new user of its municipal water and sewer systems. Kyrene does not challenge the reasonableness of these charges. The appeal is directed to the distinction between a tax and a fee.
The trial court granted partial summary judgment to Kyrene on counts one and three of its complaint, holding that Chandler's water and wastewater system development charges were taxes and were wrongfully imposed on Kyrene based on the doctrine of intergovernmental immunity. Count two of Kyrene's complaint was dismissed pursuant to stipulation of the parties, and count four was dismissed as moot in light of the court's resolution of counts one and three.
It is from this judgment that Chandler appeals. The League of Arizona Cities and Towns appears as amicus curiae.
The facts of this case are undisputed. In 1981-1982, a new elementary school, Kyrene del Cielo, was built by Kyrene within the city limits of Chandler. Kyrene paid for the water and sewer mains adjoining the elementary school's property. Other expenses arising from placement of the mains were borne by the developer, U.S. Homes. Kyrene paid Chandler $1,800.00 for the installation of three, two-inch water meters at Kyrene del Cielo. Kyrene also pays to Chandler monthly water and sewer fees based upon water meter readings. The contested charges are not water and wastewater connection charges.
The charges are based upon Chandler City Code §§ 26-26.1 and 26-29.1.
Chandler City Code § 26-26 reads in part:
Policy established.
(a) There is hereby established as hereinafter set forth a policy and orderly program to provide domestic water service and sanitary sewer service for all areas and subdivisions within the city limits and those areas and subdivisions outside the city limits for which domestic water service and/or sanitary sewer service is desired.
Chandler City Code § 26-26.1 reads, in part:
Waste water system development charge.
In accordance with the policy for providing sanitary sewer service, beginning in July 1982 and on an annual basis each July thereafter, the director of public works shall establish waste water system development charges based on the council approved five-year waste water capital improvement program and council adopted water and waste water system master plan.
The waste water system development fee shall be paid at the time the building permit or the application for water/sewer tap is issued, whichever occurs first.
When a building permit is issued but no water/sewer tap application is made, the system development charge shall be based on maximum instantaneous flow required to serve the new building by a meter, the size of which shall be determined by the city engineer.
(a) A fee for the balance of calendar year 1980 and for calendar year 1981 is hereby established:
Single-family residence, per unit .. $450.00
Multifamily residence, per unit .... 420.00
Industrial and commercial units shall be charged based on waste water flow capability as determined by water meter size as follows:
(charge schedule omitted)
A commercial or industrial user may install a waste water flow meter approved by the director of public works when a consumptive use of water exists. Separate meters may also be requested on other water services which do not contribute to the waste water system. System development fees will be based on the maximum [instantaneous] capacity of waste water flow meter.
(b) All monies received from the waste water system development fees shall be deposited in the waste water development reserve fund to be used only for capital expansion and enlargement of the city waste water system and/or for retirement of debt service, both principal and interest, related to water and sewer system development.
Chandler City Code § 26-29.1 reads, in part:
Water system development charge.
In accordance with the policy for providing domestic water service, beginning in July 1982 and on an annual basis each July thereafter, the director of public works shall establish water system development fees based on the council approved five-year capital improvement program and council adopted water and waste water system master plan.
The water system development charge shall be paid at the time the building permit or the application for water/sewer tap is issued, whichever occurs first.
When a building permit is issued but no water/sewer tap application is made, the system development charge shall be based on maximum instantaneous flow required to serve the new building by a meter the size of which shall be determined by the city engineer.
(a) A fee for the balance of calendar year 1980 and for calendar year 1981 is hereby established:
Single-family residence ( 5/8 " x 3/4 ") ..... $560.00
Multiple family, commercial, industrial and other type units shall be charged based on the size of water meters or combinations of water meters as follows:
(charge schedule omitted)
(b) All monies received from the water system development fees shall be deposited in the water development reserve fund to be used only for capital expansion and enlargement of the city water system and/or for the retirement of debt service, both principal and interest, related to water and sewer system development.
Kyrene argues that the system development charges are taxes because it receives no requested specific benefit in return for them. Kyrene asserts that these charges are not related to the construction costs of the water and sewer lines, nor are they a part of the monthly service charge paid by Kyrene. It contends that the system development charges are for the purpose of raising revenue and are based on an "ability to pay" theory. That is, a greater charge for a larger water meter is based on the supposed "deep pocket" of the larger water services user rather than on actual service provided. Kyrene also argues that the system development charges are taxes because they are put to the general governmental purpose of providing citywide water and sewer service. Kyrene relies on Stewart v. Verde River Irrigation and Power District, 49 Ariz. 531, 68 P.2d 329 (1937) as well as numerous out-of-state cases to support its proposition.
We reject Kyrene's argument and hold that when the distinction between tax and fee in Stewart is applied in this case, the result is a fee not a tax. We therefore do...
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