Larson v. City of Sullivan, ED 80469.

• Citation: 92 S.W.3d 128
• Decision Date: 01 October 2002
• Docket Number: No. ED 80469.,ED 80469.
• Parties: Merrill LARSON, et al., Appellants, v. CITY OF SULLIVAN, Missouri, Respondent.
• Court: Court of Appeal of Missouri (US)

92 S.W.3d 128

Merrill LARSON, et al., Appellants, v. CITY OF SULLIVAN, Missouri, Respondent.

No. ED 80469.

Missouri Court of Appeals, Eastern District, Division Three.

October 1, 2002.

Application for Transfer Denied January 28, 2003.

John W. Waller, Sullivan, MO, Dennis Owens, Kansas City, MO, for appellant.

Kevin M. O'Keefe, St. Louis, MO, Matthew A. Schroeder, Union, MO, for respondent.

Before MARY R. RUSSELL, P.J., CLIFFORD H. AHRENS and JAMES R. DOWD, JJ.

PER CURIAM.

Merrill Larson and other residents of the City of Sullivan ("residents") appeal from the judgment of the Circuit Court of Franklin County in favor of the City of Sullivan ("Sullivan") finding that tap-on fees ("fees") imposed upon residents for a new sewerage system are lawful. The trial court specifically determined that the applicable law authorizes these fees without voter approval, and that the fees are not an unreasonable, arbitrary and capricious exercise of power by the city. We affirm.

The citizens of Sullivan passed a sewage and water revenue bond on November 5, 1996. The specific question presented to voters was:

Shall the City of Sullivan, Missouri, issue its combined waterworks and sewerage system revenue bonds in the amount of $3,305,000 for the purpose of extending and improving the City's combined waterworks and sewerage system, the cost of operation and maintenance of said combined waterworks and sewerage system and the principal of interest on said revenue bonds to be payable from the revenues derived by the City from the operation of its combined waterworks and sewerage system, including all future improvements and extensions thereto?

Prior to the election, Sullivan mailed a flyer containing information about the project to households in the city. This brochure informed the homeowners that the cost of the new system would be paid for by the revenue bonds, existing city funds and access charges per household of $3,750 to $4,250. On July 6, 1999, city ordinance number 2581 was enacted providing for the payment of connection fees to the new sewerage system. Residents were charged $3,750 for a gravity connection or $4,250 for a grinder pump connection to the new system. Prior to this ordinance, the connection fee was $60 or $75 for the old system. People using the old sewer system were required to pay only the $60 or $75 connection fee. In addition to the connection fee, any person connecting to the new city sewer was required to pay an approved plumber to lay the lines from the resident's house to the property line for the system's hook-up. Prior to the enactment of the increased fee, a public hearing was held disclosing the amounts of the fees for the new sewer system.

After paying the fees, residents sued Sullivan asking that city ordinance number 2581 be declared null and void. Trial commenced on May 22, 2001. During the trial, evidence was presented that Sullivan provided the connection to the main line of the new system. A tap to the main line was required in order for the homeowners to connect to the new system, and Sullivan furnished the material and labor to make the actual incision to the main and insert the connection. Additionally, Sullivan ran a lateral line from the main to the property line of the homeowner. An inspection was also provided in return for the increased fee. Richard Ramstein ("Ramstein"), the city engineer, testified that grinder pumps, which were installed by the city to make the connection for some homes, cost an estimated $5,000. In addition to the cost incurred for the tap itself, Sullivan incurred the expense of running a lateral line from the main to the property line. According to Ramstein, the extension of this line cost Sullivan an average $20 to $30 per foot of line. He estimated that the average distance from the main to the property lines was 25 feet, and the cost Sullivan incurred to run the lateral line was approximately $1,500 on average. This spared the homeowner the expense of excavation and extension of the line from the main. The increased fee is used to compensate Sullivan for the charges incurred in providing the connection to the main line and extending the line to the property of the homeowner as well as for the inspection. On September 28, 2001, the trial court entered its judgment. The trial court found that the fees charged to residents were unfair in the context of an increase of fifty times from the fee charged for connection to the old sewer system, as well as there was a substantial financial hardship resulting from the increased fee. However, the court found that the fees were lawful. The court stated that applicable law, statutory and otherwise, authorized the fees in question without requiring voter approval. Additionally, the court determined that the fees were not an unreasonable, arbitrary and capricious exercise of power, nor were they induced by fraud, collusion or bad faith. Residents now appeal from the judgment of the trial court.

The judgment of the trial court will be sustained unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).

In their first point on appeal, residents claim that the trial court erred in granting judgment for Sullivan because city ordinance number 2581 levied a tax without a majority vote and as such was unconstitutional in violation of the Hancock Amendment to the Missouri Constitution. Article X, section 22 of the Missouri Constitution provides that "Mounties and other political subdivisions are hereby prohibited from ... increasing the current levy of an existing tax, license or fees ... without the approval of the required majority of the qualified voters of that ... political subdivision voting thereon." Residents argue that the connection fee imposed by ordinance number 2581 constitutes a fee subject to the Hancock Amendment and therefore the ordinance was unconstitutional because it was not approved by a majority of the voters in Sullivan.

In Keller v. Marion County Ambulance Dist, 820 S.W.2d 301 (Mo. banc 1991), the Missouri Supreme Court listed five factors which are to be considered in determining whether an increase is a "tax, license or fee" requiring voter approval under the Hancock Amendment. These are:

"1) When is the fee paid? — Fees subject to the Hancock Amendment are likely due to be paid on a periodic basis while fees not subject to the Hancock Amendment are likely due to be paid only on or after provision of a good or service to the individual paying the fee.

2) Who pays the fee? — A fee subject to the Hancock Amendment is likely to be blanket-billed to all or almost all of the residents of the political subdivision while a fee not subject to the Hancock Amendment is likely to be charged only to those who actually use the good or service for which the fee is charged.

3) Is the amount of the fee to be paid affected by the level of good or services provided to the fee payer? — Fees subject to the Hancock Amendment are less likely to be dependent on the level of goods or services provided to the fee payer while fees not subject to the Hancock Amendment are likely to be dependent on the level of goods or services provided to the fee payer.

4 Is the government providing a service or good? — If the government is providing a good or a service, or permission to use government property, the fee is less likely to be subject to the Hancock Amendment. If there is no good or service being provided, or someone unconnected with the government is providing the good or service, then any charge required by and paid to a local government is probably subject to the Hancock Amendment.

5) Has the activity historically and exclusively been provided by the government? — If the government has historically and exclusively provided the good, service, permission or activity, the fee is likely to be subject to the Hancock Amendment. If the government has not historically and exclusively provided the good, service, permission or activity, then any charge is probably not subject to the Hancock Amendment."

Id. at 311. The trial court determined that the connection fees were not subject to the Hancock Amendment under the applicable factors listed above. We affirm the decision of the court.

Residents do not address the first Keller factor in their brief, which is the timing of payment. The fee in question is not an amount due on a periodic basis, but rather, it is only assessed once. Thus, this factor is resolved in favor of Sullivan.

Next, we consider who pays the fee. Residents argue that "all or almost all of the residents of the political subdivision" are subject to the connection fee. However, we do not agree. Homeowners using the old sewer system were not required to pay the increased connection fee. Only those people who had not previously been connected to the old system were...