Mayor of Ocean Springs v. Homebldrs. Ass'n

• Decision Date: 15 June 2006
• Docket Number: No. 2004-CC-01278-SCT.,2004-CC-01278-SCT.
• Parties: MAYOR AND BOARD OF ALDERMEN, CITY OF OCEAN SPRINGS, Mississippi v. HOMEBUILDERS ASSOCIATION OF MISSISSIPPI, INC., et al.
• Court: Mississippi Supreme Court

932 So.2d 44

MAYOR AND BOARD OF ALDERMEN, CITY OF OCEAN SPRINGS, Mississippi v. HOMEBUILDERS ASSOCIATION OF MISSISSIPPI, INC., et al.

No. 2004-CC-01278-SCT.

Supreme Court of Mississippi.

June 15, 2006.

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Ralph Preston King, II, Robert H. Freilich, E. Tyson Smith, John B. Edwards, II, attorneys for appellants.

Steven H. Smith, Benny McCalip "Mac" May, Jackson, Robert Quentin Whitwell, Jr., Ashland, William Lee Guice, III, Biloxi, attorneys for appellees.

Before COBB, P.J., DICKINSON and RANDOLPH, JJ.

RANDOLPH, Justice, for the Court.

STATEMENT OF THE CASE

¶ 1. The Mayor and Board of Aldermen of the city of Ocean Springs (collectively "City") adopted a Comprehensive Plan, which included separate impact fee ordinances which authorized the assessment, collection, and expenditure of "development impact fees" for various municipal improvements, services, equipment, and vehicles. In its Development Impact Fee Procedures Ordinance, the City defined a development impact fee as:

A fee relating to a capital expenditure or service provided by the City which is imposed on new development as a condition of approval of such development as a pre-requisite to obtaining development approval and which is calculated to defray all or a portion of the costs of capital improvements required to accommodate new land development at city-designated level of service standards and which reasonably benefits the new land development.

¶ 2. The Home Builders Association of Mississippi, Inc. appeared at three public hearings conducted by the City regarding impact fees. Representatives of the Home Builders repeatedly commented on and protested each of the ordinances, to no avail, as the ordinances were approved by the City. The impact fees were to be paid in addition to any and all other applicable land-use, zoning, planning, adequate public facilities, platting, or other related fees, requirements, standards, and conditions imposed by the City.

¶ 3. After the City's adoption of the ordinances, The Home Builders Association of Mississippi, Inc.; Home Builders Associations of the Mississippi Coast, Inc.; Southeast Mississippi Home Builders Association, Inc.; Mississippi Association of Realtors, Inc.; Gulf Properties, Sole Proprietorship; Greg Williams; Kim Williams; Gulf Coast Association of Realtors, Inc.; WRH Properties, Inc.; Singleton Development; Carl B. Hamilton, Inc.; Louis W. Breland; Adams Homes, LLC; Cove Partners, LLC; Troy Vincent Homes, LLC; L.H.F., Inc.; Randall Corp. of Mississippi; James E. Platt; Pierce Blakenship; Gulf Coast Properties, Inc./Secured Mini Storage; Lifestyles 2000, Inc.; Anchor Realty & Development, Inc.; Mangum One, LLC; Charles Carr; and Magnolia State Development Group, LLC (collectively "Appellees")¹ filed a Bill of Exceptions appealing the adoption of the impact fee ordinances. Appellees claimed that the impact fees constituted facial and per se illegal taxes which the City did not have the power to enact. The City filed a Receipt and Addendum to the Bill of Exceptions, objecting to certain alleged facts and law asserted in the Bill of Exceptions.

¶ 4. The parties submitted the case to the Jackson County Circuit Court ("Circuit Court"), and after briefing and oral argument, the Circuit Court held the impact fees to be a void taxing measure. By subsequent order, the Circuit Court denied the City's Motion for a Stay and enjoined further collection of impact fees by the City. The City was directed to submit an accounting of fees already collected and a plan for their refund. The City appeals the ruling of the Circuit Court.²

STANDARD OF REVIEW

¶ 5. "The appellate court should not determine whether it would adopt the ordinance in question; instead it should determine whether the City's decision to adopt the ordinance is reasonable and supported by substantial evidence." City of Biloxi v. Hilbert, 597 So.2d 1276, 1281 (Miss.1992). "The law is well settled that a decision of the Mayor and Board of Aldermen in such matters will not be disturbed unless the decision was arbitrary, capricious, discriminatory or beyond the legal authority of the board...." City of New Albany v. Ray, 417 So.2d 550, 552 (Miss.1982) (citations omitted).

¶ 6. The Circuit Court found the impact fees were actually taxes, and the ordinances were unconstitutional, i.e., beyond the legal authority of the City. The learned circuit judge opined the issue is one for the Legislature rather than the courts. "On appeal of a trial court judgment rendered subsequent to a bench trial where the judge has sat as the fact-finder, we afford deference to the trial judge." Chantey Music Pub., Inc. v. Malaco, Inc., 915 So.2d 1052, 1055 (Miss.2005). "A circuit court judge sitting without a jury is accorded the same deference with regard to his findings as a chancellor and his findings are safe on appeal where they are supported by substantial, credible, and reasonable evidence." City of Jackson v. Perry, 764 So.2d 373, 376 (Miss.2000). We are required to give deference to the findings of the trial judge unless they are "manifestly wrong or clearly erroneous." Martin v. Lowery, 912 So.2d 461, 464 (Miss.2005) (quoting Bowers Window & Door Co. v. Dearman, 549 So.2d 1309, 1312 (Miss.1989)).

STATEMENT OF THE FACTS

¶ 7. The impact fee ordinances (collectively "Ordinances") adopted by the City established and authorized the procedures for the assessment, collection, and expenditure of impact fees for various public improvements and services.

¶ 8. The Ordinances at issue are as follows:

(1) Development Impact Fee Procedures Ordinance

(2) General Municipal Facilities Development Impact Fee Ordinance

(3) Fire Facilities Development Impact Fee Ordinance

(4) Park and Recreation Facilities Development Impact Fee Ordinance

(5) Police Facilities Development Impact Fee Ordinance

(6) Major Roadways Development Impact Fee Ordinance

(7) Water Facilities Development Impact Fee Ordinance ¶ 9. In order to establish the necessity and amount of impact fees, the City commissioned a needs study that projected the extent of capital facilities and infrastructure that each new unit of development generates; the level of service required; the projected costs of providing infrastructure per unit of development; and then established impact fees required to be paid, as a condition to development approval, to assure the development's adequate provision for infrastructure. The Preamble to the Procedures Ordinance states, in pertinent part,

Whereas the Board of Aldermen has studied the necessity for and implications of the adoption of development impact fees for public facilities and has prepared a detailed development impact fee calculation methodology for each public facility for which a development impact fee shall be imposed, which calculation methodology shall result in development impact fees which impose upon the fee payor no more than a proportionate share of the costs incurred by the city in providing system improvements to serve the new development; and

Whereas the City has retained Freilich, Leitner, Carlisle Planning Works, LLC and Kemp Associates, PA, to prepare a development impact fees report, to evaluate existing development impact fees and consider additional development impact fees and has commissioned a development impact fee report; and

Whereas the Board of Aldermen has found the use of development impact fees to be consistent with the Ocean Springs Comprehensive Plan.

¶ 10. In conformance with the Development Impact Fees Report, the City considered the following factors in establishing impact fees:

1) Land use assumptions,

2) Population projections,

3) City adopted level of service standards,

4) City capital improvement plans for each public facility,

5) City capital improvement cost figures.

¶ 11. Section 15 of the Procedures Ordinance, which gave the power to the City's Board of Aldermen to make annual adjustments to the fees, stated:

On July 1, 2004, and on July 1st of each year thereafter in which this Ordinance is in effect, the amount of any development impact fee may be automatically adjusted to account for inflationary increases in the cost of providing public facilities utilizing the most recent 20-city annual national average data from the Engineering News Record Construction Cost Index. The City Clerk shall make the automatic annual adjustment unless the Board of Aldermen has, in its Annual Review, determined an alternate adjustment. Nothing herein shall prevent the Aldermen from electing to retain existing development impact fees or from electing to waive the inflation adjustment for any given fiscal year.

(emphasis added).

¶ 12. Under Section 16 of the Procedures Ordinance, the City will not approve a final plat or issue a building permit or certificate of occupancy until the applicant demonstrates that all impact fees have been paid to the City.

¶ 13. The Development Impact Fees report further states the calculation methodology used by Ocean Springs in the adoption of the ordinances is "not cast in stone" and that "all assumptions and variables are subject to change over time."

¶ 14. The City submits that adoption of impact fee ordinances are permissible as a police power measure, and are reasonably authorized by the City's Home Rule authority under Miss.Code Ann. Section 21-17-5; or, in the alternative, by general planning and zoning statutes. The City argues the regulations are reasonably related and roughly proportional to the need generated by the development, and the City submits the impact fee ordinances are reasonable and proportionate to the needs of Ocean Springs.

¶ 15. Appellees contend that the City officials assumed authority in violation of Article 4, Section 80 of the Mississippi Constitution and that regardless of how reasonable the City's fees are, the City was without authority to adopt the fees, and whether the impact fees are reasonably related or...