Montgomery County v. Waters Landing Ltd. Partnership
| Decision Date | 01 September 1993 |
| Docket Number | No. 627,627 |
| Citation | 99 Md.App. 1,635 A.2d 48 |
| Parties | MONTGOMERY COUNTY, Maryland v. WATERS LANDING LIMITED PARTNERSHIP et al. , |
| Court | Court of Special Appeals of Maryland |
H. Christopher Malone, Sr. Asst. County Atty. and John J. Fisher, Asst. County Atty. (Joyce R. Stern, County Atty., on the brief), Rockville, for appellant.
Stephen W. Swartz, Bethesda, for appellee, Waters Landing.
Harry W. Lerch (Robert G. Brewer, Jr., Mark S. Antonvich and Lerch, Early & Brewer, on the brief), Bethesda, for appellee, Bellemead.
C. Robert Dalrymple, Todd D. Brown and Linowes and Blocher, on the brief, Silver Spring, for appellee, The Milton Co., etc.
Morton S. Gottlieb, on the brief, pro se.
Argued before CATHELL, MOTZ and MURPHY, JJ.
Montgomery County, appellant, appeals the decision of the Circuit Court for Montgomery County holding that a development impact tax was invalid. Appellees, the Milton Company and Milton Knightsbridge Limited Partnership (Milton), Waters Landing Limited Partnership (Waters Landing), Bellemead Development Corporation (Bellemead), and Morton S. Gottlieb (Gottlieb), are the taxpayers. Appellant raises the following issues on appeal:
1. Whether the Court of Appeals in Eastern Diversified [v. Montgomery County, 319 Md. 45, 570 A.2d 850 (1990) ] decided whether Montgomery County had the authority to enact a development impact tax under Chapter 808, Laws of Maryland 1963.
2. Whether Montgomery County had the authority to enact a development impact tax under Chapter 808 and this authority was confirmed and clarified by Chapter 707, Laws of Maryland 1990.
3. Whether the development impact tax enacted in 1990 violates the Equal Protection Clause of the United States Constitution.
4. Whether Montgomery County had the authority under Chapter 808 to enact a development impact tax and therefore, the County could correct retroactively any errors or defects in the original enactment of the tax.
5. Whether the original enactment of the development impact tax in 1986 substantially complied with the notice provisions of Chapter 808.
6. Whether a County or Municipality may enact a law to take effect contingent upon the subsequent enactment by the General Assembly of enabling legislation.
7. Whether the development impact tax is an excise tax and not a tax on intangible personal property.
8. Whether the Maryland Tax Court's [j]urisdiction is established by statute and can not be expanded by County law, consent of the parties, or estoppel.
9. Whether a premature appeal to the Maryland Tax Court must be dismissed for want of jurisdiction.
In 1986, Montgomery County enacted a development impact fee that was codified as Sections 49A-1 through 49A-14 of the Montgomery County Code. The development impact fee was a "fee" assessed on new construction within designated areas in Montgomery County, namely Germantown and Eastern Montgomery County, and had to be paid before a building permit would be issued for the new construction. The fee was assessed on a pro rata basis to fund a portion of the unprogrammed highway improvements needed to accommodate the traffic generated by new development. A developer challenged the County's authority to enact the fee. Montgomery County claimed it had authority under the County's home rule powers granted in the Express Powers Act, Md.Code (1957, 1987 Repl.Vol.), Art. 25A § 5. The issues were taken to the Court of Appeals, which held that:
In this case, the development impact fee imposed on new development is exacted solely for revenue purposes, is an involuntary payment of money, and the funds raised by the fee are used to finance road construction which benefit the general public. Chapter 49A thus imposes a tax which Montgomery County is without authority to enact, and the development impact fee is therefore invalid.
Eastern Diversified v. Montgomery County, 319 Md. 45, 55, 570 A.2d 850 (1990). In a footnote, the Court stated that "We do not decide whether the tax in this case is an excise, a property, or another type of tax." Id.
Chapter 808, Laws of Maryland 1963 was on the books at that time. Montgomery County, in its brief before the Court of Appeals, argued that if the Court held the fee invalid under Article 25A, the Court should hold that it is a valid tax under Chapter 808. Eastern Diversified argued that the Court should not address whether the fee would be valid as a tax under Chapter 808 because this issue was not raised below. The Court of Appeals declined to address Chapter 808, apparently because it had not been addressed at the trial court.
Thereafter, in response to Eastern Diversified, Montgomery County reimposed the impact fee as a tax in Emergency Bill 33-90 adopted April 27, 1990, which was codified in Sections 52-47 through 52-59 of the County Code under the authority of Chapter 808. Section 3 of Emergency Bill 33-90 provided that the act legalized and ratified the collection of all impact fees and taxes since July 29, 1986. The General Assembly then enacted Chapter 707, Laws of Maryland 1990, effective June 1, 1990 with the "purpose of clarifying and confirming the authority of Montgomery County to impose ... development impact taxes...." The development impact tax was then challenged by appellees in the case sub judice.
Gottlieb, Milton, and Bellemead paid impact taxes, were issued building permits, filed claims for refunds which were denied, and appealed to the Tax Court. The County is contending that Gottlieb filed his appeal to the Tax Court before the County acted on his request for a refund. Waters Landing submitted a letter of credit in lieu of payment of impact taxes and was issued building permits. It did not file a claim for refund but nevertheless appealed to the Tax Court.
The Maryland Tax Court made the following findings:
[The Court of Appeals in Eastern Diversified did not hold that] the County is without authority to impose an impact tax[, but rather it held] ... that the County cannot [sic] impose a tax and call it a fee.... [T]he grant of taxing authority by the Legislature to Montgomery County was not considered by the Court to be a relevant concern.
The impact tax is an excise tax which Montgomery County may enact through the authority vested by Chapter 808 of the Laws of Maryland, 1963. However, it did not do so until the effective date of Emergency Bill 33-90, April 27, 1990.
....
... [T]here is nothing for the County to adopt and validate because the impact fee was a nullity. [The impact tax may not be retroactively applied because the bill reimposing the fee as a tax] ... does not rectify a technical defect. There is a substantial change from the unauthorized fee to the authorization of a tax. The power of imposition, standing alone, cannot create retroactively, a tax the County now says it intended to levy.
... [T]o the extent Bill 33-90 is retroactive, it is invalid....
....
... [T]he impact tax applied to the assigned impact tax districts ... [is] rationally and reasonably based. [There is no] ... violation of [the] [E]qual [P]rotection [Clause in the 14th Amendment to the United States Constitution.]
....
... [Gottlieb] appealed to ... [the Tax] Court pursuant to the direction of the County. [There is] ... appropriate jurisdiction and no basis for dismissal.
The County appealed the Tax Court's decision to the Circuit Court for Montgomery County. The circuit court's findings, which we rephrase as follows, include:
The Court of Appeals in Eastern Diversified held that Montgomery County did not have authority under Chapter 808, Laws of Maryland 1963 to enact a development impact tax.
Since the County did not have authority under Chapter 808, the County did not have authority to enact such a tax until Chapter 707 became effective and therefore, the tax could not be retroactively applied.
Waters Landing had standing to appeal to the Tax Court because the posting of the bond is tantamount to payment.
Gottlieb had standing because the October 4th letter notifying him of the validity of the tax was tantamount to a denial of a request for a refund.
The development impact tax, in its current form, violates Article 15 of the Maryland Declaration of Rights in the Maryland Constitution which requires uniform treatment as to the assessment of property taxes.
The notification requirements of Chapter 808 were not met.
The development impact tax was not an excise tax but a tax on an intangible.
This appeal followed.
Montgomery County contends that the Court of Appeals, in Eastern Diversified, did not decide whether it had authority to enact an impact tax under Chapter 808, Laws of Maryland 1963. The Tax Court found that the Court of Appeals did not consider the authority to enact a development impact tax in general under Chapter 808, but instead, considered the authority of the County to enact a tax which it called a fee. The Tax Court held that the County was without authority to enact a tax in that manner under Chapter 808. The circuit court interpreted Eastern Diversified as holding that the county did not have authority under Chapter 808 to enact a development impact tax. The Tax Court and the circuit court were incorrect. The Court of Appeals stated in Eastern Diversified:
In this case, the development impact fee imposed on new development is exacted solely for revenue purposes, is an involuntary payment of money, and the funds raised by the fee are used to finance road construction which benefit the general public. Chapter 49A thus imposes a tax which Montgomery County is without authority to enact, and the development impact fee is therefore invalid.
Eastern Diversified, 319 Md. at 55, 570 A.2d 850. In footnote 4, the Court of Appeals stated "We do not decide whether the tax in this case is an excise, a property, or another type of tax." Id.
The holding of the Court of Appeals in Eastern Diversified is that...
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