NEWPORT COURT CLUB ASSOC. v. Town Council of Middletown

• Decision Date: 19 June 2002
• Docket Number: No. 2000-7-Appeal.,2000-7-Appeal.
• Citation: 800 A.2d 405
• Parties: NEWPORT COURT CLUB ASSOCIATES d/b/a Newport Athletic Club et al. v. TOWN COUNCIL OF THE TOWN OF MIDDLETOWN et al.
• Court: Rhode Island Supreme Court

800 A.2d 405

NEWPORT COURT CLUB ASSOCIATES d/b/a Newport Athletic Club et al. v. TOWN COUNCIL OF THE TOWN OF MIDDLETOWN et al.

No. 2000-7-Appeal.

Supreme Court of Rhode Island.

June 19, 2002.

Present: LEDERBERG, BOURCIER, FLANDERS, GOLDBERG, JJ., and WEISBERGER, C.J. (ret.).

Randall L. Souza, Providence, for Plaintiff.

Steven M. Richard/Peter J. McGinn, for Defendant.

OPINION

LEDERBERG, Justice.

If the General Assembly authorizes the town council of a home-rule municipality to include charges for sewer-related debt service and capital costs on its sewer bills, does the levy need to be approved by a town referendum? It is our opinion that it does not require voter approval in this case in which the plaintiff, Newport Court Club Associates d/b/a Newport Athletic Club (Newport Court or plaintiff),¹ has challenged the constitut ionality of a statute that authorized the town council of the Town of Middletown (the town) to charge the town's sewer users and abutters for the debt service and capital costs of the town's sewerage system. A Superior Court judgment denied Newport Court's request for a permanent injunction against the collection of sewer fees for the 1999-2000 tax year and for a declaratory judgment that the challenged statute and the town's 1999-2000 sewer budget are unconstitutional and void. Newport Court appealed; we affirm the judgment.

Facts and Procedural History

Middletown's home-rule charter became effective in 1968. Under the Middletown sewer enabling act (the act) that predated the charter, the town was authorized to issue bonds and temporary notes and to prescribe annual charges for users in order to construct and maintain a sewer system. Public Laws 1941, ch. 1103, as amended, inter alia, by P.L.1958, ch. 138, §§ 3, 5, 9. Each year, under this authority, the town has issued sewer bills to Middletown's owners of property connected to the town's sewerage system. In 1993 and 1994, Newport Court and several other commercial property owners sued the town, alleging, inter alia, that the town lacked the authority to include charges for debt service and capital costs in its sewer bills. Newport Court Club Associates v. Town Council of Middletown, 716 A.2d 787, 789 (R.I.1998) (Newport Court Club I). This Court agreed and held that any authority to assess such charges must derive from an act of the General Assembly. Id. at 790. This Court further pointed out that the Middletown sewer enabling act had never been amended to allow such authority, and at the time Newport Court Club I was decided, the act "specifically prohibit[ed] Middletown from assessing sewer users for debt service incurred as a result of the construction of the sewer system." Id.

In April 1999, presumably in response to this Court's opinion in Newport Court Club I, the town council passed a resolution supporting and approving the introduction of state legislation to amend the act to permit the town — at its discretion — to charge sewer users for the cost of debt service and capital improvements related to the sewerage system. The General Assembly enacted such legislation in July 1999 and authorized the town to include the cost of "construction, capital improvement, [and] debt service" in its annual sewer charges, "as the town council deems appropriate." Public Laws 1999, ch. 318, § 1 (the 1999 authorization or amendment). The 1999 authorization also provided that "[p]ayment for such bonds and notes may be apportioned among all taxpayers or only among the users of the sewerage works, as the town council deems appropriate," and it deleted a requirement directing that "[t]he cost of construction of the sewerage works and the debt service on obligations issued therefor shall be met from the general funds of the town." Id. The 1999 legislative authorization was not submitted to the town's electors for approval.

In reliance on the authorization, the town passed its 1999-2000 sewer budget with sewer assessments that undisputedly included charges attributable to debt service. The 1999-2000 budget did not include any charges under the line item for capital costs, although Newport Court claimed that charges attributable to construction costs and capital improvements were included in the guise of maintenance and repair. For the purposes of this opinion, we assume that both debt service and capital costs were included in the town's 1999-2000 sewer budget.

Newport Court filed suit against the town council of the town, by and through its members, and against the State of Rhode Island, by and through the Attorney General² (collectively, defendants), requesting a decla ratory judgment that the 1999 authorization was unconstitutional and, consequently, that the town's 1999-2000 sewer budget was null and void. Newport Court also sought a permanent injunction to prevent the town from issuing sewer bills and collecting sewer fees based on the 1999-2000 budget. Its motion for a temporary restraining order was denied, and the trial justice ordered that Newport Court's request for a preliminary injunction be expedited and consolidated with a hearing on the merits, pursuant to Rule 65(a)(2) of the Superior Court Rules of Civil Procedure.

On September 3, 1999, one week before the first installment payments were due under the contested sewer bills, the trial justice issued a written decision in favor of defendants. After final judgment was entered, Newport Court appealed and argued that absent a town referendum, the 1999 authorization (1) violated the home-rule provision of the Rhode Island Constitution, (2) deprived the town's sewer users of due process and equal protection under the law, and (3) represented an unconstitutional delegation of power by the General Assembly.³ Additional facts will be added as required in addressing the issues on appeal.

Standard of Review

In assessing Newport Court's challenge to the constitutionality of the 1999 authorization, "we begin with the principle that legislative enactments of the General Assembly are presumed to be valid and constitutional." Rhode Island Depositors Economic Protection Corp. v. Brown, 659 A.2d 95, 100 (R.I.1995). "In addition, the party challenging the constitutional validity of an act carries the burden of persuading the court that the act violates an identifiable aspect of the Rhode Island or United States Constitution." Id. (citing Brennan v. Kirby, 529 A.2d 633, 639 (R.I.1987)).

The material facts in this case were undisputed, and the trial justice resolved disputed issues as a matter of law. We review de novo questions of law and also mixed questions of law and fact in which constitutional issues are involved. Rhode Island Depositors Economic Protection Corp. v. Bowen Court Associates, 763 A.2d 1005, 1007 (R.I.2001); Foley v. Osborne Court Condominium, 724 A.2d 436, 439 (R.I.1999).

Home Rule

On appeal, Newport Court argued that the 1999 authorization violated article 13, section 4,⁴ of the Rhode Island Constitution, which requires that specific legislation affecting "the property, affairs and government" of a particular home-rule community be approved by a majority of the town's electors. The town, on the other hand, contended that the 1999 authorization was enacted pursuant to the Legislature's exclusive authority under section 5 of article 13,⁵ and therefore, the enactment did not require the approval of the local electorate.

We agree with Newport Court's assertion that, in general, once a town has duly adopted a home-rule charter pursuant to article 13, section 2,⁶ of the state constitution, the General Assembly may not enact special legislation affecting a local matter in that particular town unless the legislation is approved by a majority of the qualified electors of the town. R.I. Const. art. 13, sec. 4; Bruckshaw v. Paolino, 557 A.2d 1221, 1223 (R.I.1989); Opinion to the House of Representatives, 79 R.I. 277, 280, 87 A.2d 693, 696 (1952). We further recognize that the regulation of sewers and drains, including the power to expand and maintain a sewerage system, is generally a matter of purely local concern. Newport Court Club I, 716 A.2d at 790; Westerly Residents for Thoughtful Development, Inc. v. Brancato, 565 A.2d 1262, 1264 (R.I.1989).

Notwithstanding its impact on a local matter, however, a general or special act of the Legislature that authorizes a city or town to assess taxes or to borrow money does not require local voter approval because the General Assembly retains exclusive power under article 13, section 5, over matters relating to municipal taxation and borrowing. R.I. Const. art. 13, sec. 5; Warwick Mall Trust v. State, 684 A.2d 252, 254-55 (R.I.1996); Opinion to the House of Representatives, 79 R.I. at 280, 87 A.2d at 696. As this Court reaffirmed in Warwick Mall Trust's in-depth analysis of this issue :

"[U]nder the Rhode Island Constitution, the General Assembly retains its plenary power to enact special tax-enabling laws in relation to a particular city or town, notwithstanding that municipality's adoption of a home rule charter. And it can do so without having first to obtain the voters' approval in that home-rule municipality because local tax-enabling acts * * * that affect a city's power to levy, to assess, and to collect property taxes or to borrow money are not subject to article XIII, section 4's requirement of local voter approval." Warwick Mall Trust, 684 A.2d at 255.

Therefore, the question of whether local voter approval was required before the 1999 authorization could be implemented turns on whether the amendment constituted authorization "to levy, assess and collect taxes or to borrow money" under article 13, section 5.

On this question, the trial justice found:

"Whether the assessments amount to fee, taxes, or any other title, they have already been declared by the Supreme Court in Newport Court Club I to be permitted only by the General Assembly."

Having so found, the trial justice concluded:

"The analysis in this matter...