Rogue Valley Sewer Servs. v. City of Phx.

Citation262 Or.App. 183,329 P.3d 1
Decision Date09 April 2014
Docket Number103450E2,A148968.
PartiesROGUE VALLEY SEWER SERVICES, an Oregon municipality, Plaintiff–Appellant, v. CITY OF PHOENIX, an Oregon municipality, Defendant–Respondent.
CourtCourt of Appeals of Oregon

262 Or.App. 183
329 P.3d 1

ROGUE VALLEY SEWER SERVICES, an Oregon municipality, Plaintiff–Appellant,
v.
CITY OF PHOENIX, an Oregon municipality, Defendant–Respondent.

103450E2; A148968.

Court of Appeals of Oregon.

Argued and submitted Sept. 28, 2012.
Decided April 9, 2014.


[329 P.3d 2]


Tommy A. Brooks, Portland, argued the cause for appellant.
Clark I. Balfour, Carla Scott, and Cable Huston Benedict Haagensen & Lloyd LLP filed the opening brief. With him on the reply brief were Clark I. Balfour and Carla Scott.

Kurt H. Knudsen argued the cause and filed the brief for respondent.


Before ARMSTRONG, Presiding Judge, and DUNCAN, Judge, and BREWER, Judge pro tempore.

ARMSTRONG, P.J.

At issue in this case is the validity of a City of Phoenix ordinance that imposes on Rogue Valley Sewer Services (RVS) a five percent fee on gross receipts that RVS collects from residents of the city for sewer services. RVS contends that the city is not authorized to charge the fee and seeks to enjoin the city from enforcing the ordinance. The trial court decided the issue on summary judgment and concluded that the city's ordinance was valid. RVS appeals, and we affirm.

The relevant facts are not disputed. RVS is a sanitary authority organized under ORS chapter 450. In 2004, RVS began providing sewer services to city residents pursuant to a contract with the city. SeeORS 450.830 (“The authority may furnish sewage disposal service to areas outside the authority on a contract basis.”). In 2006, the city residents passed a ballot measure that, with RVS's approval, annexed the city into the boundaries of RVS for sewer services.

The city is a home-rule municipality governed by a charter enacted in 2009. Among other things, the charter grants the city the following authority:

“Section 4. Powers. The city has all powers that the constitutions, statutes, and

[329 P.3d 3]

common law of the United States and of this state now or hereafter expressly or impliedly grant or allow the city, as fully as though this charter specifically enumerated each of those powers.

“Section 5. Construction of Powers. The charter will be liberally construed so that the city may exercise fully all powers possible under this charter and under United States and Oregon law. All powers are continuing unless a specific grant of powers clearly indicates the contrary.”

2009 Phoenix Charter, ch. II, §§ 4, 5.


In 2010, the city adopted ordinance 928, as amended by ordinance 931, which “imposes and levies an annual franchise fee in an amount equal to five percent of the annual gross revenue of RVS as defined herein. Such payment shall be in addition to taxes or fees, if any, owed to the city by RVS or that are imposed by law.” Phoenix Municipal Code § 13.20.030. The ordinance defines “gross revenue” as “any revenue * * * received by RVS from the operation of its business within the city limits of the city of Phoenix; provided, however, that such phrase shall not include [certain fees, debts, and other exclusions].” Id.

In the preamble to the adoption of ordinance 928, the city stated, among other things, that “it is the intent of the City to cover its full costs and the full impacts to its streets and rights of way in connection with the RVS sewerage system,” that “the primary purpose of the collection of a franchise fee from RVS is to regulate and reimburse the City for its costs associated with RVS, and not to raise revenue,” that “the intent of the City in enacting this ordinance is to allocate money collected from RVS only for costs and reimbursement connected with proper regulatory purposes,” and that “there is a direct relationship between the fee charged and the burden produced by the fee payer, RVS.” The preamble also stated that, in imposing the fee on RVS, the city relied on its implied authority to charge a franchise fee on a utility for operation in the city rights-of-way, “even absent an agreement between the City and the utility,” and ORS 450.815(7), which gives RVS the authority to use city rights-of-way for utility purposes, subject to complying with conditions of consent imposed by the city.

RVS brought this action seeking a declaration that the city's ordinance is invalid and an injunction prohibiting the city from attempting to collect the five percent franchise fee. RVS and the city both moved for summary judgment. RVS argued that the city's authority to impose a franchise fee on RVS was preempted by Oregon law. Specifically, RVS argued that the imposition of the fee constituted an impermissible regulation of RVS's utility rates because RVS would be required to raise rates to cover the fee and because the ordinance is inconsistent with ORS 221.420, which permits local governments to levy franchise fees against certain utilities, but not a sanitary authority, for use of public rights-of-way. The city argued that it was authorized to impose the fee based on its authority as a home-rule municipality to collect a franchise fee from a utility using the city rights-of-way; ORS 450.815(7), which requires a sanitary authority to comply with a city's conditions of consent to use the city rights-of-way; and the city's authority to impose conditions on a license to use the city rights-of-way.

The court granted the city's summary judgment motion and denied RVS's motion. In its order, the trial court framed the issue as “whether or not the City of Phoenix, Oregon, under its home rule charter can charge a franchise fee on sewer operations provide by [RVS].” The trial court concluded that “the analysis of the City of Phoenix in its motion and in its response to [RVS]'s motion is correct in that it has the authority to impose the fee.”

Following entry of the trial court's order, RVS lodged an objection to the city's proposed judgment. RVS asserted that the trial court's order had not disposed of all the issues in the case because it had not decided whether the amount of the city's franchise fee was reasonable. The trial court rejected RVS's objection, concluding that RVS had not challenged the reasonableness of the fee in its complaint, nor in its motion for summary judgment. The court concluded:

“To be sure, in arguing the ordinance is too broad, RVS cited the amount of the

[329 P.3d 4]

fee, but any such argument is subsumed within the argument about the propriety of the ordinance (assuming [the city] had the authority to enact it), and the [c]ourt's decision upholding [the city]'s authority to impose the fee, the content of the ordinance, and the imposition of the fee, disposed of RVS' argument about the amount of the fee.”

The court then entered a general declaratory judgment for the city as follows: “The City of Phoenix, Oregon has the authority under its home rule charter to impose a franchise fee on sewer operations provided by Rogue Valley Sewer Services. The City may impose the fee specified in its ordinance under this authority.”


RVS now appeals the general judgment, arguing that the trial court erred in concluding that the city was authorized to impose the five percent franchise fee, and, alternatively, that the court erred in granting summary judgment because genuine issues of material fact exist regarding the calculation of the fee. We may affirm the trial court's grant of summary judgment if, viewing the summary judgment record and making all reasonable inferences in favor of RVS, we determine that there is no genuine issue of material fact and that the city is entitled to judgment as a matter of law. Jones v. General Motors Corp., 325 Or. 404, 408, 420, 939 P.2d 608 (1997).

Turning to RVS's main concern, the validity of the city's franchise-fee ordinance, we begin with a well-settled general proposition articulated by the Supreme Court in La Grande/Astoria v. PERB, 281 Or. 137, 142, 576 P.2d 1204, adh'd to on recons.,284 Or. 173, 586 P.2d 765 (1978): “[T]he validity of local action depends, first, on whether it is authorized by the local charter or by a statute, * * *; second, on whether it contravenes state or federal law.” See also AT & T Communications v. City of Eugene, 177 Or.App. 379, 389, 35 P.3d 1029 (2001), rev. den.,334 Or. 491, 52 P.3d 1056 (2002) (“Whether a city has the authority to impose a tax * * * depends on two issues: First, whether the charter of the city confers the authority to impose the tax; and second, whether that authority has been preempted by state or federal law.”).

Although RVS had contended in the trial court that it “does not dispute” the general proposition that the city charter granted the city the authority to impose the fee at issue here, unless it was preempted by state or federal law, RVS now makes a more nuanced argument to us that that general proposition does not apply in this case. Essentially, RVS contends that, because RVS was formed under ORS chapter 450, and thus is a “local government” and a “public body” as those terms are defined in ORS chapter 174, the city must have a specific and express statutory grant of authority to charge the fee against RVS. In other words, in RVS's view, where a home-rule municipality seeks to impose a fee against another local governmental entity, the general proposition is reversed—instead of the city's fee being presumed to be valid under the broad charter authority (except as limited by state or federal law), the city's fee would be presumed to be invalid, unless the city can point to a specific and express grant of authority from the legislature to impose the particular fee at issue. We do not agree with RVS's proposition. The mere fact that RVS is organized as a sanitary authority under ORS chapter 450 does not serve to circumscribe the city's authority as a home-rule municipality.

In making its argument, RVS relies on two cases that issued before La Grande/Astoria—viz., Portland v. Multnomah County, 135 Or. 469, 296 P. 48 (1931), and Cent. Lincoln P.U.D. v. State Tax Com., 221 Or. 398, 351 P.2d 694 (1960). However, those cases do not stand for the broad principle that RVS...

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6 cases
  • Rogue Valley Sewer Servs. v. City of Phx.
    • United States
    • Supreme Court of Oregon
    • July 16, 2015
    ...the fee and that the sanitary authority's argument about reasonableness was unpreserved. Rogue Valley Sewer Services v. City of Phoenix, 262 Or.App. 183, 202, 329 P.3d 1 (2014). On review, we conclude that the home-rule doctrine is the proper framework for analyzing the fee at issue in this......
  • Nw. Natural Gas Co. v. City of Gresham
    • United States
    • Supreme Court of Oregon
    • May 5, 2016
    ...authority to impose the fee against people's utility districts, citing its decision in Rogue Valley Sewer Services v. City of Phoenix, 262 Or.App. 183, 329 P.3d 1 (2014). Northwest Natural Gas Co., 264 Or.App. at 39 n. 3, 330 P.3d 65. As discussed below, we have since affirmed that court's ......
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    • United States
    • Court of Appeals of Oregon
    • July 2, 2014
    ...unequivocal’—or the concurrent operation of the local and state law must be impossible.” Rogue Valley Sewer Services v. City of Phoenix, 262 Or.App. 183, 192, 329 P.3d 1 (2014). Accordingly, the parties' arguments require us to determine the intention of the legislature in enacting ORS 221.......
  • Tri-City Serv. Dist. v. Or. City, A160203
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    • February 14, 2018
    ...acknowledged was in conflict—or, at least, in tension with—this court's decision in Rogue Valley Sewer Services v. City of Phoenix , 262 Or.App. 183, 329 P.3d 1 (2014), aff'd , 357 Or. 437, 353 P.3d 581 (2015), plaintiff primarily argued that the fee bore the hall-marks of a tax because, in......
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