US v. City of Columbia, Mo.
| Decision Date | 23 March 1989 |
| Docket Number | No. 86-4003-CV-C-9.,86-4003-CV-C-9. |
| Citation | 709 F. Supp. 174 |
| Parties | UNITED STATES of America, Plaintiff, v. CITY OF COLUMBIA, MISSOURI, and Harold Boldt, Defendants. |
| Court | U.S. District Court — Western District of Missouri |
Linda L. Parker, Asst. U.S. Atty., Kansas City, Mo., Henry S. Friedman, Trial Atty., Tax Div., U.S. Dept. of Justice, Washington, D.C., for plaintiff.
Robert H. Freilich, Richard G. Carlisle, Stephen J. Moore, Kansas City, Mo., for defendants.
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
The United States claims that the payments in lieu of gross receipts tax ("PILOT") portions of utility bills submitted by the City of Columbia, Missouri, ("Columbia") to Harry S. Truman Memorial Veterans Hospital ("hospital") is a tax and, therefore, prohibited by the United States Constitution. Besides declaratory and injunctive relief, plaintiff seeks to recover a money judgment from defendants for monies paid to the City attributable to the PILOT assessment.
Presently before me is plaintiff's motion for summary judgment.
Rule 56(c), Federal Rules of Civil Procedure, provides that summary judgment shall be rendered if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." In ruling on a motion for summary judgment, it is the Court's obligation to view the facts in the light most favorable to the adverse party and to allow the adverse party the benefit of all reasonable inferences to be drawn from the evidence. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed. 2d 142 (1970); Inland Oil and Transport Co. v. United States, 600 F.2d 725, 727-28 (8th Cir.), cert. denied, 444 U.S. 991, 100 S.Ct. 522, 62 L.Ed.2d 420 (1979).
If there is no genuine issue about any material fact, summary judgment is proper because it avoids needless and costly litigation and promotes judicial efficiency. Roberts v. Browning, 610 F.2d 528, 531 (8th Cir.1979); United States v. Porter, 581 F.2d 698, 703 (8th Cir.1978). The summary judgment procedure is not a "disfavored procedural shortcut." Rather, it is "an integral part of the Federal Rules as a whole." Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986). See also City of Mt. Pleasant v. Associated Electric Cooperative, Inc., 838 F.2d 268, 273 (8th Cir.1988). Summary judgment is appropriate against a party who fails to make a showing sufficient to establish that there is a genuine issue for trial about an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex, 106 S.Ct. at 2553.
The moving party bears the initial burden of demonstrating by reference to portions of pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, the absence of genuine issues of material fact. However, the moving party is not required to support its motion with affidavits or other similar materials negating the opponent's claim. Id. (emphasis added).
The nonmoving party is then required to go beyond the pleadings and by affidavits, depositions, answers to interrogatories and admissions on file, designate specific facts showing that there is a genuine issue for trial. Id. A party opposing a properly supported motion for summary judgment cannot simply rest on allegations and denials in his pleading to get to a jury without any significant probative evidence tending to support the complaint. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).
A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. The evidence favoring the nonmoving party must be more than "merely colorable." Id. 106 S.Ct. at 2511. The inquiry to be made mirrors the standard for a directed verdict: whether the evidence presented by the party with the onus of proof is sufficient that a jury could properly proceed to return a verdict for that party. Id. Essentially, the question in ruling on a motion for summary judgment and on a motion for directed verdict is whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law. Id. 106 S.Ct. at 2512.
The Veterans Administration is an independent agency of the United States government which was created by Congress to administer the laws relating to benefits for veterans, their dependents and their beneficiaries. 38 U.S.C. § 201, et seq. The Harry S. Truman Memorial Hospital is located in Columbia, Missouri, and is administered by the V.A. Columbia provides water and electricity and water and electrical services (utility services) from Columbia's wholly owned utility plants to the Veterans' Hospital.
City Ordinance Sections 15.5701 and 15.6452 provide that the monthly electric and water charges shall include an "in lieu of gross receipts tax payment" (PILOT) equal to a specified percentage of the monthly utility rate charge. City Ordinance Sections 15.570 and 15.645 were enacted pursuant to City Charter Section 102. Section 102 provides that the City Council should establish rates, fees or charges for utility services furnished by the City's public works department to produce revenues sufficient to pay the cost of operation and maintenance of the public works, to pay the principal and interest on all revenue bonds of the City, to maintain an adequate depreciation fund for the making of renewals and replacements, to provide a fund for the extension, improvement or enlargement of the public works, to pay the interest and principal of any general obligation bond issued by the City to extend or improve the public works and "to pay into the general revenue fund of the City annually an amount substantially equivalent to that sum which would be paid in taxes if the water and electric light works were privately owned."3
On the monthly utility bill the amount of the PILOT is stated separately from the charges for electricity and water.4 The funds Columbia collects from the PILOT are earmarked for and deposited into the General Revenue Fund. Columbia uses the General Revenue Fund to finance the operation of Columbia.
Neither the United States nor any of its possessions, institutions or activities can be taxed by states or local subdivisions unless Congress consents. McCulloch v. Maryland, 17 U.S. (4 Wheat) 316, 4 L.Ed. 579 (1819); United States v. New Mexico, 455 U.S. 720, 734, 102 S.Ct. 1373, 1382, 71 L.Ed.2d 580 (1982); First Agricultural National Bank v. State Tax Commission, 392 U.S. 339, 340, 88 S.Ct. 2173, 2174, 20 L.Ed.2d 1138 (1968); Mayo v. United States, 319 U.S. 441, 63 S.Ct. 1137, 87 L.Ed. 1504 (1943).
By applying the three-part test set forth in United States v. Maine, 524 F.Supp. 1056 (D.Me.1981), plaintiff argues that the PILOT is a tax. The Maine court stated a charge imposed by a state upon the United States is a tax if it fails to meet any one of the three following conditions: 1) the charge must be imposed in a nondiscriminatory manner; 2) the charge must be "a fair approximation of the cost of the benefits" received; and 3) the charge must be structured to produce revenues that will not exceed the total cost to the government of the benefits to be supplied. Id. at 1059, citing Massachuetts v. United States, 435 U.S. 444, 98 S.Ct. 1153, 55 L.Ed.2d 403 (1978). Plaintiff concludes that the PILOT charge fails the second and third conditions.
Plaintiff also argues that the PILOT is "an enforced contribution to provide for the support of the government" which is the definition of a tax stated in United States v. LaFranca, 282 U.S. 568, 572, 51 S.Ct. 278, 280, 75 L.Ed. 551 (1931).
Columbia contends that:
The "PILOT" rate component is a profit, it is clearly not a tax, but simply the measure of profitability. That is, the City Charter has set the level of profit or reasonable return to be that figure which the city would have realized in taxes if the utilities were privately owned. Had the City Charter set profit by some mathematical formula unrelated to taxes or possible tax revenues, the government could not and would not contend that a tax was present or implicated. That is, if the Charter simply said that utility rates should include a 7.5268% return, we would not be here. But the fact that the City's profit or rate of return is measured by lost tax revenues should no more concern the federal government than a simple percentage of profit or return, assuming that the percentage is reasonable and applied equally to all consumers.
Defendants' suggestions in opposition at 11-12 (footnotes omitted).
In United States v. Maine, 524 F.Supp. 1056 (D.Me.1981) the issue was whether a "sliding scale of fees" imposed by the State of Maine on federal credit unions was a tax prohibited by the Supremacy Clause of the United States Constitution, Art. VI, cl. 2. The Maine court concluded that the three-prong test from Massachusetts v. United States, 435 U.S. 444, 464-67, 98 S.Ct. 1153, 1165-67, 55 L.Ed.2d 403 (1978) should be used to determine whether "sliding scale of fees" was a tax.
In Massachusetts, the Commonwealth of Massachusetts sought a refund of an annual aircraft registration tax imposed on the Commonwealth by the United States claiming that the United States had violated the implied immunity of a state government from federal taxation. The Supreme Court in Massachusetts never questioned and, in fact, assumed without discussion, that the annual aircraft registration tax was a tax. "The constitutional question presented in this case is whether this tax, as...
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U.S. v. City of Columbia, Mo.
...and electric light works were privately owned. City of Columbia, Mo., City Charter at Sec. 102 (quoted in United States v. City of Columbia, 709 F.Supp. 174, 177 n. 3 (W.D.Mo.1989)). Pursuant to section 102, the City Council enacted section 15.645 of the Columbia Code of Ordinances, impleme......