Williams v. Anne Arundel County

• Decision Date: 01 September 1993
• Docket Number: No. 56,56
• Citation: 334 Md. 109,638 A.2d 74
• Parties: Raymond J. WILLIAMS et al. v. ANNE ARUNDEL COUNTY, Maryland et al. ,
• Court: Maryland Court of Appeals

Page 109

334 Md. 109

638 A.2d 74

Raymond J. WILLIAMS et al. v. ANNE ARUNDEL COUNTY, Maryland et al.

No. 56, Sept. Term, 1993.

Court of Appeals of Maryland.

Feb. 14, 1994.

Reconsideration Denied April 8, 1994.

Robert J. Booze, argued and on brief (L. Dale Burgmeier, Burgmeier and Downer, on brief), Annapolis, for petitioner.

Judson P. Garrett, Jr., County Atty., argued and on brief (Jamie Baer Insley, Sr. Asst. County Atty., on brief), Annapolis, for respondent.

Frederick C. Sussman, Wright, Sussman & Elmore, P.C., on brief, Annapolis, amicus curiae.

Argued before MURPHY, C.J., and ELDRIDGE, RODOWSKY, McAULIFFE ^*, CHASANOW, KARWACKI and ROBERT M. BELL, JJ.

RODOWSKY, Judge.

This case involves the long-standing practice in Anne Arundel County of creating special community benefit tax districts in residential subdivisions in order to finance certain local improvements and services. Specifically, this case concerns Anne Arundel County Code (1985, 1993 Supp.) (A.A.Code), Art. 6, § 2-104(f-3) which creates the Cape St. Claire Community Benefit District (the District). Petitioners own real property in the District. They seek a judgment declaring invalid the ordinance creating the District, and they seek to enjoin collection of any tax levied under the authority of that ordinance by the Anne Arundel County Council on property in the District. Their principal contention is that the tax is not for a public purpose. The requested relief was denied by the Circuit Court for Anne Arundel County and, in an unreported opinion, by the Court of Special Appeals. For reasons hereinafter stated, we shall affirm.

The legal and historical background of the tax district concept, particularly as practiced in Anne Arundel County, will assist in understanding the issues presented here. ¹

I

It appears that the earliest special community benefit tax district in Anne Arundel County (the County) was Herald Harbor on the Severn, created by Chapter 261 of the Acts of 1929 for the purpose of constructing and maintaining roads within that community, as defined. Under the format there employed the Board of County Commissioners of Anne Arundel County (the Commissioners) appointed a five person board from among the area's residents, and that board annually recommended to the Commissioners the amount to be raised by special tax in the district to carry out the statutory purpose.

By Chapter 366 of the Acts of 1939 the General Assembly authorized the Commissioners

"to establish from time to time special zones ... and to furnish and provide special privileges or benefits to persons or property in such zones, and to levy special taxes or assessments upon property in such zones receiving special benefit to pay the costs of furnishing ... such special privileges or benefits."

Exercise by the Commissioners of the power conferred by Chapter 366 was conditioned on a petition, seeking creation of the zone, by a majority of the taxpayers therein and on publication.

The County has been a home rule county under Maryland Constitution Art. XI-A since November 1964. Article XI-A is implemented by the Express Powers Act, Md.Code (1957, 1990 Repl.Vol., 1993 Cum.Supp.), Art. 25A. One of the powers of chartered counties is to levy on land, improvements and personal property. Art. 25A, § 5(O). That provision was amended by Chapter 646 of the Acts of 1949 to confer power "to establish ... special taxing areas for any of the purposes enumerated in Article 25A...." ²

At this time there are forty-two special community benefit districts located throughout the County. Each was originally created by a public local law of the General Assembly, by a resolution of the Commissioners, or by an ordinance of the County Council. These enactments are codified in A.A.Code, § 2-104(b) through (bb). ³

Cape St. Claire is a residential community of some 2200 homes on the south shore of the Magothy River, near its entrance into the Chesapeake Bay. Development of Cape St Claire was begun in the 1940s by the River Bay Company which recorded subdivision plats and imposed covenants running with the land. The development plan included certain community property, consisting primarily of several beaches and parks. Recorded covenants require lot owners to pay a fee, apparently fixed at ten dollars per year, to the River Bay Company or its successor for the maintenance of community property. Title to the community property has been transferred to the Cape St. Claire Improvement Association, Inc. (the Association), a private membership corporation. Currently all persons owning property on the platted areas comprising Cape St. Claire are eligible for membership in the Association, but membership in the Association is limited to such persons.

In February 1989 a majority of the owners of the lots in Cape St. Claire petitioned the County Council, pursuant to A.A.Code § 2-103, for the establishment of a special community benefit district in Cape St. Claire. The District was created by Bill No. 19-89, enacted April 24, 1989, and codified as A.A.Code, § 2-104(f-3). Its purposes are:

"(i) maintenance of community property, including lawn care, trash removal, repair, lighting, paving, and erosion prevention;

"(ii) special security for community property;

"(iii) acquisition, improvement, and construction of real and personal community property; and

"(iv) funding administrative expenses incidental to carrying out these purposes, including mailing, secretarial, auditing, insurance, and legal costs."

§ 2-104(f-3)(2). The special community benefit tax in the District is "a uniform assessment for each real property tax account." A.A.Code § 2-106(d)(3). ⁴

"Unless otherwise provided by law, special taxing district budget requests [are] prepared by the board of directors of the civic or community association administering the district and submitted to the property owners for their comments...." A.A.Code § 8-106(a). Final budget requests must be submitted to the Anne Arundel County Budget Office on or before January 31 of each year. § 8-106(b)(1). These budget requests must include "[a] detailed listing of the purposes to which the special taxing district funds are to be applied." § 8-106(c)(1). The budget request must also state "the rate of special taxing district tax." § 8-106(c)(4).

The County charter embodies an executive budget system. A special taxing district must satisfy the County Executive that the requested appropriations be included in the County's annual budget and appropriation ordinance. See County Charter § 706 and, e.g., Bill No. 54-93 (the County Budget and Appropriation Ordinance for the fiscal year ending June 30, 1994). The County Council, with certain exceptions not here relevant, may decrease or delete any item from the budget as proposed, but the County Council may not "increase any expenditure recommended by the County Executive." Charter § 709. A special community tax district's annual tax must also be included in the ordinance of levy for special tax districts. See, e.g., Bill No. 55-93 for the fiscal year ending June 30, 1994.

Special benefit taxes are collected and enforced in the same manner as County real property taxes. A.A.Code § 2-107. The County Controller deposits a special tax district's tax collections into a special account. A.A.Code § 2-108(a). The Controller releases these collections to "[t]he Treasurer or other fiscal officer of each special community benefit district." § 2-108(b). Those recipients must be bonded. Id. Disbursements are made monthly after deduction of a fee paid to the general fund of the County of five percent of the collections, subject to an annual ceiling of $1,000 per tax district. § 2-108(c). Under pain of fine or imprisonment for violation of the restriction, "[f]unds disbursed to a special community benefit district shall be expended only for the purposes for which appropriations have been made in the budget as enacted by the County Council." § 2-108(d) and (e).

It is clear from the foregoing that the legal theory underlying the forty-two special community benefit districts in Anne Arundel County is that they are special benefit assessment areas. Thus, the special taxes levied in those areas are special benefit assessments. "The use of such 'special assessments' has a long history in the United States." O. Reynolds, Jr., Local Government Law § 99, at 300 (1982) (footnote omitted). In Gould v. Mayor & City Council of Baltimore, 59 Md. 378 (1883), this Court contrasted special assessments with the general property tax, saying:

"The right to make such assessments is undoubtedly an exercise of the taxing power, but an assessment thus made differs from a general tax levied for State and city purposes. The latter is a tax imposed on all persons within the territorial limits according to the value of their property, in consideration of the protection, which the government affords alike to all. A local assessment, on the other hand, is a tax levied occasionally as may be required upon a limited class of persons interested in local improvement, and who are presumed to be benefited by the improvement over and above the ordinary benefit which the community in general derive from the expenditure of the money. In the payment of the assessment thus made, the adjacent owner is supposed to be compensated by the enhanced value of his property, arising from the improvement."

Id. at 380.

"In order to justify a special assessment for a local improvement ... there must be both a public purpose and a special benefit to the properties to be assessed over and above that accruing to the public." Montgomery County v. Schultze, 302 Md. 481, 489, 489 A.2d 16, 20 (1985). See also Silver Spring Memorial Post No. 2562, Veterans of Foreign Wars v. Montgomery County, 207 Md. 442, 448, 115 A.2d 249, 251 (1955). One treatise expands on the concept, as follows:

"In order to justify a local assessment the improvement must be a public one; that is,...