MEMORANDUM
FROM:
Sid Hemsley, Senior Law Consultant
DATE:
March 19, 2009
RE:
Solid Waste Collection Fees
I have researched the question of whether the reference in Tennessee Code Annotated, '
67-5-103(c) to the billing of “special assessments” on property tax bills as authorized by ' 6-2201(19) applies only to general law mayor-aldermanic cities. As you recall, a few days ago I
orally opined that it might have been the intention of the General Assembly to have that statute
apply to all cities in Tennessee.
I have changed my mind about the answer to that question. My research convinces me
that the better view is that Tennessee Code Annotated, ' 67-5-103(c) applies only to special
assessments made under ' 6-2-201(19) of the general law mayor-aldermanic charter. It might
also be argued that Tennessee Code Annotated, ' 67-5-103(c) also applies to:
- The general law modified city manager-council charter by virtue of fact that ' 6-33101(a) of that charter provides that, “Every territory incorporating under the provisions of
chapters 30-36 of this title has all the power and authority enumerated in '' 6-2-201, 6-19-101
and 6-19-102.”
- The general law manager-commission charter because ' 6-19-101(19) of that charter is
similar to ' 6-2-201(19) of the general law mayor aldermanic charter, and identical as to the
“special assessment to the property owner” part of the statute.
But Tennessee Code Annotated, ' 67-5-103(c) could easily and expressly be made to
apply to all the general law charters, each of which has the “special assessment to the property
owner” provision. With respect to respect to private act and home rule cities, consideration
might also be given to opening Tennessee Code Annotated, ' 67-5-103(c) to such cities whose
charters have “special assessment to property owner” provisions.
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But there appears to be a threshold problem that needs to be looked at before such action
is taken: Most cities that impose solid waste regulation, collection and disposal charges probably
do not impose them as “special assessment[s] to property owner[s]”; rather, they probably charge
them as fees or user fees. In fact, it is often difficult to draw distinctions between what are called
“special assessments” “fees,” and “user fees.” The “special assessment to the property owner”
provisions in the general law charters and in Tennessee Code Annotated, ' 67-5-103(c), appear
to make it clear that in context of that latter statute the solid waste regulatory, collection and
disposal fee must be levied against the property. Indeed, that is probably the reason that statute
authorizes such an assessment to be billed on the property tax bill, and why it does not allow the
same thing for “fees” and “user fees” and “other charges.” In any case, note that the statute does
not allow the special assessment to be treated the same way as a property tax bill; no lien attaches
to the property, and no penalties or interest for late payment of the special assessment accrue.
Presumably, the property could not be sold for failure to pay the assessment.
Section 6-2-201(19) of the general law mayor-aldermanic charter provides that:
(19) Collect and dispose of drainage, sewerage, ashes, garbage,
refuse or other waste, or license and regulate their collection and
disposal, and the cost of collection, regulation may be funded by
taxation, special assessment to the property owner, user fees and
other charges;....
The general law manager-commission charter, ' 6-19-101(19) contains a similar
provision, as follows:
Collect and dispose of drainage, sewerage, ashes, garbage, refuse
or other waste, or liens and regulate such collection and disposal,
and the cost of such collection, regulation or disposal may be
funded by taxation or special assessment to the property owner; ....
The general law modified city manager-council charter, ' 6-33-101(a), also contains this
provision: “Every territory incorporating under the provisions of chapters 30-36 of this title has
all the powers and authority enumerated in '' 6-2-201, 6-19-101 and 6-19-102.”
Tennessee Code Annotated, ' 67-5-103(c) provides that:
With respect to municipalities that fund all or part of the cost of
waste disposal by special assessments to the property owner, as
authorized in ' 6-2-201(19), the special assessment may be
billed in the same manner as municipal real property taxes
notices, but shall not constitute a lien on any affected property
or accrue any penalties or interest for late payment. Any
municipality that exercises this method of waste disposal by
special assessment shall bear all costs of system modifications
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necessary to prepare property tax notices.
Note that Tennessee Code Annotated, ' 6-2-201(19) [general law mayor aldermanic
charter] and Tennessee Code Annotated, ' 6-19-102(19) [general law manager commission
charter] differ in the respect that the former authorizes municipalities to pay for the regulation,
collection and disposal of solid waste by taxes, special assessments to the property owner, and
user fees and other charges, and the later authorizes municipalities to pay for the cost of the
regulation, collection and disposal of solid waste by taxation or special assessment to the
property owner. Tennessee Code Annotated, ' 6-33-101(a) in a left hand fashion, authorizes
municipalities to pay for the regulation, collection and disposal of solid waste by both the
methods prescribed in the general mayor aldermanic and the general law manager-commission
charters.
A number of Tennessee cases undertake the distinction between taxes and special
assessments. That distinction indicates that by whatever name they might be called “special
assessments” for solid waste regulation, collection and disposal, are not taxes. However, only a
consideration of West Tennessee Flood Control & Soil Conservation District v. Wyatt, 247
S.W.2d 56 (Tenn. 1952), is necessary to make that point. In that case, the public act establishing
the plaintiff flood control district authorized the board of commissioners of the district to “levy
special assessments against any and all lands within the district which may be benefitted by said
improvements in an amount that is necessary, not to exceed fifty cents per acre in any one year,
said benefits to be determined by said Commissioners after a hearing before said board.” The
board of commissioners levied a general “special assessment” of $.50 per acre against all the land
in the flood control district. The principal question before the Court was whether the $.50 per
acre levy was a tax or a special assessment.
Holding that it was a tax, the Court distinguished between a tax and a special assessment:
Whether or not the Act in question is an unlawful delegation of the
taxing power is not determined by the term “special assessments.”
While the law recognizes differences between special assessments
and a tax, the purpose for which it is levied is controlling. The
differences between a special assessment and a tax are (1) a special
assessment can be levied only on land for special purposes; (2) a
special assessment is based wholly on lands benefitted. The
imposition of a charge on all property, real and personal in a
prescribed area, is a tax and not an assessment. Where the
assessment is to provide revenue for both general and special
purposes it must be denominated a tax as distinguished from a
special assessment. In other words if the money collected, all or
any part of it, is used for some purpose other than as a direct
benefit to the land assessed, it is a tax. The Constitution expressly
forbids the Legislature from delegating to a subordinate agency,
such as the defendant “Flood Control and Soil Conservation
District,” the power to levy such a tax. [At 58.]
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However, continued the Court, “It cannot be doubted that the Legislature has the authority
to select or create new governmental agencies and delegate to them the power to make ‘special
assessments’ for the benefit of lands located in a specified area.” [At 58] [Citations omitted.]
Why was the “special assessment” levied by the flood control district actually a tax
(which the district had no constitutional authority to levy)? The Court reasoned that:
1. The Act did not provide that the assessment levied be for any particular purpose. In
fact, it provided that the levy was “to provide revenue for the operation of the district.” [The
Court’s emphasis.]
2. The Act did not define the improvements to be made, nor for the filing of any pleading
or procedure specifying in detail the planned improvements.
3. The Act contained no planned procedures or specifications of any kind providing the
manner of determining special benefits and their ratio. The Court, citing an earlier case,
acknowledged the difficulty of formulating a plan or method by which to determine which and by
how much lands are benefitted by a local improvement project, but that difficulty did not negate
the requirement that the Act contain such a plan.
Finally, declared the Court:
The whole theory upon which “special assessments” are upheld as
not violative of constitutional limitations upon the power to tax, is
that the property assessed “will be specially benefitted thereby
above the benefits received by the public at large;” and, while the
results may not be such as are anticipated, still the principle holds
good. And it is likewise held that the burden may be apportioned
between the public and the property benefitted, and between the
property owners themselves, according to actual benefits expected,
or according to value, or, in some jurisdictions, according to the
area of frontage, as the Legislature may direct. [Arnold v. City of
Knoxville, supra [115 Tenn. 195, 90 S.W. 473.] [At 61.]
[Also see Reasoner v. Memphis, 39 S.W. 2d 1029 (1931); Rockwood v. Rogers, 290
S.W.2d 381 (1926); Obion County v. Massengill, 151 S.W.2d 156 (1941).]
Patterson v. City of Chattanooga, 241 S.W.2d 291 (Tenn. 1951) pointed out the
difference between taxes, user fees and special assessments:
‘As we have pointed out, sewer rental charges are not taxes or
special assessments, but possess commercial characteristics.’
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The same holds true in the instant cases. Here the user of water is
assessed a certain amount for the use of the sewer which under
ordinary circumstances is a necessary incident to for the user of
water to have to dispose of the sewerage and water after it is used
and polluted. It is upon these users alone that the charge is made
and not upon the property as a whole but as the various property
owners and properties become users of water they are charged for
this service measured by the quantity of metered water supplied
them...
The Court of last resort of Oklahoma im the case of Sharp v. Hall,
18 Okla. 678, 181 P.2d 972, 974, basing its opinion on an Alabama
case of Benson v. Andalusia, 204 Ala. 99, 195 So. 443, reached the
same conclusion. The Oklahoma Court saying: ‘such charges
assessed for the use of the sewer system cannot be construed as a
general tax. They are charges for special benefits received by
certain persons residing in The city, but not enjoyed by all.’ [At
293]
But in cases involving charges for municipal services of various kind, the use of the
words “assessed,” “special assessment,” “special benefits,” and similar language can be
confusing as to exactly the form and character of the charge at issue. Tennessee Attorney
General’s Opinion 83-466 makes a similar point. There one of the questions was whether the
“fire tax” levied by Shelby County was a tax or a fee, to which that opinion declared:
There is some doubt whether the charge for fire protection is
properly labeled a “fee,” since that term generally refers to a
payment made upon the voluntary use of a service. See Parking
Authority v. City of Trenton, 40 N.J. 251, 191 A.2d 289, (1963);
Jersey City Sewerage Authority v. Housing Authority, 40 N.J.145,
190 A.2d 870 (163); 16 E. McQUILLIN, THE LAW OF
MUNICIPAL CORPORATIONS ' 44.02. N.16 (3d ed. 1979).
Here property owners in rural Shelby County must pay the fee
whether they desire fire protection or not; the element of
voluntariness is wholly absent from the program. This charge
resembles a ‘special assessment,’ the legal term used when a
government furnishes a service and then assesses a charge against
those citizens who benefit from it. A citizen cannot choose to reject
the benefit from a special assessment, just as persons in rural
Shelby County cannot decline fire protection. A special
assessment generally is for a permanent improvement to property;
fire protection however, has been deemed a proper purpose for a
special assessment. See McCoy v. City of Sisterville, 120 W.Va.
471, 199 S.E. 260 (1938). The courts have not carefully preserved
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a distinction between fees and special assessment, [Emphasis is
mine.] and some charges have been deemed fees even though
citizens could not choose to avoid them by rejecting the service
offered. See Holman v. City of Dierks, 233 S.W.2d 392 Ark.
(1950) (fee imposed on each dwelling and business for spraying
the city with insecticide.) [Emphases are mine,]
In the instant case, it makes no real difference whether the charge
is characterized as a fee or a special assessment. Section 5-16101(a) authorizes counties ‘to charge fees, rates and charges,’ so it
too is not limited to fees....
It is clear that whether the fire protection charge is a fee or a
special assessment, it is not to be treated as a tax. ‘[T]axes are
burdens of a pecuniary nature imposed generally upon individuals
or property for defraying the cost of governmental functions’.
[Citation omitted by me.] They are payable into the general fund
to defray the customary governmental expenditures. Id. In
contrast, the instant charge is imposed only on those who benefit
from it, and only an amount necessary to pay for the service. It is
indisputable that mere fees imposed upon users of a municipal
service are not taxes. It is equally clear that ‘[a] special assessment
is not in the constitutional sense a tax at all.’ S. Siwel & Co. v. Los
Angeles County, 160 P.2d 789, 792 (Cal. 1945).
But note that TAG 84-446 itself creates some confusion about the form and character of a
special assessment, by declaring that, “This charge resembles a ‘special assessment,’ the legal
term used when a government furnishes a service and then assesses a charge against those
citizens who benefit from it...” In almost the next breath it declares that, “A special assessment
generally is for a permanent improvement to property.” That language does not clear up the
distinction between a user fee, which is a charge assessed against the user of a service, and a
special assessment, which is generally a charge assessed against the property, regardless of who
is the user, for the benefit received by the property. Obviously, the property owner is liable for
the special assessment against the property.
Here we come to the distinction that the Tennessee courts have made between a tax and a
fee. S & P Enterprises, Inc. v. City of Memphis, 672 S.W.2d 212 (Tenn. Ct. App. 1983), upheld
an amusement device regulation fee that the plaintiff argued was a tax. The city by affidavits
argued that the fee would produce revenue of around $225,000 and the implementation program
would cost $227,000. The Court observed that:
An occupational or a privilege tax embodies as its primary purpose
the creation and collection of revenue while a true license fee as
distinguished from such a tax should be fixed to cover the expense
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of issuing it, the service of officers and other expenses directly or
indirectly incident to the supervision of the particular business or
vocation. [Citing Macmillan v. City of Knoxville, 139 Tenn. 310,
202 S.W, 65 (1917). [At 215]
Such a fee, continued the Court, “is only required that the fees bear some reasonable relationship
to the expenses involved....” [At 217]
More recently, in City of Tullahoma v. Bedford County, 938 S.W.2d 408 (Tenn. 1197), it
is said that:
Whether the charge for depositing waste in a landfill is a tax or a
fee, even though denominated a tax, is determined by its purpose.
A tax is a revenue raising measure levied for the purpose of paying
the governments general debts and liabilities. Memphis Retail
Liquor Dealers’ Ass’n v. City of Memphis, 547 S.W.2d 244, 245-46
(Tenn. 1977). See City of Knoxville v. Lee, 159 Tenn. 619, 623, 21
S.W.2d 628, 629-30 (1929). 16 Eugene McQuillin, The Law of
Municipal Corporations, ' 44.02 (rev.3d ed. 1994). A fee is
imposed for the purpose of regulating a specific activity or
defraying the cost of providing a service or benefit to the party
paying the fee. [At 412] [Citations omitted.]
One of the most instructive cases on this distinction with respect to court costs is Crocker
v. Finley, 459 N.E.2d 1346 (Ill. 1997), and is cited with approval in City of Tullahoma v. Bedford
County, above. In Crocker, an Illinois statute required court clerks to collect a $5 filing fee in all
cases seeking a dissolution of marriage, which was to be used to fund shelters and other services
for the victims of domestic violence. Holding that the fee was actually a tax, the Court said:
A fee is defined as a “charge fixed by law for services of public
officers.” (Black’s Law Dictionary 553 (5th ed. 1979) and is
regarded as compensation for the services rendered (36 A C.J.S.
Fee, at 248 (1961)). Thus court charges imposed on a litigant are
fees assessed to defray the expenses of his litigation. On the other
hand, a charge having no relation to the services rendered, assessed
to provide general revenue rather than compensation, is a tax.
[Citation omitted.] [At 452]
In the general law mayor-aldermanic charter, cities have the option of paying for the
regulation, collection and disposal of solid waste by “taxation, special assessment to the property
owner, user fees, and other charges.” But the language in that charter, and in the other two general
law charters, about “[by] special assessment to the property owner,” and in Tennessee Code
Annotated, ' 67-5-103(a) does not appear to be a loose use of the term “special assessment.”
Rather, it is discrete term, in which the cost of the regulation, collection and disposal of solid
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waste are paid by the property owner, not by taxation, nor user fees or other charges. For that
reason, in order to obtain the benefit of Tennessee Code Annotated, ' 67-5-103(a), the charge for
solid waste regulation, collection and disposal must actually be a special assessment against the
property owner. Although West Tennessee Flood Control & Soil Conservation District v. Wyatt,
above, dealt with the question of whether the charge in that case was a tax or a special assessment,
it is worth reviewing for the purpose of determining what qualifications a charge must meet to be
a “special assessment to the property owner” in the context of the general law charters and
Tennessee Code Annotated, ' 67-5-103(a). The general law mayor-aldermanic charter, and
perhaps the other two general law charters, resolve the question of whether there is a state statute
authorizing the special assessment. But they do not contain any guidelines for how the special
assessment must be made. Generally, it appears that a special assessment statute or ordinance
must detail how that is to be done, based on some benefit to the property in question.
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