Case Title: City of Challis v. Consent of the Governed Caucus

Citation: 

Docket Number: 41956

State: idaho

Court: Idaho Supreme Court (civil)

Date: 2015-08-20T00:00:00Z

Document:
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IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 41956 
 
THE CITY OF CHALLIS, an Idaho  
municipal corporation, 
       Petitioner-Respondent, 
v. 
CONSENT OF THE GOVERNED CAUCUS,  
An Idaho unincorporated nonprofit  
association; and CLARENCE LEUZINGER,  
an individual, 
       Respondents-Appellants. 
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Boise, February 2015 Term 
 
2015 Opinion No. 92 
 
Filed: September 25, 2015 
 
Stephen Kenyon, Clerk 
 
SUBSTITUTE OPINION, THE 
COURT’S PRIOR OPINION 
DATED AUGUST 20, 2015 IS 
HEREBY WITHDRAWN. 
 
Appeal from the District Court of the Seventh Judicial District of the State of  
Idaho, Custer County.  Hon. Alan C. Stephens, District Judge. 
 
The judgment of the district court is reversed and the case is remanded for 
proceedings consistent with this opinion. 
 
 
Sawtooth Law Offices, PLLC, Boise, for appellants.  David P. Claiborne argued. 
 
 
Moore Smith Buxton & Turcke, Chtd., Boise, for respondent.  Paul J. Fitzer  
  
argued. 
                     _______________________________________________ 
 
HORTON, Justice. 
This appeal from Custer County relates to proposed repairs and improvements to the City 
of Challis’ (the City) water distribution system. In 2013, the City initiated a judicial confirmation 
proceeding seeking approval to incur $3.2 million in debt without a public vote. The Consent of 
the Governed Caucus (the Caucus) challenged the constitutionality of the City’s request based 
upon Article VIII, section 3 of the Idaho Constitution. The district court granted the City’s 
request and the Caucus appealed. We reverse. 
I. FACTUAL AND PROCEDURAL BACKGROUND 
The City maintains a drinking water distribution system. In December of 2011, the City 
commissioned the services of Riedesel Engineering to determine the present and future adequacy 
of the system with respect to laws and standards of the local fire authority, the Idaho Department 
 
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of Environmental Quality (DEQ), and the United States Environmental Protection Agency. 
Riedesel Engineering issued its Challis Water System Facility Plan (the Riedesel Report) in 
February of 2012, outlining aspects of the water system that needed repair and improvement.  
The City initiated this action on August 29, 2013, under Idaho’s Judicial Confirmation 
Law, Idaho Code sections 7-1301, et seq. The City sought approval to incur $3.2 million in 
public indebtedness without a public vote for work on the City’s water distribution system. On 
October 1, 2013, the Caucus appeared and challenged whether the indebtedness was “necessary” 
under the Idaho Constitution. An evidentiary hearing was held on January 17, 2014. At the 
hearing, the City presented testimony from its Mayor, Superintendent of Public Works, and 
Engineer. The Caucus presented testimony from an engineer it had retained.  
Three components comprised the proposed work on the City’s water system: (1) 
replacement of meters and installation of a new telemetry system, (2) construction of a new 
pipeline to the airport, and (3) replacement of aging pipes and fire hydrants in “Old Town.”1  
The metering and telemetry work calls for aging meters to be replaced with automatic 
meters and the system supervisory control and data acquisition (SCADA) system to be upgraded. 
Although the current metering and telemetry system is operational, the Riedesel Report identifies 
several advantages to the proposal. Replacement of the metering system will allow for accurate, 
year-round determination of water use, permit identification of service leaks, enable recovery of 
“lost water revenues,” and encourage conservation. Installation of a new telemetry system will 
reduce staff time and improve monitoring capabilities, resulting in enhanced responsiveness to 
alarms and increased system security.  
  The airport component of the work calls for extending new six and eight inch mains, 
along with fire hydrants, to the airport. The airport is not currently tied into the City’s water 
system, relying instead on an independent system supplied with well water. The Riedesel Report 
reflects that the primary deficiency of the current airport water system is inadequate water flow 
to meet design fire requirements. This has resulted in increased fire insurance premiums and 
concern about the potential negative impact on the City’s economic attractiveness to businesses 
which may be considering locating operations within the City. 
                                                          
 
1 The City has two water storage and distribution systems: Old Town and Cyprus. Old Town is the original water 
distribution system and Cyprus the newer, having been constructed in the 1980s. 
 
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The Old Town work includes replacing old four inch pipes with larger water mains, 
installing new fire hydrants, looping dead end pipes, installing pressure reduction stations, and 
making roadway improvements. Although Old Town’s water system is currently operational, the 
outdated system is subject to water main breakage and increased capacity is needed for fire 
protection purposes. Portions of the Old Town system do not meet current standards imposed by 
DEQ regulations. However, these regulations also provide that the City is not required to comply 
with these standards until new construction on the system takes place. In other words, the Old 
Town system is “grandfathered.”  
On February 5, 2014, the district court issued its Findings of Fact and Conclusions of 
Law, holding that the City could incur debt to finance the project without a confirmatory vote of 
the electorate. The district court entered judgment on March 19, 2014, and the Caucus timely 
appealed. 
II. STANDARD OF REVIEW 
“This Court defers to the factual findings of the district court unless those findings are 
clearly erroneous. This Court exercises free review of the district court’s application of the 
relevant law to the facts. Constitutional issues are questions of law over which we also exercise 
free review.” City of Idaho Falls v. Fuhriman, 149 Idaho 574, 576, 237 P.3d 1200, 1202 (2010) 
(quoting City of Boise v. Frazier, 143 Idaho 1, 2, 137 P.3d 388, 389 (2006)). 
III. ANALYSIS 
The Caucus’ appeal asserts that Article VIII, section 3 of the Idaho Constitution forbids 
the City from incurring this debt without a confirmatory vote and that the district court’s findings 
were clearly erroneous. We begin by considering the current status of our jurisprudence relating 
to this provision of the Idaho Constitution.  
A. An overview of recent case law regarding Article VIII, section 3 of the Idaho 
Constitution. 
 
“Cities in Idaho are generally barred from incurring debts or liabilities, in excess of the 
income and revenue provided for debts and liabilities in such year, unless they first conduct an 
election and secure voter approval of the proposed expenditure, as provided in Article VIII, § 3 
of the Idaho Constitution.” Fuhriman, 149 Idaho at 576–77, 237 P.3d at 1202–03. This 
constitutional provision contains an exception, known as the proviso clause, that no voter 
approval is required if the expenditure is for “ordinary and necessary expenses authorized by the 
 
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general laws of the state . . . .” Idaho Const. art. VIII, § 3. The words “ordinary” and “necessary” 
are “read in the conjunctive.”2 Frazier, 143 Idaho at 4, 137 P.3d at 391.  
 
In Frazier, this Court summarized the circumstances surrounding adoption of Article 
VIII, section 3 of Idaho’s Constitution: 
Article VIII, § 3 has been part of Idaho’s Constitution since the beginning 
of statehood. The draft version of Article VIII, § 3 that was submitted to the 1889 
Idaho Constitutional Convention was modeled after and nearly identical to Article 
XI, § 18 of the California Constitution of 1879. See 1 PROCEEDINGS AND DEBATES 
OF THE CONSTITUTIONAL CONVENTION OF IDAHO 1889, 589 (1912) (henceforth 1 
PROCEEDINGS); CAL. CONST. of 1879, Art. XI, § 18. The intention was to prevent 
local government entities from incurring debts without approval from the voters 
and a clear plan to retire those debts. DONALD CROWLEY & FLORENCE HEFFRON, 
THE IDAHO STATE CONSTITUTION 170 (1994). 
Broadly speaking, Article VIII, § 3 imposes two requirements to be met by 
local governments before incurring indebtedness. The first requirement is a public 
election securing two-thirds of the vote, and the second is the collection of an 
annual tax sufficient to pay the debt within thirty years. The remainder of the 
section consists of exceptions to those requirements, beginning with the 
previously mentioned proviso clause and continuing with language added in a 
series of subsequent amendments not applicable to our analysis. 
When the draft version of Article VIII, § 3 was presented to the 
constitutional convention, it was amended by the delegates to add the words 
“provided, that this section shall not be construed to apply to the ordinary and 
necessary expenses authorized by the general laws of the state.” See IDAHO 
CONST. art VIII, § 3; 1 PROCEEDINGS at 584–94. Delegate William Claggett 
offered the original proviso clause. See 1 PROCEEDINGS at 586. Claggett explained 
his intent to the other delegates, stating: “[w]e all know that in the practical 
administration of county government, that there sometimes will be extraordinary 
expenses, I mean extraordinary expenses in the ordinary administration of 
affairs.” Id. at 588. By way of example, Claggett mentioned the payment of 
witness fees. Id. Other delegates mentioned juror fees and criminal court 
expenses, id. at 590, the expense of controlling streams and ditches, id. at 592, 
and “any emergency” id. at 587. 
Frazier, 143 Idaho at 3–4, 137 P.3d at 390–91. 
 
Originally this Court interpreted the proviso clause “very narrowly,” but as time went on 
this Court “interpreted the ‘ordinary and necessary’ language more broadly.” Asson v. City of 
Burley, 105 Idaho 432, 441–42, 670 P.2d 839, 848–49 (1983). However, this Court returned to 
the proviso clause’s original, narrow interpretation in Frazier and decided the case using a 
“bright-line rule” originally used in Dunbar v. Bd. of Comm’rs of Canyon Cnty., 5 Idaho 407, 
                                                          
 
2 The parties to this appeal agree that the proposed project is an “ordinary” expense. Thus, this opinion will focus on 
whether the proposed expenditure is “necessary.” 
 
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412, 49 P. 409, 411 (1897). Fuhriman, 149 Idaho at 578, 237 P.3d at 1204; Frazier, 143 Idaho at 
4, 137 P.3d at 391. This bright-line rule provides that “in order for an expenditure to qualify as 
‘necessary’ under the proviso clause of Article VIII, § 3 there must exist a necessity for making 
the expenditure at or during such year.” Id. (emphasis original) (quoting Frazier, 143 Idaho at 4, 
137 P.3d at 391). “The required urgency can result from a number of possible causes, such as 
threats to public safety, the need for repairs, maintenance, or preservation of existing property, or 
a legal obligation to make the expenditure without delay.” Id. (quoting Frazier, 143 Idaho at 6–7, 
137 P.3d at 393–94). This Court reasoned that this rule aligns:  
closely with the types of expenditures the delegates at the Idaho Constitutional 
Convention discussed when they debated Article VIII, § 3 of our state 
constitution. Those expenditures included unavoidable expenses, such as carrying 
on criminal trials and abating flood damage, that could not be delayed. We 
observe that the expenditures contemplated by the delegates involved immediate 
or emergency expenses, such as those involving public safety, or expenses the 
government entity in question was legally obligated to perform promptly. 
Frazier, 143 Idaho at 4, 137 P.3d at 391 (citation omitted). 
B. The district court erred by failing to apply the legal standard for determination of what 
constitutes a “necessary” expense under Article VIII, section 3 of the Idaho 
Constitution as articulated in Fuhriman and Frazier. 
The district court did not discuss our decisions in Frazier and Fuhriman as to what 
constitutes a necessary expense.3  Instead, the district court held that the expenditure need not be 
“urgent,” stating:  
an expense can be necessary without an immediate “urgency” or emergency if the 
repair is necessary for the good of the public health and safety. This Court finds 
that the proposed repairs do not need to be “urgent” in the sense that Respondents 
argue, but instead the repairs must be necessary under the meaning of the Idaho 
Constitution. 
This statement is inconsistent with the legal principles articulated in Fuhriman and Frazier. In 
both cases, we repeatedly referred to the “urgency” of a necessary expense for which 
indebtedness may be incurred without an approving vote of the electorate. Fuhriman, 149 Idaho 
at 578–79, 237 P.3d at 1204–05; Frazier, 143 Idaho at 6, 137 P.3d at 393.   
 
The Caucus argues the district court erred by failing to apply the principles articulated in 
these decisions, contending that there must be a necessity for making the expenditure during the 
                                                          
 
3 The district court did cite to Frazier on one occasion. However, this citation related to the definition of “ordinary” 
for purposes of Article VIII, section 3. As noted, there is no dispute that the proposed project would be an ordinary 
expense.   
 
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year at issue. The City responds that the Caucus’ “absolutist interpretation” ignores (1) the repair 
and maintenance and (2) public safety exceptions to Article VIII, section 3 of the Idaho 
Constitution, which apply without temporal limitation.  
 
This Court has previously addressed the first exception claimed by the City. In Fuhriman, 
we expressly rejected the municipality’s contention that expenses arising “in the ordinary 
administration of local government affairs, such as repairs [and] maintenance” are exempt from 
the “necessity-requires-urgency analysis.” Fuhriman, 149 Idaho at 578–79, 237 P.3d at 1204–05. 
There, Idaho Falls sought to incur a long-term liability under a power sales agreement for the 
benefit of its municipal electric utility. Id. at 575–76, 237 P.3d at 1201–02. We held that the 
“necessity-requires-urgency” analysis applied and the “exception” advocated by Idaho Falls did 
not apply, stating:  
Idaho Falls appears to advocate a “know it when we see it” factual inquiry for 
determining whether liabilities or indebtedness incurred by counties or 
municipalities are “ordinary and necessary.” We shall not stray from the principle 
of stare decisis without an exceptionally compelling reason to do so, particularly 
where doing so would be a move to embrace ambiguity over order. 
Id. at 579. 237 P.3d at 1205. The Court reasoned that Idaho Falls could continue to provide 
power through short-term, albeit more expensive, agreements while it came up with a more 
lasting solution subject to a confirmatory vote. Id.  
 
This Court has not explicitly addressed the question whether the “necessity-requires-
urgency” analysis applies in instances where public safety is implicated. The City correctly 
observes that our past decisions have taken an expansive view of public safety considerations 
when evaluating whether expenditures were ordinary and necessary. See City of Pocatello v. 
Peterson, 93 Idaho 774, 778, 473 P.2d 644, 648 (1970) (replacement of an “inadequate” and 
“unsound” airport terminal held to be a “necessary” expense); Bd. of Cnty. Comm’rs of Twin 
Falls Cnty. v. Idaho Health Facilities Auth., 96 Idaho 498, 510, 531 P.2d 588, 600 (1974) 
(holding that improvements to hospital structure in order to comply with state safety standards 
was an “ordinary and necessary” expense). Frazier did not overrule these earlier decisions, 
choosing instead to characterize them as “broadly consistent” with the Dunbar rule. Frazier, 143 
Idaho at 4, 137 P.3d at 391.  
 
We take this opportunity to reiterate our holding in Frazier and Fuhriman. The 
“necessity-requires-urgency” analysis governs all expenditures, regardless of the underlying 
purpose. In Fuhriman, when discussing this analysis, we quoted from Frazier, observing that 
 
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“[t]he required urgency can result from a number of possible causes, such as threats to public 
safety, the need for repairs, maintenance, or preservation of existing property, or a legal 
obligation to make the expenditure without delay.” Fuhriman, 149 Idaho at 578, 237 P.3d at 
1204 (quoting Frazier, 143 Idaho at 6–7, 137 P.3d at 393–94). For these reasons, we conclude 
that the district court erred by failing to apply the legal analysis articulated in Fuhriman and 
Frazier when considering whether the City’s proposal constituted a “necessary” expense under 
the Idaho Constitution. 
C. This Court must consider the project as a whole. 
The parties concur on one point of law: a court is without power to partially grant judicial 
confirmation of a bond, obligation or agreement. We agree that courts lack the authority to 
approve some aspects of a proposal while rejecting others. Idaho Code section 7-1308(2) charges 
the district court with the responsibility of determining “if the political subdivision is entitled to 
the relief sought.” Nothing within the Judicial Confirmation Law may be interpreted as granting 
the district court authority analogous to a line-item veto. Here, the City’s petition asked the 
district court to confirm “whether or not the proposed promissory note or other obligation 
evidencing” $3.2 million in debt “constitutes an ‘ordinary and necessary expense.’ ”  
D. The district court erred in finding the project to be “necessary” under the test provided 
in Fuhriman, Frazier, and Dunbar.  
We must now determine whether the proposed project is “necessary.” As previously 
noted, the proposed project has three components, (1) the meter and telemetry upgrades, (2) the 
airport expansion, and (3) the Old Town water line replacement. 
The district court determined the metering upgrades were necessary for accurate billing 
and water conservation. It also determined the telemetry upgrades were “necessary” “to provide 
security to the system.” The Caucus argues installing “new high-tech metering and telemetry” is 
not truly urgent because the City discussed the project for four years and there is already a 
workable metering system. The City responds that telemetry upgrades are necessary to prevent 
unauthorized entry to facilities and potential threats to the water distribution system. It further 
argues meter replacement is necessary for water conservation and equitably charging users for 
the amount of water they actually consume.  
In Fuhriman, we discussed our earlier decision in Bannock Cnty. v. C. Bunting & Co., 4 
Idaho 156, 37 P. 277 (1894) overruled on other grounds by Veatch v. City of Moscow, 18 Idaho 
313, 109 P. 722 (1910), stating: 
 
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In Bannock County v. C. Bunting & Co., this Court found Bannock County’s 
expenditures for the provision of a temporary jail were ordinary and necessary. 4 
Idaho 156, 37 P. 277 (1894) overruled in part on other grounds by Veatch v. City 
of Moscow, 18 Idaho 313, 109 P. 722 (1910). However, we went on to clarify 
that, although Bannock County was obligated to provide a facility to act as a jail, 
“such rooms must be temporarily provided, at as little expense as is consistent 
with providing suitable quarters, until the question can be submitted to the 
people.” Id. at 168, 37 P. at 281. In accordance with this reasoning Idaho Falls 
must obtain electricity on a temporary basis unless and until a long-term 
agreement is confirmed by two-thirds of its qualified electors. 
149 Idaho at 579, 237 P.3d at 1205. Additionally, we quoted Frazier’s discussion of the thrifty 
inclinations of the framers of the Idaho Constitution: 
The Idaho Constitution is imbued with the spirit of economy, and in so far as 
possible it imposes upon the political subdivisions of the state a pay-as-you-go 
system of finance. The rule is that, without the express assent of the qualified 
electors, municipal officers are not to incur debts for which they have not the 
funds to pay. Such policy entails a measure of crudity and inefficiency in local 
government, but doubtless the men who drafted the Constitution, having in mind 
disastrous examples of optimism and extravagance on the part of public officials, 
thought best to sacrifice a measure of efficiency for a degree of safety. The 
careful, thrifty citizen sometimes gets along with a crude instrumentality until he 
is able to purchase and pay for something better. And likewise, under the 
Constitution, county officers must use the means they have for making fair and 
equitable assessments until they are able to pay for something more efficient or 
obtain the consent of those in whose interests they are supposed to act. 
Id. at 579–80, 237 P.3d at 1205–06 (quoting Frazier, 143 Idaho at 5, 137 P.3d at 392). 
Here, the Riedesel Report indicates the proposed metering and telemetry projects are 
largely motivated by economic interests. It stated: “Even though metering is not a health and 
safety priority, our analysis indicates the construction cost may be significantly (if not 
completely) offset by the labor saving to read the meters and process water bills.” Regarding 
telemetry it stated:  
The City of Challis currently has minimal telemetry/supervisory control and data 
acquisition (SCADA) capability, and relies on visual inspections and site visits to 
monitor operation of its pumps and water storage elements. A more robust 
SCADA system will reduce staff time, improve overall monitoring of key 
elements, enhance reporting and response of alarm conditions, and improve the 
security of the system. 
The testimony of Donald Acheson, the City Engineer, also supports these conclusions. He 
testified that meter replacement was necessary for water conservation and for “equitably 
distributing” the cost of water use. He also testified that the meters in the City were from the 
 
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1980s, were beyond a meter’s typical life-span, and were inefficient. Regarding telemetry, 
Acheson testified the telemetry improvements would promote public safety.  
 
Applying the relevant law to these facts, we cannot say that the proposed metering and 
telemetry upgrades are necessary. As with the proposed long-term power agreement in 
Fuhriman, metering and telemetry upgrades are undoubtedly desirable from an economic 
perspective. However, the need for these upgrades cannot be characterized as urgent. As with the 
temporary jail in Bannock County the City must get by with what it has until it obtains approval 
for these expenditures from the electorate.  
The City also argues that “[t]here is no Idaho precedent wherein this Court parceled out 
individual aspects of a project” and compares this Court’s concerns about the expense of 
metering and telemetry to questioning whether an “additional bathroom facility should or should 
not be included.” We do not agree. The estimated construction costs of aspects of the project as 
follows: 
 
 
 
 
 
 
 
Estimated Construction Cost 
1. 
Old Town Improvements 
 
 
 
 
$ 920,853 
2.  
Airport Extension 
 
 
 
 
 
$ 563,178 
3.  
Metering & Telemetry 
 
 
 
 
$ 645,036 
 
 
Estimated Construction Total  
 
 
$ 2,129,066 
4.  
Contingencies  
 
 
 
 
 
$ 236,827 
5.  
Design Engineering, Bidding & Award 
 
 
$ 348,715 
6. 
Construction Observation, Testing & Administration 
$ 207,352 
7.  
Other (Legal, Interest & Grant Administration) 
 
$ 115,000 
 
 
TOTAL ESTIMATED PROJECT 
 
 
$ 3,036,960 
At $645,036 the metering and telemetry upgrades constitute over 30% of the total estimated 
construction costs. We are unable to conclude that metering and telemetry is just a small portion 
of the project that we may overlook. 
 
The metering and telemetry upgrades cannot be characterized as “necessary.” Because 
this portion of the project is not necessary from a constitutional perspective, the district court 
erred in granting the petition for judicial confirmation. In light of this conclusion, we need not 
consider the parties’ arguments regarding the necessity of the airport extension and replacement 
of water lines in Old Town. 
E. We award the Caucus attorney fees under Idaho Code section 7-1313. 
 
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Both parties request attorney fees. Since the City is not the prevailing party, it is not 
entitled to an award of attorney fees. The Caucus requests attorney fees on appeal and for the 
proceedings before the district court under Idaho Code section 7-1313. This statute provides: 
 
Whenever a court shall determine that a political subdivision is not 
entitled to the relief sought or that this chapter has not been substantially 
complied with and enters a judgment denying the petition, the court shall award 
reasonable attorney fees to any owner of property, taxpayer, qualified elector or 
rate payor or any other interested person who has appeared and moved to dismiss 
or answer the petition. 
In Frazier, 143 Idaho at 7, 137 P.3d at 394, we awarded attorney fees and remanded “to the 
district court pursuant to I.C. § 7–1313 and I.R.C.P. 54 for a determination of costs and a 
reasonable sum of attorney fees below and on appeal” after a party challenging Boise’s plan to 
build an airport parking garage prevailed on appeal. As the statute is mandatory, the Caucus is 
entitled to an award of attorney fees incurred in the prior proceedings and in this appeal. 
However, we erred in one procedural aspect in Frazier. It is not the district court’s responsibility 
to determine an appropriate award of fees and costs incurred on appeal; rather, that is our duty. 
Accordingly, this matter will be remanded to the district court with directions to ascertain and 
award the Caucus reasonable attorney fees and costs incurred in the prior proceedings in the 
district court.  In the event that the Caucus timely submits a memorandum of costs and fees, see 
Rules 40(c) and 41(d), I.A.R., this Court will evaluate that memorandum, and any objections 
thereto, to determine an appropriate award of attorney fees and costs.  
IV. CONCLUSION 
We reverse the district court’s judgment granting judicial confirmation of the City’s 
proposed $3.2 million indebtedness for expenses related to repair and improvement of its water 
distribution system. This case is remanded to the district court with directions to ascertain and 
award the Caucus reasonable attorney fees and costs incurred in the proceedings below. We 
award attorney fees and costs on appeal to the Caucus. 
 
Justices EISMANN and W. JONES, CONCUR. 
 
 
J. JONES, Chief Justice, dissenting. 
 
I dissent because I am unable to agree with the Court’s conclusion that Article VIII, 
section 3 of the Idaho Constitution requires a vote of the people for the maintenance or 
modernization of an existing city water system. The framers of the Idaho Constitution were 
 
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thrifty people, concerned about the possibility of county and city governments incurring 
unnecessary debt, but they were also practical people who looked to the future. They hoped and 
expected that cities in Idaho would grow, that municipal services for those cities would 
necessarily expand, and that such services would require periodic updating. And, they did not 
want to place unnecessary fiscal restraints upon county and municipal governments. This is 
reflected in the proceedings of the constitutional convention relating to Article VIII. 
 
As originally proposed, section 3 would have required a two-thirds vote of qualified 
electors for any indebtedness exceeding the income and revenue of the governmental entity for 
the current year. The convention president, Judge William Claggett from Shoshone County, 
proposed the proviso clause out of concern that, without it, Article VIII, section 3, “would 
prohibit the issuance of county scrip to pay the ordinary indebtedness absolutely imposed upon 
the county as provided by law, in case there should be any heavy expenses . . . exceeding the 
current revenues of that year.” He observed that Article III, section 3 was “intended to apply to 
special indebtedness.” 1 PROCEEDINGS AND DEBATES OF THE CONSTITUTIONAL 
CONVENTION OF IDAHO 1889, 587 (1912) (hereafter 1 Proceedings). In support of the 
amendment adding the proviso clause, Judge Claggett argued: 
We all know that in the practical administration of county government, that there 
sometimes will be extraordinary expenses, I mean extraordinary expenses in the 
ordinary administration of affairs. I am not speaking now of special indebtedness 
at all, but the ordinary general indebtedness which is incurred in the way of 
administration of county affairs. . . .[T]he object of the proviso . . . is to limit 
[section 3] to such indebtedness as does not arise under the ordinary 
administration of the county. 
1 Proceedings at 588−89. 
 
W.B. Heyburn from Shoshone County argued in favor of the proviso clause, pointing out 
that it was expensive and impractical to require an election every time a county incurred 
indebtedness in excess of current year revenues. He said, “[W]e don’t want to leave any part of 
the ordinary legitimate expenses of running county government in doubt, and we don’t want to 
call a county election for the purpose of making up a deficit of four or five hundred dollars at the 
end of the year, because the costs of the election are very considerable in a county such as ours.” 
1 Proceedings at 591.  
 
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H.S. Hampton from Cassia County offered a substitute for the proviso clause, limiting it 
to “necessary court expenses.” 1 Proceedings at 591−92. P.J. Pefley from Ada County opposed 
the substitute, arguing: 
 
It occurs to me if that motion should prevail it would cut cities off. Now 
we are liable to fall short in our ordinary levy in this city. We have streams 
running adjacent through the city that in time of high water, and ditches all the 
time, that are liable as I said to break away and run down through the city, and if 
we had to wait to hold an election and get two-thirds of the voters to ratify another 
levy, the whole city might be ruined before it could be abated, and I would not 
like to see anything of that kind occur. I think it should apply to cities and 
counties alike and all corporations, that they should be allowed in contingencies 
to abate them immediately without waiting for an election to be ratified by two-
thirds.  
1 Proceedings at 592. The substitute amendment was rejected and the proviso clause was 
adopted by the convention.  
 
The convention then turned to consideration of a proposed section 4 to Article VIII, 
which apparently limited the indebtedness authorized to be incurred by governmental 
subdivisions to five percent on the assessed value of their property. 1 Proceedings at 598. 
Substantial objections were made to the proposed limitation. The debate on section 4 is relevant 
here, as it sheds light on the intent of the delegates as to the proviso clause upon which they had 
just acted.  
W.B. Heyburn moved to strike section 4, saying, 
if it is not stricken out, as far as the members of this convention from Shoshone 
county are concerned, they can just go home, because they will have no interest in 
the state government whatever. It will completely fence them in, either with the 
amendment or as it was originally reported. . . . The wheels of their government 
will be stopped, whenever you adopt that section, right there. . . . We have a 
government that must be kept in motion.  
1 Proceedings at 599−600. J.W. Poe from Nez Perce County agreed, arguing:  
 
I heartily support the motion of the gentleman from Shoshone, Mr. 
Heyburn. I don’t think these city corporations or town corporations ought to be 
circumscribed as to the powers of appropriation or indebtedness they may create. 
They are the parties who will have to suffer the consequences of any unnecessary 
schemes there may be that are abetted by reason of an appropriation for any 
amount which may be excessive. . . . I heartily support the motion to take that 
section out of the constitution, and leave the cities the opportunity if they see 
proper, to make appropriations for sewerage, sanitary purposes, or any other thing 
which in their judgment they may believe will inure to the advantage of their city 
or town or to their county. Leave it to them.  
 
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1 Proceedings at 600−01.  
Edgar Wilson from Ada County argued, “[I]f the section does prevail it paralyzes 
different improvements in this city and will ruin municipal improvements in half a dozen towns 
in Idaho Territory.” 1 Proceedings at 601. W.C.B. Allen from Logan County said, “I think it is 
limiting the powers of the state in such respects as would prevent its prosperity and progress and 
prevent it from issuing bonds for carrying on public work.” 1 Proceedings at 602. Section 4 was 
stricken by the convention. 
 
None of the delegates indicated that there must be a great sense of urgency in the present 
year for a governmental subdivision to incur indebtedness exceeding revenues or income in order 
to repair or improve existing infrastructure. Mr. Pefley clearly indicated that he understood the 
proviso clause to allow debt to be incurred in order to make improvements to a city’s existing 
ditch system before damage was incurred. He did not indicate that the potential damage had to be 
of an immediate nature. Again, these people were practical and knew that once you established a 
ditch system, a fire department, a municipal water distribution system, or some other public 
facility authorized by law, maintenance and modernization were necessary to keep the facility in 
good operating condition. They intended Idaho cities to expand and did not express any notion 
that each time an improvement was necessary, an election would be required.  
 
The urgency expressed in Dunbar v. Bd. of Comm’rs of Canyon Cnty., 5 Idaho 407, 412, 
49 P. 409, 411 (1897), where the Court said, “there must exist a necessity for making the 
expenditure at or during such year,” is unsupported by any argument made by the delegates at 
the convention. Indeed, the comment was unnecessary to the Court’s decision because Dunbar 
was decided on the ordinary prong of the proviso clause, rather than the necessary prong. The 
Court’s holding said:  
We conclude that the building of a bridge and the payment of scalp bounties are 
not ordinary, but extraordinary, expenses, and, being such, cannot be created in 
excess of the revenue for the fiscal year in which they may be incurred without 
the assent of two-thirds of the electors of the county voting at an election duly 
called and held. 
 Id. The holding did not address the necessity issue. The holding was, however, contrary to Judge 
Claggett’s admonishment that the proviso was not intended to prohibit “extraordinary expenses 
in the ordinary administration of affairs.” 1 Proceedings at 588. He specifically stated that what 
the proviso clause did not countenance was “special indebtedness.” Further, the two expenditures 
 
14 
 
at issue in the Dunbar case were for new items—a new bridge and a new scalp bounty—rather 
than for continuation of existing programs or expenditures. 
 
Of interest is the fact that the Court did not even acknowledge the Dunbar holding in a 
case decided just 15 years later, pertaining to the repair and improvement of a city water system. 
In Hickey v. City of Nampa, 22 Idaho 41, 124 P. 280 (1912), the Court was considering whether 
planned expenditures to repair and improve the water system of the City of Nampa required the 
vote of the city’s qualified electors under Art. VIII, section 3. The system had sustained fire 
damage. The Court held that a vote was unnecessary, saying: 
The city of Nampa had duly and regularly exercised the power and authority 
conferred upon it by the provisions of subdivisions 36 and 37 of section 2238, 
Rev. Codes, in acquiring and maintaining a waterworks system and apparatus and 
appliances for extinguishing fires. In order for this property to be of any value to 
the city, it was necessary for it to be kept in repair. When the fire came and the 
waterworks system was impaired and rendered useless, it was necessary that the 
city repair and restore it. It was also equally necessary to have fire equipment and 
apparatus to enable it to properly utilize the water in case of fire. . . . It appears in 
this case that the mayor and city council acted in good faith, and that this was a 
bona fide improvement and restoration of property, within the purview and 
meaning of the statute. 
 
 
The city council could certainly not use this as a subterfuge for the 
construction or purchase of a new system of waterworks or other independent, 
separate, or new property, so as to contravene the provisions of section 3, art. 8, of 
the Constitution. . . . We take it that it was within the power of the Legislature, 
under [Article VIII, section 3] to say that an expenditure, though out of the 
ordinary, which is incurred for the purpose of repairing some damage done to city 
property, or improving it in such manner as to render it serviceable to the city, 
falls within this proviso to the Constitution. The repair and improvement of the 
property may be “ordinary and necessary,” and yet not occur frequently. It is one 
of the incidents of the ownership of property that it must be kept in repair . . . 
22 Idaho at 44−45, 124 P. at 281. (underlined emphasis added). The Court made no mention of 
the Dunbar dicta that “there must exist a necessity for making the expenditure at or during such 
year.”  
 
Notwithstanding that the urgency language in Dunbar appears to have been unnecessary 
to the decision in that case and unsupported by any debate at the constitution convention, it was 
cited to and given legs in City of Boise v. Frazier, 143 Idaho 1, 4, 137 P.3d 388, 391 (2006). It 
then was given additional credibility in City of Idaho Falls v. Fuhriman, 149 Idaho 574, 578, 237 
P.3d 1200, 1204 (2010). With this shaky foundation, it also makes its way into the Court’s 
 
15 
 
present opinion. It is inconsistent with the constitutional convention debate and should be 
disregarded. 
 
The main focus of the inquiry should be directed to the issue of whether the 
governmental entity proposes a new program or facility or whether the proposed expenditure is 
for an existing program or repair or modernization of an existing facility. That was, in fact, the 
issue decided by the Court in both Dunbar and Frazier. In Dunbar, the question was whether a 
new bridge could be built without a vote of the electors where the cost would exceed the current 
year’s income. In Frazier, the question was whether “[c]onverting a flat parking lot into a five 
floor parking garage,” an expansion “so profound as to constitute an entirely new construction” 
was “necessary” within the meaning of the proviso clause. Id. at 6, 137 P.3d at 393.  
It is true that the Court has zigged and zagged over the years as to the scope of the 
proviso clause, sometimes giving it a broader reading and at other times a narrower reading. This 
is reflected in the Court’s discussion of previous decisions in Asson v. City of Burley, 105 Idaho 
432, 441−42, 670 P.2d 839, 848−49 (1983), and of cases discussed in the various opinions in 
Frazier and Fuhriman. Nevertheless, what has been fairly consistent is the recognition of a 
dichotomy between new programs or construction, which require a vote of the electors, and 
support or expansion of existing governmental facilities or functions, which do not.  
Earlier cases dealing with water systems are instructive. In Woodward v. City of 
Grangeville, 13 Idaho 652, 660, 92 P. 840, 842 (1907), the Court held that the City of 
Grangeville was not authorized, without a vote of the electors, to purchase an existing water 
system from the estate of a deceased city resident. However, in the Hickey case, we held that the 
City of Nampa was authorized, without voter approval, to repair and improve an existing water 
system. Likewise, a decision by the City of Moscow to drill a new well to support a voter-
approved plan to improve an existing water system and build a water storage tank to provide a 
“more adequate water supply” did not necessitate a vote of the people. The well was not 
approved by the voters but the Court deemed it necessary to the project nevertheless. Durand v. 
Cline, 63 Idaho 304, 312−13, 119 P.2d 891, 894−95 (1941).  
Aside from its errant reliance on Dunbar for the urgency element, the Frazier Court 
merely followed the long-standing dichotomy between new construction, on the one hand, and 
maintenance of an existing facility, on the other. The expensive new parking garage in Frazier 
was clearly not exempt under the proviso clause and, therefore, a vote was required under article 
 
16 
 
VIII, section 3. The Dunbar urgency language was not actually necessary for the Court’s 
holding. 
Turning to the case at hand, there is no question but that the Challis water project 
involved ordinary expenditures. The City of Challis had exercised its power under Idaho Code 
section 50-323 to construct and operate a domestic water system; had acted pursuant to Idaho 
Code section 50-309 to maintain a fire department and “to provide water for fire purposes” in the 
city; and decided to operate and maintain an airport, as authorized by Idaho Code section 50-321. 
The question is whether the three elements of the water project presented here are within the 
necessary prong of the proviso clause. 
In this regard, the district court made the following pertinent findings of fact: 
8. 
As the owner and operator of the [water] System, the City is charged with 
the duty of maintaining safe and reliable services for the City and its residents, 
and to do so in a manner that does not jeopardize the City’s drinking water supply 
and provides sufficient fire flow. In furtherance of that responsibility in December 
2011, the City retained the services of Riedesel Engineering, a professional 
consulting civil engineering firm duly authorized and licensed to practice in Idaho 
(the “Engineer”), to conduct a study of the System for the purpose of determining 
the adequacy of the System for present and future needs with respect to standards 
established by the local fire authority, the State of Idaho through its Department 
of Environmental Quality (“DEQ”) and the United States Environmental 
Protection Agency (“EPA”). The Engineer performed a study entitled “City of 
Challis Water Facility Plan” along with the supplemental information and 
emergency protocol for the City’s existing water system (DEQ No. 11-13-19) (the 
“Study”).  
 
9. 
The most recent water system facility plan and resulting improvement 
project performed for the City had dated from 1981 and is approximately 30 years 
old. The residential services and meters installed with the 1980s capital project 
are aged and need to be replaced. 
 
10. 
However, the majority of the system, the Old Town distribution system, 
dates back to the 1930s. These pipes have reached their useful life and are now 
dilapidated and in need of replacement resulting in multiple breaches in the city, 
including several this year. Should a breach occur in a main section of this 
distribution line, entire sections of the City could be without water. 
 
11. 
Although no enforcement action has been brought against the City, the 
City’s system is not in compliance with State law.  
 
a. 
The City is not able to provide adequate fire flows due to the use of 
existing four (4) inch old and dead end water mains, and small diameter 
 
17 
 
un-looped lines. IDAPA 58.01.08.542.06 addresses the size of water 
mains. The section provides that where fire hydrants are provided, they 
shall not be connected to water mains smaller than six (6) inches in 
diameter, and fire hydrants shall not be installed unless fire flow volumes 
are available. 
b. 
As testified to by the engineer and the public works director, all of the 130 
fire hydrants are in need of replacement because they contain dilapidated 
componentry that cannot be serviced. To date only 25-30 have been 
replaced. 
c. 
However, the hydrants are connected to four (4) inch lines. Pursuant to 
IDAPA 58.01.08.50 the adequacy of the water system fire flow capacity is 
determined by the local fire authority. The Challis system does not meet 
the minimum standard established by the local fire authority, Chief 
Gunderson, who expressed concerns that the Challis’ system limits the 
District’s ability to fight a fire. The concerns include 
i. 
The use of 4 inch lines in violation of IDAPA 58.01.08.542.06. 
ii. 
Improper spacing of fire hydrants in violation of IFC Appendix B, 
Table C105.1. 
iii. 
The existing distribution system cannot meet peak hour demand 
with 
the 
design 
fire 
criteria 
in 
violation 
of 
IDAPA 
58.01.08.552.01.b.i. 
iv. 
Many of the fire hydrants are dysfunctional. 
v. 
The public works director testified that the fire hydrants provide 
suitable flow for only approximately 45 seconds.  
vi. 
In short, the fire chief, engineer, and public works director 
expressed concerns that the system cannot effectively fight a fire. 
12. 
In order to repair this preexisting and obligatory utility, achieve 
compliance with state law minimum safety regulations, and obtain the required 
amount of fire flow to protect the health and safety of the citizenry, the Study 
(which as a planning document contains over $8 million dollars of recommended 
upgrades) was [pared] down to meet the immediate needs of the System totaling 
$2,129,066 in repairs and replacement plus additional estimated funding 
requirements for contingencies, design engineering, bidding, testing, and other 
costs total $3,036,960. These include: 
a. 
Construction of distribution system improvements to tie the Old 
Town system eliminating the 4-inch pipes and the fire hydrants that tie to 
them, install new and properly spaced fire hydrants, and tie-in dead end 
lines. Add pressure reducing stations and isolation valves to create (4) 
pressure zones which eliminates service areas that are over-pressurized. 
b. 
Install a telemetry system to improve supervisory control and data 
acquisition to protect the water system. 
 
18 
 
c. 
Replace metering with new automated read (AMR) equipment 
taking the first steps to recover the estimated 4% lost water identified by 
Idaho Rural Water, which will provide accuracy of water usage, but more 
importantly the billing, which is necessary precondition for DEQ 
approval, funding and to comply with a water audit. 
d. 
Installation of a transmission pipeline to provide minimum supply 
of water necessary for firefighting service to the Challis Airport as 
determined by the fire authority, Chief Gunderson.  
13. 
Donald Acheson, the city engineer believes that a piecemeal approach to 
the replacement of the aging componentry does not mitigate the danger to the 
public safety as a system is only as strong as its weakest link, and it is not 
foreseeable as to exactly where the breach or fire will occur. 
14. 
Based on the Study and other available information, the City’s Mayor and 
Council have determined that the proposed improvements are necessary to meet 
the present and immediate needs of the City. The improvements are essential to 
ensure that the System remains functional and adequate to meet the requirements 
of Idaho law and provide for minimum required fire flow protection both in old 
town and to the airport, and to provide security for this valuable resource. 
Additionally, the replacement of pipes, hydrants, meters, and telemetry are part of 
a regular, ordinary, and necessary maintenance of a preexisting and obligatory 
utility.  
These findings certainly appear to be supported by the record.  
The Caucus does not identify and attack specific factual findings made by the district 
court but, rather, devotes one and one-third pages of its opening brief to arguing that no evidence 
supported the Court’s “determination that the Project was necessary for fire protection, health or 
welfare.” The Caucus claims that expenses for repair or maintenance of a water system do not 
qualify as necessary within the meaning of the proviso clause unless “recent casualty or accident 
. . . impaired the System,” citing Hickey. The Caucus contends that since the City “is presently 
providing its users with clean drinking water,” and because what the City “proposes is a 
permanent solution to a future risk,” the proviso clause does not allow the proposed 
expenditures. The Caucus claims that since there is no evidence that the City is not presently able 
to fight actual fires, there is no necessity to address the problem with the aging 4-inch pipes, 
dilapidated componentry, and inadequate existing system at the airport.  
 
Essentially, the Caucus takes the position that since there has not been an actual 
breakdown or disaster, the water system cannot be repaired, improved, expanded, or modernized, 
without a vote of the people. This attitude appears to be at odds with the forward-looking, 
optimistic, and expansive views exhibited by Idaho’s constitutional framers. 
 
19 
 
It is clear from the convention proceedings that the framers of the Constitution were 
hopeful about Idaho’s future. They wanted and expected towns to grow and prosper. They knew 
that towns would grow into cities, and that cities would expand to accommodate growing 
populations and would need to continually modernize their existing facilities. They wanted 
governing bodies to exercise caution in implementing new programs and constructing new 
facilities and, therefore, required a vote of electors for those purposes. But, they knew that, once 
approved, the new infrastructure would need to be maintained, expanded for growing 
communities, and modernized to keep it up to date. For those purposes they adopted the proviso 
clause. It was clear from the debate that they did not want to hamstring cities by requiring that 
they hold a vote every time some existing facility needed to be expanded or modernized. That 
was just an inherent part of voter approval of a new project or a new facility, just as digging a 
new well was an inherent part of improving the water system in Durand.   
The City determined that expenditures were necessary to improve the water system by 
replacing old infrastructure within the city proper, to extend the system to the City airport, and to 
improve the means for conserving and accounting for water with modern telemetry. None of this 
entailed establishing a new program but, rather, was to maintain and modernize the existing 
system and make it available to the City’s airport.  
Even though the City had good drinking water and had not suffered catastrophic failure 
of the distribution system, it was clearly dilapidated and out of date, had many dysfunctional fire 
hydrants, and was crying out for replacement. The airport was not connected to the main water 
system and its own water system was inadequate, particularly with respect to fire protection. The 
new controls were necessary to conserve water, to improve accountability, and to protect the 
integrity of the system. Just as it would not be appropriate to require that voters approve the 
modernization of county or city accounting and recordkeeping from pen and pencil to computers, 
it shouldn’t require a vote to modernize the controls of a city water system from manual to 
electronic. That is just an inherent part of owning infrastructure. As the Court said in Hickey, 
“[i]n order for this property to be of any value to the city, it was necessary for it to be kept in 
repair.” 22 Idaho at 44, 124 P. at 281.  
The district court did a good job of analyzing the issues presented and its decision was in 
keeping with the spirit of the Idaho constitutional drafters. I would affirm.  
 
Justice BURDICK CONCURS.