Title: Hillis Homes, Inc. v. PUD

State: washington

Issuer: Washington Supreme Court

Document:

105 Wn.2d 288 (1986) 714 P.2d 1163 HILLIS HOMES, INC., Appellant, v. PUBLIC UTILITY DISTRICT NO. 1 OF SNOHOMISH COUNTY, Respondent. No. 50699-0. The Supreme Court of Washington, En Banc. February 27, 1986. *289 Edward Heavey, for appellant. Williams, Novack & Hansen, Douglas F. Graham, and David R. Riley, for respondent. ANDERSEN, J. Hillis Homes, Inc., challenges the validity of a general facilities charge exacted by Public Utility District No. 1 of Snohomish County (the District) upon new customers desiring to connect to the District's water system. Following a trial to the court, the trial court concluded and held that the charge was authorized by statute, was not invalid as a tax, was not discriminatory or unreasonable, and did not constitute a deprivation of property without due process of law. We accepted direct review.[1] The facts of the case as found by the trial court, and on the basis of which it concluded as it did, are set out in detail in the trial court's findings of fact. The nature of the assignments of error justifies these being quoted here: Finding of fact 1. *290 Finding of fact 2. Finding of fact 3. Finding of fact 4. Finding of fact 5. Finding of fact 6. Finding of fact 7. Finding of fact 8. Finding of fact 9. Finding of fact 10. Finding of fact 11. Finding of fact 12. Finding of fact 13. Finding of fact 14. *294 Finding of fact 15. Finding of fact 16. Finding of fact 17. Finding of fact 18. Finding of fact 19. Finding of fact 20. Finding of fact 21. Finding of fact 22. Finding of fact 23. Finding of fact 24. Finding of fact 25. Finding of fact 26. Finding of fact 27. Finding of fact 28. Finding of fact 29. Three principal issues are raised by Hillis Homes' appeal. ISSUE ONE. Did the District have statutory authority to impose the general facilities charge that it did? ISSUE TWO. Is the GFC an impermissible tax? ISSUE THREE. Is the GFC discriminatory or unreasonable? CONCLUSION. We conclude that the District did have the authority to exact a GFC, or connection fee, from new customers of its water supply system. The District's authority in this regard stems from two statutes. One is RCW 54.16.030, which provides in part: (Italics ours.) The other is RCW 54.24.080, which provides in part: (Italics ours.) [1] No appellate decision in this jurisdiction has determined whether or not a public utility district may impose a connection charge based on these statutory provisions. Neither statute provides the express authority to do so, however, [2] RCW 54.16.030 gives PUDs the authority to regulate and control the use and distribution of water provided by a PUD water system. RCW 54.24.080 directs that PUDs having revenue obligations outstanding shall collect rates and charges not only for water, but also for other services and facilities furnished by the district. In both instances, the imposition of a connection charge on new customers is a reasonably necessary means of effectuating the express powers granted. In opinions which we deem persuasive, other courts have also upheld the imposition of connection charges under similarly worded statutes.[3] CONCLUSION. Contrary to Hillis Homes' assertions, the charge imposed in this case is not a tax. In Teter v. Clark Cy., 104 Wn.2d 227, 239, 704 P.2d 1171 (1985), we recently reiterated the distinction between fees and taxes: In Teter, the City of Vancouver and Clark County imposed charges upon property owners to finance flood control operations provided by a newly created water department. We noted that the charges were collected only to pay for necessary regulatory actions (such as runoff control ordinances, erosion control ordinances, and septic tank regulations) and were therefore fees rather than taxes. Conversely, in Hillis Homes, Inc. v. Snohomish Cy., 97 Wn.2d 804, 650 P.2d 193 (1982), Snohomish and San Juan Counties imposed charges on new residential developments as a prerequisite to plat approval and the charges were to pay for additional services (including schools, parks, roads and fire protection) necessitated by the new developments. Since the charges were primarily intended to raise revenue rather than regulate residential developments, they were held to be, in fact, unauthorized taxes, notwithstanding the Counties' classification of them as "fees". [3] The facts of the present case more closely resemble those in Teter than they do the facts in Hillis Homes, Inc. v. Snohomish Cy. The District has exacted a connection charge from its new water system customers as part of an overall plan to regulate the use of water. RCW 54.16.030 contemplates this type of regulatory scheme, in that it *300 expressly gives PUDs "full and exclusive authority to ... regulate and control the use [and] distribution" of water. The fact that the connection charge necessarily imposes some burden on new customers does not make it an invalid tax. Hillis Homes, at 809. In upholding a similar connection fee, the Florida Supreme Court in Contractors & Builders Ass'n v. Dunedin, 329 So. 2d 314, 318 (Fla. 1976) observed: We agree. CONCLUSION. As the facts found by the trial court establish, Hillis Homes' contention that the GFC is discriminatory and unreasonable because it was allegedly calculated without regard to the benefits received by the various customers within the District's water system is not tenable. [4] Hillis Homes bears the burden of proof on this issue since rates and charges are presumptively reasonable; and the rates will be sustained unless it appears, from all the circumstances, that they are excessive and disproportionate to the services rendered.[4] Here, the District determined the amount of the various connection charges by using a "proportionate share analysis". In findings of fact supported by the record, the trial court found that the connection charges pay for only those improvements to the water system necessitated by the new customers, and hence will benefit them alone, and the remaining improvements are paid for by rate increases imposed on all customers.[5] The District further classified the new customers into *301 subgroups, according to the expected demand they would place on the water system.[6] Thus, the charges for new single-family, multi-family, and commercial/industrial customers are computed separately. Although the charges were not individualized according to the benefits accruing to each specific customer,[7] this was not required. "[O]nly a practical basis for the rates is required, not mathematical precision."[8] [5] Different classes of customers may be charged different rates as long as the classifications themselves are reasonable.[9] Since the District's classifications are based upon the relative benefits received by each like group of customers, they are not unreasonable or discriminatory. The trial court's findings of fact are supported by substantial evidence in the record. To the extent that the remaining issues raised are not answered by our foregoing discussion, they are deemed nonmeritorious. Affirmed. DOLLIVER, C.J., and UTTER, BRACHTENBACH, DORE, PEARSON, CALLOW, GOODLOE, and DURHAM, JJ., concur. [1] RAP 4.2(a)(4). [2] Foundation for the Handicapped v. Department of Social & Health Servs., 97 Wn.2d 691, 698-99, 648 P.2d 884 (1982), cert. denied, 459 U.S. 1146 (1983), quoting Pacific Cy. v. Sherwood Pac., Inc., 17 Wn. App. 790, 794-95, 567 P.2d 642 (1977). [3] See, e.g., Englewood Water Dist. v. Halstead, 432 So. 2d 172 (Fla. Dist. Ct. App. 1983); Carlton Santee Corp. v. Padre Dam Mun. Water Dist., 120 Cal. App. 3d 14, 174 Cal. Rptr. 413 (1981); Amherst Builders Ass'n v. Amherst, 61 Ohio St.2d 345, 402 N.E.2d 1181 (1980); Home Builders Ass'n v. Provo City, 28 Utah 2d 402, 503 P.2d 451 (1972); Associated Homebuilders of Greater East Bay, Inc. v. Livermore, 56 Cal. 2d 847, 366 P.2d 448, 17 Cal. Rptr. 5 (1961). [4] Teter v. Clark Cy., 104 Wn.2d 227, 237, 704 P.2d 1171 (1985). [5] Finding of fact 13. [6] Finding of fact 15. [7] See finding of fact 28. [8] Teter, at 238. [9] Silver Shores Mobile Home Park, Inc. v. Everett, 87 Wn.2d 618, 623, 555 P.2d 993 (1976).