Present: All the Justices 

MOUNTAIN VIEW LIMITED PARTNERSHIP, 

AND CLIFTON WOODS LIMITED PARTNERSHIP 

v. Record No. 972275 OPINION BY JUSTICE BARBARA MILANO KEENAN 

 September 18, 1998 

THE CITY OF CLIFTON FORGE 

FROM THE CIRCUIT COURT OF THE CITY OF CLIFTON FORGE 

Duncan M. Byrd, Jr., Judge 

 In this appeal, we decide whether a former ordinance 

setting rates for refuse collection constituted an impermissible 

tax and whether the rate classifications contained in the 

ordinance were reasonable. 

I. 

In June 1991, the City Council for the City of Clifton 

Forge (City) enacted an ordinance increasing refuse collection 

charges in the City based on a classification system of 

residential and commercial users (1991 Ordinance).1 The fees 

imposed by the 1991 Ordinance varied in accordance with the 

described classifications. For example, single family 

residences receiving weekly service were charged $13.50 per 

month. Apartment house owners who collected refuse in 

"dumpsters" and received weekly or biweekly service were charged 

$12.55 per month for each residential unit. Rooming house 

 1

In 1993, the 1991 Ordinance was repealed and a new 

ordinance was enacted (1993 Ordinance). The 1993 Ordinance set 

rates for refuse collection based on anticipated volume assigned 

to "equivalent dwelling units." 
owners receiving weekly service were charged $6.75 per room per 

month. Stores, businesses, restaurants, banks, and office 

buildings requiring one collection per week also were charged 

$13.50 per month. However, some businesses, such as beauty 

shops, dry cleaners, and service stations, were charged higher 

fees, due to the nature of the waste that they generated. 

Mountain View Limited Partnership owns and operates an 

apartment complex known as Mountain View Apartments, which 

consists of 54 residential units. Clifton Woods Limited 

Partnership owns and operates an apartment complex known as 

Clifton Woods Apartments, which contains 66 residential units. 

Both complexes are located within the City of Clifton Forge and 

each uses one "dumpster" for the disposal of solid waste. The 

"dumpster" at the Mountain View complex is emptied by the City 

twice per week, while the "dumpster" at the Clifton Woods 

complex is emptied once per week. 

Before July 1991, Mountain View Limited Partnership and 

Clifton Woods Limited Partnership (collectively, Mountain View) 

paid the City a refuse collection fee of $7.00 per month for 

each residential unit. Under the 1991 Ordinance, Mountain View 

was required to pay $12.55 per month for each residential unit. 

In October 1992, Mountain View filed a motion for judgment 

and motion for declaratory judgment against the City, 

2
challenging the validity of the 1991 Ordinance.2 The issues 

raised at trial were whether the fee imposed by the 1991 

Ordinance constituted an impermissible tax and whether the fee 

classifications contained in the Ordinance were valid. 

At trial, Thomas C. Trinkle, the managing general partner 

of Mountain View, testified that other local jurisdictions 

charged comparable apartment complexes refuse collection fees at 

a flat rate of $28 a month and $132 a month. He also testified 

that the City of Covington charged $5.23 per dwelling unit per 

month for refuse collection. 

At Mountain View's request, Jason Hartman, a certified 

public accountant, made a comparative analysis of the City's 

annual financial reports pertaining to refuse collection for 

fiscal years 1990-91 through 1995-96. Hartman testified that 

these documents showed a total accumulated surplus of about 

$832,000 over the six-year period. As of June 1996, the 

accumulated surplus was $615,742.12. This amount included a 

$125,000 loan made in June 1996 from the solid waste fund to 

other governmental units included in the City's general fund. 

 2

After the 1991 Ordinance became effective, Mountain View 

refused to pay the applicable garbage collection fee. The City 

filed two separate motions for judgment against Mountain View 

seeking payment of fees and penalties plus interest for the 

failure to pay garbage collection fees. The parties agree that 

if the ordinance is valid, Mountain View owes the City $59,046 

plus interest of 10% per year from November 1, 1993, until paid, 

3
Hartman stated that the City maintains its solid waste fund 

as a unit of the "general fund" of the City. He explained that 

the general fund is a "governmental fund," which is analyzed 

under accounting principles by tracking the flow of financial 

resources, rather than by measuring individual costs and related 

revenue for those costs. 

Hartman testified that in order to determine whether a 

proprietary fee approximates the cost of providing a service, 

the "enterprise fund" method of accounting should be used. The 

governmental fund and the enterprise fund methods differ in the 

manner in which future expenses are listed. Under the 

governmental fund method, an expense is recorded only in the 

year the expenditure is made, while the enterprise fund method 

accounts for future expenses prior to the actual expenditure. 

Hartman agreed, however, that both methods of accounting are 

appropriate for use by a municipality, and that there is no 

requirement that one method be used over the other. 

Hartman further noted that in 1995 and 1996, the City's 

expenditures for solid waste management almost doubled. He 

explained that this increase was due to the fact that, in these 

years, the City allocated to the solid waste fund 25% of the 

costs incurred by other departments in performing duties related 

 

for services rendered between November 1, 1992, and September 

30, 1995. 

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to solid waste management. Although Hartman was "skeptical" of 

this allocation, he acknowledged that there are many ways to 

estimate a proper allocation of costs, and that accounting 

principles dictate only that the method be reasonable and 

consistent. 

Stephen A. Carter, the City Manager of Clifton Forge from 

June 1989 through June 1994, testified that the City paid for 

refuse disposal based on volume. He stated that since it is 

impractical to weigh refuse collected at every separate location 

in the City, the 1991 Ordinance classifications were created in 

an attempt to account for the difference in the volume of refuse 

generated by various commercial and residential users. 

Carter explained that the City raised the refuse collection 

fees in 1991 based on an expected increase in operating costs 

and future expenditures relating to the closing of the landfill 

used by the City. Carter stated that, in 1991, the City 

disposed of its solid waste in the Peters Mountain Landfill, 

which was scheduled to close in the "near future." 

Based on a consultant's report detailing the cost of 

complying with state and federal regulations relating to 

landfill closings, the City determined that its current fee 

structure would not support the expenses related to the Peters 

Mountain closing and other anticipated expenses. Carter stated 

that the City Council enacted the increased fees in the 1991 

5
Ordinance to ensure that the City could meet its anticipated 

expenses, and that an unexpected delay in the landfill closing 

resulted in a surplus in the solid waste fund. 

Beginning in fiscal year 1994, Carter decided to allocate 

to the solid waste fund the cost of work performed by other City 

departments on solid waste management, which previously had been 

billed to those other departments within the City's general 

fund. After discussions with managers of the relevant city 

departments, Carter determined that about 25% of the costs 

incurred by other City departments were related to solid waste 

management. Other city employees testified that Carter's 

estimate was reasonable. 

Thomas Price Smith, the City's independent auditor, 

testified that he reviewed the 25% allocation and concluded that 

it was reasonable. Smith also stated that, in his experience 

performing audits for about 70 counties, towns, and cities in 

Virginia, many local governments maintain a solid waste fund 

surplus. 

Smith explained that maintaining a surplus is desirable 

because a municipality must plan for future expenses. He 

testified that if a local governing body "spend[s] down" to zero 

at the end of its fiscal year, the governing body will have no 

funds with which to operate in the first month of the new fiscal 

year. Smith also stated that the State Auditor of Public 

6
Accounts requires that solid waste expenditures be reported 

under the governmental fund method of accounting. 

Richard Magnifico, the current city manager, testified that 

the City no longer uses the Peters Mountain Landfill and 

presently disposes of its solid waste at the Alleghany transfer 

station. He explained that "tipping fees," the cost for 

disposing of each ton of solid waste, increased from 

approximately $20 per ton at the Peters Mountain Landfill to $65 

per ton at the Alleghany transfer station. 

Magnifico projected that the City's solid waste fund would 

have a zero or a negative balance by the next fiscal year. He 

attributed this situation to the costs associated with the 

closing of the Peters Mountain Landfill, the increased "tipping" 

fees, the purchase of a new garbage truck for $78,000, and the 

purchase of a recycling truck for $30,000 and recycling 

containers for $22,000. 

After hearing this evidence, the trial court held that the 

1991 Ordinance imposed a valid fee, rather than an impermissible 

tax, and that there was sufficient evidence of the 

reasonableness of the Ordinance classifications to render the 

issue fairly debatable. Thus, the trial court upheld the 1991 

Ordinance and entered judgment in favor of the City in the total 

amount of $59,046 plus interest. 

7
II. 

On appeal, Mountain View argues that the City enacted the 

1991 Ordinance as a means of generating revenue to pay for the 

cost of performing other municipal functions. Mountain View 

asserts that under McMahon v. City of Virginia Beach, 221 Va. 

102, 267 S.E.2d 130, cert. denied, 449 U.S. 954 (1980), and 

Tidewater Ass'n of Homebuilders, Inc. v. City of Virginia Beach, 

241 Va. 114, 400 S.E.2d 523 (1991), the fee imposed by the 

Ordinance was an impermissible tax, because the fee exceeded the 

actual cost of providing the service and there was no reasonable 

correlation between the benefit conferred and the burden 

imposed. 

Although Mountain View concedes that the City may collect 

fees and maintain a surplus to pay for anticipated expenses, it 

contends that the present evidence in support of the need for a 

surplus is incredible as a matter of law. Mountain View argues 

that the surplus in the solid waste fund of at least $615,000 

far exceeded the estimated costs associated with the closing of 

the Peters Mountain Landfill, particularly since those costs 

were payable over a period of 30 years. 

Mountain View also asserts that the City's allocation of 

25% of costs from other municipal departments to the solid waste 

fund, and the loan in the amount of $125,000 to other 

governmental units included in the general fund, indicate that 

8
the City improperly used the revenue generated by the 1991 

Ordinance to support other city functions. Mountain View 

contends that, through use of the governmental fund accounting 

method, the City has attempted to hide its use of funds 

generated from solid waste collection fees to support other 

municipal functions. We disagree with Mountain View. 

We first consider the principles set forth in McMahon and 

Tidewater. In McMahon, the City of Virginia Beach had enacted 

an ordinance requiring landowners to connect their properties to 

the municipal water supply system, even if the owners did not 

intend to use any water from the system. 221 Va. at 104, 267 

S.E.2d at 132. Several landowners filed a declaratory judgment 

suit against the City alleging, among other things, that the 

water connection fee was an impermissible tax. The trial court 

disagreed, ruling that the fee was valid. Id. at 106, 267 

S.E.2d at 133. We affirmed the trial court, holding that 

"because the charges imposed by the ordinance would not exceed 

the actual cost to the City of installing the waterlines in the 

streets in front of the landowners' residences, a reasonable 

correlation arose between the benefit conferred and the cost 

exacted." Id. at 107, 267 S.E.2d at 134. Thus, we concluded 

that the evidence refuted the landowners' contention that the 

ordinance was adopted solely as a revenue-generating measure. 

Id. at 108, 267 S.E.2d at 134. 

9
Later, in Tidewater, we addressed the validity of a 

Virginia Beach ordinance that assessed a "water resource 

recovery fee" on all new connections to the City's water system. 

241 Va. at 117, 400 S.E.2d at 525. The fee was designed to 

finance, in part, the acquisition of water from Lake Gaston for 

use by the City's residents. A homebuilders' organization 

challenged the ordinance alleging, among other things, that the 

ordinance imposed a tax rather than a valid fee. Id. at 120, 

400 S.E.2d at 527. The trial court upheld the ordinance. Under 

the principles set forth in McMahon, we approved the trial 

court's ruling and held that under the facts presented, there 

was a reasonable correlation between the benefit of the service 

provided and the burden imposed by the fee. Id. at 121, 400 

S.E.2d at 527. 

We did not hold in either case that a fee charged by a 

municipality could not exceed the projected cost of providing 

the service, or that a municipality may not maintain a surplus 

in anticipation of future expenses. In fact, Code § 15.2-25053

expressly provides that a locality may include in its budget a 

reasonable reserve for contingency expenditures. Under the 

facts presented in McMahon and Tidewater, we merely concluded 

that since the costs of the planned services exceeded the fees 

10
imposed for those services, there was no merit to the contention 

that either of the ordinances constituted an impermissible tax. 

See Tidewater, 241 Va. at 121, 400 S.E.2d at 527; McMahon, 221 

Va. at 107, 267 S.E.2d at 134. 

In Tidewater, we implicitly acknowledged that a 

municipality may collect fees in anticipation of future expenses 

when we stated that the City was not only making significant 

expenditures presently, but would be required to make future 

expenditures to implement the project. 241 Va. at 122, 400 

S.E.2d at 528. We also stated in McMahon that a municipality 

may enact ordinances in anticipation of future problems, and 

that there "is no requirement that protective measures be 

limited to actions taken after a crisis." 221 Va. at 107, 267 

S.E.2d at 134. 

In accordance with these principles, we hold that a 

municipal ordinance setting a fee for refuse collection and 

disposal is not an invalid revenue-generating device solely 

because the fee set by the ordinance generates a surplus. The 

relevant inquiry, as set forth in McMahon and reaffirmed in 

Tidewater, is whether there is a reasonable correlation between 

the benefit conferred and the cost exacted by the ordinance. 

 3

This section, effective December 1, 1997, does not differ 

substantively from Code § 15.1-161.1, which was in effect on the 

date of trial. 

11
Tidewater, 241 Va. at 121, 400 S.E.2d at 527; McMahon, 221 Va. 

at 107, 267 S.E.2d at 134. 

In applying this test to the 1991 Ordinance, we consider 

the evidence in the light most favorable to the City, the 

prevailing party at trial. Hudson v. Lanier, 255 Va. 330, 331, 

497 S.E.2d 471, 472 (1998); Cardinal Dev. Co. v. Stanley Constr. 

Co., 255 Va. 300, 302, 497 S.E.2d 847, 849 (1998). We will not 

disturb the trial court's decision unless it is plainly wrong or 

without evidence to support it. Code § 8.01-680; Hudson, 255 

Va. at 333-34, 497 S.E.2d at 473; Cardinal, 255 Va. at 302, 497 

S.E.2d at 849. 

We conclude that the record contains sufficient evidence to 

support the finding of a reasonable correlation between the 

benefit conferred and the cost exacted by the 1991 Ordinance. 

The evidence showed that the benefit conferred by the Ordinance 

included the refuse collection service itself, as well as 

payment of projected costs relating to landfill closing 

regulations, greatly increased "tipping" fees, and new 

equipment. 

The maintenance of a budget surplus to pay for future costs 

was supported by the testimony of Thomas Price Smith, the City's 

auditor, and Jason Hartman, Mountain View's accounting expert. 

Both witnesses testified that municipalities commonly maintain 

surpluses in solid waste funds, and Smith added that such a 

12
practice is desirable to ensure that a municipality can meet the 

public's needs. The evidence also showed that the City's solid 

waste fund surplus essentially has been depleted due to recent 

expenditures necessary for the provision of solid waste 

collection services. 

We disagree with Mountain View that a different outcome is 

required based on the City's allocation of 25% of its costs from 

other departments to the solid waste department. This 

allocation was supported by Stephen Carter's testimony, as well 

as the testimony of Richard Magnifico, and Lee Anna Tyler, the 

City's accounting supervisor, who confirmed that the 25% figure 

was a reasonable estimate of the amount of work performed by 

other departments relating to solid waste management. Even 

Mountain View's expert, Hartman, agreed that the practice of 

allocating costs from other departments is reasonable, and that 

formal studies are not required to determine an appropriate 

allocation. 

We also find no merit in Mountain View's contention that 

the $125,000 loan made from the solid waste fund to other 

governmental units included in the City's general fund is 

evidence that the 1991 Ordinance is a revenue-generating device. 

13
Under Code § 15.2-1105,4 cities have authority to borrow money. 

Moreover, since the evidence was not refuted that this loan 

always has been accounted for as part of the solid waste fund 

surplus, the record does not show that this money was improperly 

diverted to other governmental units within the general fund. 

The City's use of the governmental fund accounting method 

also does not alter our decision. Both accountants who 

testified agreed that the City's use of this accounting method 

was proper, and that accounting principles do not require the 

City to use the enterprise fund accounting method. The City's 

use of the governmental fund method also assists the City in 

complying with the requirement of the State Auditor of Public 

Accounts that the City use this method of accounting in its 

reports to that office. Therefore, under the principles set 

forth in McMahon and Tidewater, we conclude that the evidence 

supports the trial court's determination that the 1991 Ordinance 

imposed a valid fee. 

III. 

Mountain View also argues that the trial court erred in 

ruling that the classifications contained in the 1991 Ordinance 

were reasonable. Mountain View notes that Carter, the former 

city manager, conceded that the cost associated with refuse 

 4

This section, effective December 1, 1997, does not differ 

substantively from Code § 15.1-843, which was in effect on the 

14
collection from businesses is no different from the cost 

involved in refuse collection from apartment buildings. Thus, 

Mountain View contends that the 1991 Ordinance was invalid 

because it charged apartment building owners more for the same 

service provided to business customers. We disagree with 

Mountain View's argument. 

We review Mountain View's challenge under well-established 

principles that afford the 1991 Ordinance a presumption of 

validity. See Twietmeyer v. City of Hampton, 255 Va. 387, 390, 

497 S.E.2d 858, 860 (1998); Town of Narrows v. Clear-View Cable 

TV, Inc., 227 Va. 272, 280, 315 S.E.2d 835, 839-40 (1984), cert. 

denied, 469 U.S. 925 (1985). "Municipal corporations are prima 

facie the sole judges of the necessity and reasonableness of 

their ordinances, and the presumption of their validity governs 

unless it is overcome by unreasonableness apparent on the face 

of the ordinance or by extrinsic evidence which clearly 

establishes the unreasonableness." Tweitmeyer, 255 Va. at 390-

91; 497 S.E.2d at 860 (quoting Town of Narrows, 227 Va. at 280, 

315 S.E.2d at 839-40); accord National Linen Service Corp. v. 

City of Norfolk, 196 Va. 277, 279, 83 S.E.2d 401, 403 (1954). 

A party challenging the validity of an ordinance has the 

burden of proving that the ordinance is unreasonable. 

Twietmeyer, 255 Va. at 391, 497 S.E.2d at 860; Town of Narrows, 

 

date of trial. 

15
227 Va. at 280, 315 S.E.2d at 840; Board of Supervisors v. 

Lerner, 221 Va. 30, 34, 267 S.E.2d 100, 102 (1980). When the 

presumptive reasonableness of an ordinance is challenged by 

probative evidence of its unreasonableness, the municipality 

must present evidence that the ordinance is reasonable. If the 

evidence of reasonableness is sufficient to render the issue 

fairly debatable, the ordinance must be sustained. However, if 

such evidence is insufficient to make the issue fairly 

debatable, the evidence of unreasonableness defeats the 

presumption and the ordinance cannot be sustained. Tidewater, 

241 Va. at 122, 400 S.E.2d at 528; Town of Narrows, 227 Va. at 

280-81, 315 S.E.2d at 840; Board of Supervisors v. Snell Constr. 

Corp., 214 Va. 655, 659, 202 S.E.2d 889, 893 (1974). 

We accord the trial court's ruling on this issue a 

presumption of correctness. We also give full credit to the 

presumption of validity of the 1991 Ordinance and examine the 

record to determine whether the evidence supports the court's 

ruling. Twietmeyer, 255 Va. at 391, 497 S.E.2d at 860; Town of 

Narrows, 227 Va. at 281, 315 S.E.2d at 840; see Tidewater, 241 

Va. at 122, 400 S.E.2d at 528. 

Applying these principles, we conclude that the evidence 

supports the trial court's ruling that the City's evidence of 

the reasonableness of the 1991 Ordinance classifications was 

sufficient to make the issue fairly debatable. The City 

16
presented evidence that it was impractical to weigh refuse at 

the point of collection. The evidence also showed that the fee 

for an apartment complex was based on a charge per residential 

unit to account for the greater volume of waste generated by 

this type of facility. The fee charged for other types of 

residential dwellings, such as rooming houses and single family 

residences, also was based on a per unit basis. 

Although the size of Mountain View's "dumpsters" was the 

same as those used by some businesses, there was no evidence 

that the amount of waste generated by these facilities was the 

same. Thus, we conclude that the record supports the trial 

court's ruling that the 1991 Ordinance was valid because the 

evidence of reasonableness of the classifications was fairly 

debatable. 

For these reasons, we will affirm the trial court's 

judgment. 

Affirmed.

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