Opinion ID: 2518820
Heading Depth: 3
Heading Rank: 1

Heading: Whether the Charter Amendment is Void under the RCCK

Text: The Appellants contend that [t]he circuit court wrongly concluded as a matter of law that [the Charter Amendment] is, in fact, a disguised initiative ordinance `authorizing or repealing the levy of taxes.' Relying on Omaha National Bank v. Spire, 223 Neb. 209, 389 N.W.2d 269 (1986), the Appellants assert that [t]he procedure by which [the Charter Amendment] was incorporated into [the RCCK] is dispositive and must be respected. The Appellants argue that [t]here is no dispute that [the Charter Amendment] was properly enacted in accordance with the [RCCK's] amendment process. This is conclusive of its character as a [c]harter amendment. (Citation omitted.) The Appellants further argue that: The circuit court wrongly determined without any evidence in the record that the intent of the people of the County was to disguise an ordinance as a Charter provision. See Lum Yip Kee, Ltd. v. City & County of Honolulu, 70 Haw. 179, 187, 767 P.2d 815, 820 (1989) (courts will not and cannot inquire into motives of members of a municipal governing body or other zoning authority where the validity of zoning plans or laws is under consideration). With virtually no factual record before it but the language of [the Charter Amendment], the circuit court should not have substituted its judgment about what the people of the County intended for the actual judgment of the people expressed in the [Charter Amendment]. (Footnote omitted.) Finally, the Appellants assert that [c]harters are the organic documents of the counties  their `constitutions'  and are the product of the people, not ordinary legislation such as ordinances, and the courts should not lightly abrogate them. The County, on the other hand, contends that, [i]rrespective of its title, the Charter Amendment is an impermissible initiative. The County argues that, [i]n substance, the Charter Amendment creates at least two new classes of properties under Kaua`i County's existing real property tax scheme. Initially, we acknowledge that, at oral argument, the County, through its attorney, conceded that the Charter Amendment was valid, and, when specifically asked whether the County was withdrawing its argument that the Charter Amendment was a disguised ordinance, counsel replied, Yes, to be candid, your Honor, as we see it today. However, the validity or invalidity of the Charter Amendment is a question of law for this court to decide. See Yogi, 101 Hawai`i at 63, 62 P.3d at 206 (stating that, where issues to be decided are questions of law, this court, as the court of last resort in this state, has responsibility to decide the issue); see also McCandless v. Campbell, 20 Haw. 404, 405 (1911) (concluding that, where a statement in question is purely of a conclusion of law[, it] does not bind the court. If it becomes essential to a disposition of the appeal, the issue of the alleged unconstitutionality will be considered and decided.) Stated differently, this court is not bound by the County's concession of law. F.A.C.E. Trading, Inc. v. Todd, 393 Md. 364, 903 A.2d 348, 355 n. 7 (2006) (stating that the appellate court is not bound by a party's concession of law); Bergmann v. McCaughtry, 211 Wis.2d 1, 564 N.W.2d 712, 714 (1997) (same). Moreover, inasmuch as there is no dispute that the circuit court's voiding of the Charter Amendment was based upon its conclusion that the amendment was a disguised ordinance and the Appellants specifically challenge the circuit court's conclusion on appeal, we must examine whether the circuit court erred in so concluding, regardless of the County's representation at oral argument. This court has previously stated that: It is . . . a fundamental tenet of municipal corporation law that a charter may not be amended except by properly initiated and enacted charter amendments. The City Council has no authority to amend the Revised Charter of the City and County of Honolulu [(RCH)]. See RCH, article XV. See also 5 McQuillin Mun. Corp. § 15.01[] at 50 [(3d ed. 1989)] (Whether a proposal is an ordinance or an amendment to the city charter must be determined from the substance of the proposal rather than its name); State ex rel. Werner v. Koontz, 153 Ohio St. 325, 91 N.E.2d 473 (1950) (footnote omitted) (amending the charter cannot be done with the guise of . . . designating such proposed amendment as an ordinance). Fasi v. City Council of City & County of Honolulu, 72 Haw. 513, 519, 823 P.2d 742, 744-45 (1992) (emphases added). In other words, the determination whether a proposal is an ordinance or an amendment to the city charter must be made by an examination of the substance and not the form of the proposal. See Save Our Streets v. Mitchell, 357 Md. 237, 743 A.2d 748, 755 (2000) (stating that the content of a charter amendment cannot transcend its limited office and be made to serve or function as a vehicle through which to adopt local legislation). Such an examination comports with this court's steadfast policy of refusing to elevate form over substance. Coon v. City & County of Honolulu, 98 Hawai`i 233, 254, 47 P.3d 348, 369 (2002) (stating that elevat[ing] form over substance is an approach we have repeatedly eschewed). Although Omaha National Bank  the case relied on by the Appellants  stands for the proposition that the deciding factor in determining whether a proposed initiative enactment is an amendment or a statute is the manner in which the proposal is denominated in the initiative petition submitted to the voters[,] 389 N.W.2d at 275, such a position is inconsistent with our prior precedent and case law from other jurisdictions. We, therefore, decline to follow Omaha National Bank, as the Appellants urge on appeal. Consequently, the determination whether the Charter Amendment is a disguised initiative ordinance must be made by an examination of the substance and not the form of the proposal. Preliminarily, we note our agreement with the Maryland Court of Special Appeals, which recently observed that: A charter is, in effect, a local constitution. Cheeks v. Cedlair Corp., 287 Md. 595, 606, 415 A.2d 255 (1980). It provides a broad organizational framework establishing the form and structure of government in pursuance of which the political subdivision is to be governed and local laws enacted. Id. at 607, 415 A.2d 255. Its `basic function' . . . is `to distribute power among the various agencies of government, and between the government and the people who have delegated that power to their government.' Save Our Streets v. Mitchell, 357 Md. 237, 248, 743 A.2d 748 (2000) (citation omitted). Consequently, it follows that an amendment to a charter is necessarily limited in substance to amending the form or structure of government initially established by adoption of the charter. Cheeks, 287 Md. at 607, 415 A.2d 255. It may not serve or function as a vehicle through which to adopt local legislation. Id. . . . Mayor & City Council of Ocean City v. Bunting, 168 Md.App. 134, 895 A.2d 1068, 1075 (2006) (brackets omitted) (first set of ellipses in original) (emphases added). Based on the foregoing principles, the Maryland Court of Special Appeals further observed that . . . the [Maryland] Court of Appeals [(Maryland's court of last resort)] has invalidated proposed charter amendments, for being legislative in character, that would have established a comprehensive system for regulating rents within the City's residential housing market, Cheeks, 287 Md. at 608, 415 A.2d 255; or created detailed procedures for arbitrating labor disputes involving county firefighters, Griffith v. Wakefield, 298 Md. 381, 470 A.2d 345 (1984); or prohibited the expenditure of county funds to install or maintain speed bumps as well as to remove them. Save Our Streets, 357 Md. 237, 743 A.2d 748. . . . It is common, the Court [of Appeals] explained, for constitutions or charters to authorize, or preclude, specified types of enactments by legislative bodies. [ Griffith, 298 Md. at 389, 470 A.2d 345]. This is quite different, the Court [of Appeals] stressed, from a charter itself containing all of the detailed provisions concerning the subject. Id. Id. (emphases added). In Board of Supervisors of Elections of Anne Arundel County v. Smallwood, 327 Md. 220, 608 A.2d 1222 (1992) [hereinafter, Smallwood ], the Maryland Court of Appeals (the court) considered the validity of certain proposed charter amendments that would have essentially limited property taxes in Baltimore and Anne Arundel Counties. The proposed charter amendments consisted of, inter alia, roll-back and cap provisions. Specifically, [t]he roll-back provisions of the proposed [charter] amendments would have limited the amount of property tax revenues for the tax year 1991-1992 to no more than the amount collected in the tax year 1989-1990 for Baltimore County[] and no more than that collected in the tax year 1988-1989 for Anne Arundel County. Id. at 1234. The cap provision of the proposed charter amendment for Baltimore County would have precluded property tax revenues from be[ing] raised by more than 2% per year, beginning with tax year 1992-1993. Id. at 1226. Similarly, the cap provision of the proposed charter amendment for Anne Arundel County would not have allowed property tax revenues to exceed the constant yield rate by a value greater than the increase in the Consumer Price Index from the preceding January, or by 4.5%, whichever would be less[,] id. at 1227, beginning with tax year 1992-1993. The proposed charter amendments in both counties were rejected by the voters at the 1990 general election. Id. at 1229. On appeal, the court concluded that the cap provision of the proposed amendments constituted proper charter material. Id. at 1230. Observing that a charter is the organic, the fundamental law, establishing basic principles governing relationships between the government and the people[,] id., the court held that [t]he proposed [charter] amendments directly involved the relationship between the people and the government by limiting the power of the government to tax. Id. (internal quotation marks, citation, and ellipsis omitted) (format altered). Specifically, the court stated: Limitations imposed by the people on their government are fundamental elements of a constitution. The Maryland Declaration of Rights and the Bill of Rights to the United States Constitution largely represent limitations on governmental power. In fact, the desire of the people to limit the government's ability to tax was a major cause of the American Revolution. There was no colony of English America, in which the claim of the inhabitants, to exemption from all taxation not sanctioned by their assent, was more familiar than in Maryland. The Constitution of the United States, the Constitution of Maryland, and the charters of [both Maryland counties] are replete with provisions limiting the power of governments to raise and appropriate revenue. Thus, a limitation on the power of a legislative body to raise revenue is at the heart of the form and structure of our government and thus is proper charter material. Id. at 1230-31 (internal quotation marks, citations, and footnotes omitted) (emphases added). The court also relied on a distinction between proposed amendments that authorize, or preclude, specified types of enactments by legislative bodies, which are ordinarily valid, and those that constitute complete and specifically detailed legislative scheme[s], which are ordinarily invalid. Id. at 1231 (internal quotation marks and citations omitted); see Save Our Streets, 743 A.2d at 756 (recognizing that the Smallwood court relied on such a distinction). The court stated that: [T]he . . . [charter] amendments were not back-door attempts by the voters of [the c]ounties to enact detailed legislation. Nor did they divest the county councils of the ability to set the property tax rates. Rather, each would have merely precluded a particular type of enactment by the legislative body, namely[,] the power to collect property taxes above the specified cap.  608 A.2d at 1232 (emphasis added). The court also relied on a treatise for the proposition that [a] common express restriction upon the municipal power to tax is one limiting the amount or the rate that may be imposed in any one year. The validity of such a provision generally is sustained. Id. (quoting E. McQuillin, The Law of Municipal Corporations § 44.26 (3d ed.1984)). Ultimately, the court held that the tax cap portions of the [charter] amendments were facially valid because they constituted proper charter material and did not conflict with public general law. Nevertheless, we render no opinion as to the validity of the tax caps as they might have been applied in practice. County governments are required by state law to provide many public services such as public education, police and fire protection services, water and sewage services, etc. If it is subsequently determined in a particular case that a local limitation on property tax revenues so hampers a county government that it cannot perform the duties required under state law, a tax limitation charter provision may well be found to be invalid as applied. Id. at 1233 (citing E. McQuillin, The Law of Municipal Corporations § 44.26) (emphases added). With respect to the roll-back provisions, however, the court held that those provisions of the proposed charter amendments violated Maryland Code, Tax-Property Article § 6-302(a) (1986), which mandates that the governing body of each county is to set the property tax rate for the next year. [22] Id. at 1234 (emphasis added). The court stated that, [u]nlike the tax cap provisions that would have simply placed a limit on the taxing power of each county council, the roll back provisions would have transferred the county councils' [section] 6-302(a) powers to the voters. Instead of the councils setting the tax rates, the roll back provisions would have allowed the voters of Baltimore and Anne Arundel Counties to set the property tax rates for the tax year 1991-1992. Id. Accordingly, the court invalidated the roll-back provisions of the proposed charter amendments. Id. As previously mentioned, the Charter Amendment in the instant case provides: