Opinion ID: 2373639
Heading Depth: 3
Heading Rank: 2

Heading: The District Court Erred in Rejecting The City's Multiyear Analysis

Text: ¶ 26 We now address whether the district court erred in rejecting the City's five-year cost/revenue analysis in determining the reasonableness of the fee. While the district court found that the City's inspection costs exceeded its inspection revenues from July 1, 1998, to June 30, 2003, it concluded that the City's use of a five-year period to analyze the reasonableness of its inspection fees was prone to manipulation and therefore inappropriate. Associates urges us to adopt the district court's rationale. Additionally, it argues that the district court is correct for the alternative reason that use of a five-year period violates the Uniform Fiscal Procedures Act for Utah Cities (the Act). See Utah Code Ann. §§ 10-6-101 to -159 (Supp. 2010). We disagree on both counts. ¶ 27 We first address Associates' contention that the City's five-year analysis is contrary to the Act. Associates argues that the City was required by the Act to provide an annual budget for its civil inspection program in which the City was required to estimate the total ... anticipated revenues from its inspection fee. It further argues that these revenues were required to equal the total of appropriated costs associated with the civil inspections. See id. § 10-6-110(2). Associates' contentions are misplaced. ¶ 28 Whether the City is in violation of the Act has no bearing on whether the City's inspection fee is constitutional. Nor does it have any bearing on whether a multiyear analysis is appropriate in determining the reasonableness of the fee. Rather, the Act provides accounting, budgeting, and financial reporting procedures for cities. Id. § 10-6-102. While the Act may require cities to adopt an annual budget for certain funds, it does not follow that the Act requires a court to determine the constitutionality of a fee based on an annual period. We therefore conclude that the City's multiyear analysis is not prohibited by statute. ¶ 29 Having determined that the City's multiyear analysis is not prohibited by statute, we next address the propriety of a multiyear analysis. We previously have noted that a multiyear approach is appropriate in evaluating whether the revenues generated by a municipal fee reasonably relate to the regulatory cost. See Bennion Gas & Oil Co., 15 P.2d at 651. The rationale for a multiyear approach is that a city's disbursement for its regulatory expenses may so vary from time to time that the surplus of one year may be needed to supply the deficiency of another. Id. (internal quotation marks omitted). ¶ 30 This rationale is persuasive. While the City experienced a surplus of inspection revenues during calendar year 1999, this surplus was needed to cover the deficiencies the City faced in the following four years, where the City's inspection costs exceeded its revenues. In this case, a multiperiod review is more appropriate than an annual period review because the revenues the City received from its civil inspection fee were received up front. The fees were recognized in the year they were received but the actual inspection costs were incurred over the following months or years. [4] Because we conclude that a multiyear analysis is not prohibited by the Act and is an appropriate approach for analyzing whether a city's costs exceed its revenues, we hold that the district court erred in finding that the City's multiyear analysis was inappropriate.