Eagle Harbor, LLC v. Isle of Wight County

PRESENT: All the Justices

EAGLE HARBOR, L.L.C., ET AL.
OPINION BY
v. Record No. 051543 JUSTICE G. STEVEN AGEE
April 21, 2006
ISLE OF WIGHT COUNTY

FROM THE CIRCUIT COURT OF ISLE OF WIGHT COUNTY
E. Everett Bagnell, Judge

Eagle Harbor, L.L.C. and Founders Pointe, L.L.C. ("the

Developers")1 appeal from the judgment of the Circuit Court of

Isle of Wight County which sustained the demurrer of the County

of Isle of Wight ("the County") to a bill for declaratory and

other relief filed by the Developers, as well as an amended

bill, and dismissed the case with prejudice. For the reasons

set forth below, we will affirm the judgment of the trial court.

I. BACKGROUND AND PROCEEDINGS BELOW

The Developers own several hundred acres of land in the

County, part of which is zoned "for development of a mixed-use

community" including residential units, and the remainder is

"zoned for single-family residential . . . units." Combined,

the Developers have approximately 1,850 residential unit sites,

1
Eagle Harbor owns approximately 567 acres, zoned for up to
1,510 residential units, located on Route 17 in Isle of Wight
County. Founders Pointe owns approximately 325 acres in the
County, which are zoned for up to 340 single-family residential
units. The Founders Pointe development was commenced by the
principals of Eagle Harbor after Eagle Harbor initially
contested the sewer and water connection fees at issue in this
case. Eagle Harbor and Founders Pointe will be referenced
together as "the Developers" throughout this opinion.
all of which are located in the County's Northern Development

Service District ("NDSD"). The County has three separate

utility service districts: the NDSD, the Windsor Service

District ("WSD"), and the Southern Development Service District

("SDSD").

In 1996, the County's Board of Supervisors ("the Board")

enacted ordinances ("the 1996 Ordinances") setting water and

sewer connection fees for each residential unit of $3,000 to

connect to the County's water system and $3,000 to connect to

the County's sewer system. The 1996 Ordinances also provided

that "when application for service is made for single family

houses in a system totally installed by the developer and

conveyed to the County at no cost, the connection fees [would]

be reduced by sixty percent (60%)" ("the developer credit"). In

2000, the Board repealed the developer credit.

In 1997, the County issued 25-year General Obligation Water

and Sewer Bonds in the amount of $14,250,000 in order to finance

improvements to its water and sewer system. Specifically, 45%

of the bond proceeds financed improvements to the County's water

system in the NDSD and the remainder went to improvements to the

County's sewer system in the other two service districts. There

were no sewer improvements in the NDSD and no water improvements

undertaken in the WSD or the SDSD from the proceeds of the bond

issue.

2
 In April 2001 the Board commissioned an "internal study of

existing water and sewer rates" and utility connection fees.

The results of the study ("the County Report") noted that under

the 1996 Ordinances, including the repeal of the developer

credit, payments on "[t]he average yearly sewer debt of $554,246

would require an average of 185 new sewer connections per year,"

and "[t]he average yearly water debt of $461,063 would require

an average of 154 new water connections per year." The County

Report also found that only "100 new water connections and 90

new sewer connections are projected next fiscal year," and

concluded that "[b]ased on [the] assumption . . . that there

would be the same number of connections per year in the next 25

years, the existing water and sewer connection fees would need

to be increased to $4,610 and $6,158 respectively to totally

support the existing debt." In September 2001, the Board passed

new ordinances increasing the residential water and sewer

connection fees to $4,000 each. ("the 2001 Ordinances"). These

fees applied to any new residential connection to either system

anywhere in the County.

By letter to the County dated August 14, 2003, Eagle Harbor

contested the legality of the 2001 Ordinances. Specifically,

Eagle Harbor contended that the connection fees were not "fair

and reasonable" as required by statute because there was "no

reasonable correlation" between the benefits derived from the

3
water and sewer improvement projects funded by the bond proceeds

and the fees charged. The letter noted that any new customer

connecting to the County systems during the life of the bond

issue would be required to pay the fees regardless of whether

that customer derived benefit from the improvement projects

financed by the bond proceeds. Further, Eagle Harbor pointed

out that though "the useful life of the improvements . . .

materially exceeds the term of the [b]onds, customers benefiting

from those [p]rojects after the [b]onds have been retired bear

none of the capital costs associated with them." Eagle Harbor

suggested alternative methods of computing the fees that would

require connecting customers to pay fees based on the benefit

received from the bond issue projects in their utility service

district. Eagle Harbor contended that it should pay only a

nominal sewer connection fee as it had "paid all the costs of

extending sewer" to its property.

By letter of November 20, 2003, Eagle Harbor made a demand

pursuant to Code § 15.2-1248, that the County pay $3,848,500,

"representing the sum by which land sales within Eagle Harbor,

LLC have been impacted by the challenged fees."2 Founders Pointe

made a separate demand on September 10, 2004, for $569,500 in

2
In later demand letters to the County, Eagle Harbor
increased its demand as more of its residential units for which
it had paid the increased utility fees were sold. By letter of

4
damages for the "imposition of improper and excessive water and

sewer connection fees" upon the same basis previously set forth

by Eagle Harbor.

Receiving no response from the County, the Developers filed

a bill of complaint for declaratory and other relief on

September 17, 2004, seeking a determination that the connection

fees under the 2001 Ordinances were "unreasonable and contrary

to law." They also sought compensation for the difference

between the connection fees they paid under the 2001 Ordinances

and the level of fees the Developers contended were reasonable

and lawful. The Developers did not allege in this pleading, or

in the later filed amended bill for declaratory and other

relief, that the 2001 Ordinances were actually an improper

revenue raising device amounting to an illegal tax, impact fee,

or special assessment so as to be void.

In the alternative, the Developers asked the trial court to

enter "an injunction requiring the County to refund all water

and sewer connection fees illegally charged since September 20,

2001." The Developers appended to their bill of complaint a

copy of the County Report and a study conducted by their own

expert, Robert C. Dolecki, P.E., evaluating the County's

methodology in setting connection fees ("the Dolecki Report").

September 13, 2004, Eagle Harbor alleged its accrued damages had
increased to $6,284,600.

5
 The County filed a demurrer and a hearing was held by the

trial court. By letter opinion dated March 22, 2005, the trial

court found that a "presumption of legislative validity" and

therefore, a "presumption of reasonableness" attached to the

2001 Ordinances. The trial court noted that the standard of

review for such an ordinance was whether it was "fairly

debatable." The trial court then opined that under the standard

of review "only irrational, arbitrary or capricious action falls

outside the 'fairly debatable' standard." The trial court then

concluded that the Developers did not "state[] facts, which if

considered true, would establish unreasonableness."

Consequently, the trial court ruled the 2001 Ordinances met the

"fairly debatable" standard and were thus valid.

As to the Developers' claim under Code § 15.2-2119, the

trial court opined that this statute authorizes localities to

collect fees from property owners connecting to County utility

systems, and the Developers' contention that the 2001 Ordinances

were "contrary to law" was without merit. The trial court's

opinion did not specifically address the requirement under Code

§ 15.2-2119 that sewer and water connection fees must be "fair

and reasonable." The trial court concluded that it would

sustain the County's demurrer and dismiss the Developers' bill

of complaint.

6
 On April 1, 2005, the Developers moved the trial court for

leave to file an amended bill of complaint for declaratory

judgment and attached their proposed amended bill to the motion.

The facts alleged in the amended bill were essentially the same

as in the prior pleading. The Developers alleged they were

required as a condition of zoning to connect to County

utilities, and they consequently paid over $1,700,000 to extend

public water and sewer lines to their developments, which lines

have been or will be turned over to the County without charge.

The 2001 Ordinances, along with the repeal of the developer

credit, increased the Developers' connection fees per lot from

$2,400 to $8,000, and "the imposition of excessive connection

fees . . . diminished the value of the [Developers'

properties]". While the bond issue financed the NDSD Water

Project, the Windsor Sewer Project, the Windsor Boulevard

Extension, and the SDSD Sewer Project, approximately 90% of the

proceeds were used to extend service to specific areas where

County water or sewer service did not previously reach.

The Developers admitted they derived a limited benefit from

the NDSD Water Project but contended they received no benefit in

return for the sewer connection fee charged by the County. The

Developers further alleged that under the 2001 Ordinances, the

County did not assess capital costs of the bond issue against

those customers benefiting from such projects in proportion to

7
benefits derived, nor did it treat the improvements as

enhancements to the system generally and recover the capital

costs of the bond issue through regular monthly charges for

water and sewer service.

By Order of April 25, 2005, the trial court granted the

motion for leave to amend but found that the additional facts

alleged in the amended bill had been previously argued by the

parties and considered by the court.3 The trial court sustained

the demurrer to the bill of complaint and the amended bill of

complaint and dismissed the Developers' suit with prejudice. We

granted the Developers this appeal.

II. STANDARD OF REVIEW

"A demurrer tests the legal sufficiency of facts alleged in

pleadings, not the strength of proof." Glazebrook v. Board of

Supervisors of Spotsylvania County, 266 Va. 550, 554, 587 S.E.2d

589, 591 (2003) (citations omitted). To survive a challenge by

demurrer, a pleading must be made with "sufficient definiteness

to enable the court to find the existence of a legal basis for

its judgment." Moore v. Jefferson Hospital, Inc., 208 Va. 438,

3
We agree with the trial court that the amended bill of
complaint alleges no "additional facts" which were not
"previously argued by the parties [and] considered by the [trial
court]." As the initial and amended bills of complaint were
essentially the same and disposition was made by the same order
of April 25, 2005, we will hereafter refer to the Developers'
pleading as both the bill of complaint and the amended bill of
complaint.

8
440, 158 S.E.2d 124, 126 (1967) (internal quotation marks and

citations omitted).

In reviewing a trial court's order sustaining a demurrer,

"we are required to address the same issue that the trial court

addressed, namely whether the amended [bill of complaint]

alleged sufficient facts to constitute a foundation in law for

the judgment sought." Hubbard v. Dresser, Inc., 271 Va. 117,

119, 624 S.E.2d 1, 2 (2006). We undertake this review de novo,

accepting "as true all facts properly pleaded in the bill of

complaint and all reasonable and fair inferences that may be

drawn from those facts." Glazebrook, 266 Va. at 554, 587 S.E.2d

at 591 (citations omitted).

III. ANALYSIS

The Developers argue in three assignments of error that the

trial court erred in sustaining the County's demurrer. They

initially argue the trial court erred "by holding that the

validity of the fee structure [was] 'fairly debatable' as a

matter of law," and instead should have applied the "reasonable

correlation" test discussed in McMahon v. City of Virginia

Beach, 221 Va. 102, 267 S.E.2d 130 (1980). They also contend

that it was error to find the 2001 Ordinances "fairly debatable"

and thus "reasonable" as a matter of law in spite of the

Developers' factual allegations to the contrary. As such, the

Developers argue the trial court was required to take evidence

9
on the issue and could not sustain the County's demurrer on the

record before it. Finally, the Developers contend that the

trial court erred in its consideration of their argument under

Code § 15.2-2119 because it disregarded the statutory

requirement that connection fees be "fair and reasonable."

The County defends the standard applied in the trial court,

arguing that "[i]t is the Board, not [the Developers], that

determines an appropriate methodology for calculating connection

fees." Additionally, the County contends that the fees set by

the 2001 Ordinances were "fair and reasonable" as required by

Code § 15.2-2119 because the fees "were determined by the County

on an objective basis," and the "anticipated revenue from those

fees is not sufficient to cover the County's utility debt

service." The County also argues there was sufficient evidence

placed before the trial court by the Developers to permit a

ruling as a matter of law on whether the 2001 Ordinances met the

"fairly debatable" standard and therefore sustaining the

demurrer was appropriate.

A. REASONABLE CORRELATION TEST

The Developers' first assignment of error invites this

Court to hold that utility connection fees must meet an

independent test of validity in that such fees must bear a

reasonable correlation to the benefits derived by the property

10
owner. The Developers contend we established such a test for

utility connection fees in McMahon. We disagree.

In McMahon, we determined that a locality may "require

landowners who possess adequate supplies of potable water

provided by their privately owned wells to connect with the

municipal water supply" for a fee. 221 Va. at 103, 267 S.E.2d

at 131. We also affirmed the finding of the trial court "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 Va. at 134.

However, the issue in McMahon, and the other cases cited by

the Developers, Tidewater Association of Homebuilders, Inc. v.

City of Virginia Beach, 241 Va. 114, 400 S.E.2d 523 (1991), and

Mountain View Limited Partnership v. City of Clifton Forge, 256

Va. 304, 504 S.E.2d 371 (1998), was whether the ordinance in

question was illegal because it was "an impermissible revenue-

producing device" in the form of an invalid special assessment

or the like. The Developers have neither alleged nor argued

that the 2001 Ordinances are of that nature.

Our decision in McMahon does not set out a separate

"reasonable correlation" test for utility connection fees.

Rather, the examination of a municipal fee alleged to be an

11
"impermissible revenue-producing device" focuses on whether "a

reasonable correlation arose between the benefit conferred and

the cost exacted" to clarify if the levy in question "are fees

rather than special assessments." 221 Va. at 107-08, 267 S.E.2d

at 133-34. The landowners in McMahon argued that the ordinance

requiring the mandatory water connection was not "a valid health

measure" but rather "an impermissible revenue-producing device."

Id. at 107, 267 S.E.2d at 133. We determined that the ordinance

was a public health measure and as such, was a "valid exercise

of the City's police power." Id. at 107, 267 S.E.2d at 134.

Our observation that there existed "a reasonable correlation

. . . between the benefit conferred and the cost exacted" served

only to "negate[] the landowners' contention that the ordinance

was adopted solely as a revenue measure." Id. at 107-08, 267

S.E.2d at 134.

Our subsequent decisions applying McMahon's reasonable

correlation observation were in similar circumstances.4 In

4
The Developers urge that our decision in Estes Funeral
Home v. Adkins, 266 Va. 297, 586 S.E.2d 162 (2003), supports
their position that utility connection fees imposed by a
locality are unlawful if there is "no correlation between the
rates charged . . . and the cost . . . of providing [the
service]." However, the claim in Estes Funeral Home was based
on a constitutional argument that the Equal Protection clause
prohibited assessing disparate trash collection fees among
members of the same customer class. Id. at 302-03, 586 S.E.2d
at 165. We agreed that a locality could not charge different
fees to similarly situated customers. Id. at 306, 586 S.E.2d at
167. No such claim is made in the case at bar, which involves

12
Tidewater Association of Homebuilders, a group of homebuilders

challenged a city ordinance imposing a Water Resource Recovery

Fee to recover the capital costs of building a water pipeline.

241 Va. at 117, 400 S.E.2d at 525. The homebuilders alleged

"the City had no legal authority to levy and collect the fee,

that the fee was an unauthorized tax, and that the timing and

amount of the fee were arbitrary and capricious exercises of the

City's authority." Id. Specifically, the homebuilders

contended that the City acted without authority because the fee

was an "impact fee" as defined by former Code § 15.1-498.2,5 and

thus should have been established by statute in order to be

valid. Id. at 119-20, 400 S.E.2d at 526. Further, they alleged

that the fee was an impermissible tax because there is "no

particularized benefit to those who pay the fee." Id. at 120,

400 S.E.2d at 527.

Holding that "the ability to finance the cost of providing

[a water system] is inherent in the authority to provide it,"

this Court determined that the fee was a form of proprietary fee

for a particular service. Id. at 119-20, 400 S.E.2d at 526-27.

"[W]ithout the [pipeline], new developments or connections to

the mirror opposite of the circumstances reviewed in Estes
Funeral Home, because the County here is charging uniform fees
among members of the same customer class. Estes Funeral Home
therefore has no application in the case at bar.
5
This statute is now codified as Code § 15.2-2319.

13
the existing water system would not have been possible." Id. at

121, 400 S.E.2d at 527. We held that "those who are paying the

fee for the new connections . . . are receiving an immediate

benefit – access to the present City water system which would be

unavailable without the project." Id. Citing McMahon, we noted

that because "there was a reasonable correlation between the

benefits of the service provided and burdens of the fee paid,

. . . the fee was valid and not solely a revenue measure or

special assessment." Id.

In Mountain View, apartment complex owners contested the

validity of an ordinance nearly doubling refuse collection and

disposal fees. 256 Va. at 307, 504 S.E.2d at 373.

Specifically, the owners contended that under Tidewater and

McMahon, "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." Id. at 310, 504

S.E.2d at 374-75. At trial, the City of Clifton Forge presented

evidence that the landfill used at the time the higher fees were

enacted was set to close and that anticipated expenditures

associated with that closing merited the fee increase. Id. at

308-09, 504 S.E.2d at 374.

In explaining our prior holdings in McMahon and Tidewater

we observed that: "[W]e merely concluded that since the costs of

14
the planned services exceeded the fees imposed for those

services, there was no merit to the contention that either of

the ordinances constituted an impermissible tax." Id. at 311,

504 S.E.2d at 375. Based upon this precedent, we determined the

challenged ordinance in Mountain View

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.

Id. at 312, 504 S.E.2d at 376.

Our decision in McMahon and its progeny establish that the

judicial inquiry as to a reasonable correlation relating to a

municipal fee is directed to whether that fee is a bona fide

fee-for-service or an "invalid revenue-generating device."

Mountain View, 256 Va. at 312, 504 S.E.2d at 376. The

reasonable correlation test is not an independent determination

of reasonableness in the context of the "fairly debatable"

standard applied to the legislative enactment of a local

governing body. Instead, it is determinative of whether a fee

enacted by a locality is a permissible exercise of its police

power as opposed to an impermissible revenue-producing device in

the form of a special assessment, impact fee or the like.

In the case at bar, the Developers neither pled nor argued

that the 2001 Ordinances enacted fees that constituted an

15
impermissible tax as a special assessment, impact fee, or the

like. Neither do the Developers challenge the County's

authority to enact and levy the connection fees as a valid

exercise of the County's police powers. Instead, they contend

only that the fees are "unreasonable and contrary to law" as not

reasonably related to the benefit conferred on the Developers.

Therefore the "reasonable correlation" test has no application

to the 2001 Ordinances, and the trial court did not err by

refusing to apply such a review.

B. CODE § 15.2-2119

This Court has held that "setting rates and fees for sewer

or water services is a nondelegable legislative function." City

of South Boston v. Halifax County, 247 Va. 277, 283, 441 S.E.2d

11, 15 (1994); County of York v. King's Villa, Inc., 226 Va.

447, 450, 309 S.E.2d 332, 333 (1983); Armstrong v. County of

Henrico, 212 Va. 66, 77, 182 S.E.2d 35, 43 (1971). Thus, as

with any other legislative function, the action of the Board in

setting the connection fees is accorded a presumption of

validity. Board of Supervisors v. Robertson, 266 Va. 525, 532,

587 S.E.2d 570, 575 (2003).

The trial court recited the "reasonableness" standard which

governs the challenge to an ordinance a local governing body

enacts in its legislative capacity:

16
 The presumption of legislative validity that
attached to the Board's [legislation] is a presumption
of reasonableness. Legislative action is reasonable if
the matter in issue is fairly debatable. An issue is
fairly debatable when the evidence offered in support
of the opposing views would lead objective and
reasonable persons to reach different conclusions
. . . .
We have enunciated the following principles for
determining whether the presumption of reasonableness
in a given case should prevail or has been overcome:
Where presumptive reasonableness is challenged by
probative evidence of unreasonableness, the challenge
must be met by some evidence of reasonableness. If
evidence of reasonableness is sufficient to make the
question fairly debatable, the [legislative action]
must be sustained. If not, the evidence of
unreasonableness defeats the presumption of
reasonableness and the [legislative action] cannot be
sustained.

Id. at 532-33, 587 S.E.2d at 575 (citations and internal

quotation marks omitted).6

Code § 15.2-2119 requires that "[w]ater and sewer

connection fees established by any locality shall be fair and

reasonable." The General Assembly has used this language

throughout the Code to describe the obligation of authorities

6
The trial court cited Marsh v. City of Richmond, 234 Va.
4, 10, 360 S.E.2d 163, 166-67 (1987) and City of Richmond v.
Randall, 215 Va. 506, 511, 211 S.E.2d 56, 60 (1975), for the
proposition that "only irrational, arbitrary or capricious
action falls outside the 'fairly debatable' standard." However,
in Marsh we did not mention the "fairly debatable" standard, and
our decision in Randall echoes the reasoning of Robertson,
requiring a weighing of the evidence to determine reasonableness
and thus whether the contested issue is "fairly debatable."
Randall, 215 Va. at 511-12, 211 S.E.2d at 60. Thus, the trial
court erred in defining "fairly debatable" by focusing on the
"irrational, arbitrary or capricious" standard.

17
and localities charging connection fees and service fees for

water, sewer, and wireless communications to charge only fair

and reasonable fees. Code §§ 15.2-2143, -5114(10), -5136(D),

-5137(E), -5431.11(9), -5431.25(D); Code §§ 21-118.4(e), -118.5.

The legislature, however, declined in each instance to define

"fair and reasonable."

The Developers argue that because Code § 15.2-2119 was

amended in 1997, adding the "fair and reasonable" language to

the statute, the General Assembly created a new standard of

review. They contend a court must independently determine

whether a local governing body's fee enactment is "fair and

reasonable," not simply whether the issue of a "fair and

reasonable" connection fee is "fairly debatable." We disagree

with the Developers.

Prior to its amendment, Code § 15.2-21197 did not separately

address the right of a locality to assess connection fees. The

1997 amendments, however, added the pertinent language to the

statute that: "Water and sewer connection fees established by

any locality shall be fair and reasonable." (Emphasis added).8

These amendments did not address or change the applicable

7
Code § 15.1-321 became Code § 15.2-2119 in December of
1997 pursuant to a separate enactment during the same session of
General assembly repealing and recodifying former Title 15.1 as
Title 15.2. See 1997 Acts ch. 587.
8
See 1997 Acts ch. 12 (amending former Code § 15.1-321, now
codified as § 15.2-2119).

18
standard of judicial review used when examining the exercise of

the legislative function by a local governing body in adopting a

connection fee. Upon evidence that the connection fee is not

"fair and reasonable," and corresponding evidence that the

adopted fee does meet that standard, the courts' function upon

judicial review is to determine if the evidence that the fee is

"fair and reasonable" makes the issue "fairly debatable."

Application of that standard in this case indicates the trial

court did not err in granting the demurrer as to the Code

§ 15.2-2119 claim.

A public body's statutory obligation to charge "fair and

reasonable" fees is a delegation of authority by the General

Assembly which includes a certain amount of discretion. See

Central Tel. Co. of Va. v. Corporation Comm'n, 219 Va. 863, 874,

252 S.E.2d 575, 581 (1979) (In performance of its statutory

mandate to fix "just and reasonable" rates for a public utility,

the State Corporation Commission "exercises a legislative

function . . . which involves a reasonable amount of

discretion."). When the General Assembly permits a governmental

entity to act with discretion, without further statutory

guidance, we presume that such action is valid and reasonable

unless the party disputing the action presents unchallenged

evidence of unreasonableness. See Robertson, 266 Va. at 532-33,

587 S.E.2d at 575. Even though the trial court's opinion does

19
not elaborate on the facts weighed on demurrer, the record

reflects the trial court considered not only the factual

allegations in the Developers' pleadings, but also the facts

represented by the documents incorporated into the pleadings:

the Dolecki Report and the County Report. See City of

Chesapeake v. Cunningham, 268 Va. 624, 633, 604 S.E.2d 420, 426

(2004) ("Where no evidence is taken . . . the trial court, and

the appellate court upon review, must rely solely upon the

pleadings (which include[] the voluminous attachments in this

case) in resolving the issue presented.").

The Developers' pleading, including the Dolecki Report,

alleged facts, which if true, arguably constitute "probative

evidence" that the fees set by the 2001 Ordinances were not fair

and reasonable. For purposes of a demurrer, the Developers

showed they extended sewer lines to their properties at their

own considerable expense, but then paid the County $7,400,000 in

sewer connection fees without receiving any benefit. They also

alleged that if the cost of the sewer improvements were divided

by the number of property owners connecting to the bond-financed

system and receiving benefit therefrom, the actual cost per

connection should be $15,000, not $4,000. While the contrast is

not as stark regarding water connection fees, the Developers

make similar allegations which we must accept as true for

purposes of a demurrer. See Arlington Yellow Cab Co. v.

20
Transportation, Inc., 207 Va. 313, 318-19, 149 S.E.2d 877, 881

(1966).

Taking the facts alleged but not the conclusions of law

presented as true for purposes of the demurrer, the Developers

set out facts representing the unreasonableness of the

connection fees. Unless there were contrasting facts presented

of reasonableness, these allegations would be sufficient to

survive a demurrer because the issue could not be "fairly

debatable." However, by incorporating the County Report in

their pleading, the Developers also presented facts showing the

reasonableness of the fees to the trial court.

The County Report summarized the Board's policy decisions

with regard to financing the County's water and sewer systems:

• Operating expenses should be covered by user fees.
• Capital expenses should be covered by connection fees.

. . . .

• No general fund monies should be used to supplement
the Public Utilities budget.

. . . .

[T]he goal of the utility system is to become self
sustaining. In order to achieve that goal, the water
and sewer connection fees need to be increased to
cover the existing debt . . . .

The County Report concluded that in order to meet the policy

goal of having a self-sufficient utility system, the water and

sewer fees would need to be increased to $4,610 and $6,158,

21
respectively. Instead of increasing the connection fees to the

amount needed to fully support the bond indebtedness, the County

raised its connection fees to $4,000 per connection in the 2001

Ordinances.

The Developers' pleading, through the County Report, thus

placed before the trial court facts showing that the connection

fees established by the 2001 Ordinances were a uniform amount to

all new customers countywide, were less than the actual system

costs and were solely dedicated to retiring the utility bond

issue. The County Report thus presented facts showing that the

2001 Ordinances were fair and reasonable in rebuttal to the

allegations of unreasonableness in the pleadings and the Dolecki

Report.

The trial court thus had before it facts reflecting that

the fees were not "fair and reasonable" and offsetting facts

showing that the fees were reasonable as its letter opinion

notes: "the facts stated by Eagle Harbor . . . would appear to

support the very debatability of the County's enactment of the

fees." As such, there was "evidence of reasonableness . . .

sufficient to make the question fairly debatable," thus "the

legislative action must be sustained." Robertson, 266 Va. at

533, 587 S.E.2d at 575 (internal quotation marks omitted).

Accordingly, the trial court did not err in sustaining the

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demurrer regarding the Developers' argument under Code § 15.2-

2119.

C. TRIAL COURT'S FAILURE TO HEAR EVIDENCE

The Developers also assign error by contending the trial

court had an insufficient evidentiary basis upon which it could

sustain the County's demurrer and the trial court therefore

could not rule as a matter of law without taking evidence on the

issue of reasonableness. The Developers aver that Concerned

Taxpayers v. County of Brunswick, 249 Va. 320, 327, 455 S.E.2d

712, 716 (1995), establishes a rule requiring an evidentiary

proceeding beyond the pleadings and argue "the trial court must

hear and compare the evidence in order to determine whether a

legislative action's validity is 'fairly debatable.' "

In many cases, the Developers' argument would be accurate

as a practical matter because the facts alleged could not be

deemed sufficient to rule as a matter of law at the demurrer

stage since there is no venue for a defendant's factual

presentation. In evaluating a plaintiff's pleading upon

demurrer, the only factual allegations before the court would be

those alleged by that pleading. If those factual allegations,

deemed true, established the plaintiff's prima facie case and

required a rebuttal for determining the merits, the trial court

could not act without the taking of evidence.

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 However, in the case at bar, the Developers not only made

allegations of fact in their pleading, but enlarged the scope of

facts before the trial court by incorporation of the Dolecki

Report and the County Report. As noted earlier, the trial court

was entitled to consider these documents in its determination of

the demurrer. See City of Chesapeake, 268 Va. at 633, 604

S.E.2d at 426.

By virtue of the extended nature of the Developers'

pleading with the incorporated reports, the trial court was in a

unique position in the consideration of the demurrer to have

evidence of the purported unreasonable nature beyond the bare

allegations in the pleadings as part of the record for decision.

As discussed above, the trial court had facts showing the

unreasonable nature of the 2001 Ordinances in the Dolecki Report

which was met with facts reflecting reasonableness in the County

Report. The Developers chose to put these facts before the

trial court through the structure of their filing and cannot now

complain regarding the trial court's consideration of them. In

effect, the Developers presented both sides of the evidentiary

issue through their filing which was adequate for the trial

court to determine the 2001 Ordinances were "fairly debatable"

and resolve the issue on demurrer. Unlike the parties in

Concerned Taxpayers, the Developers here put an adequate

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evidentiary record before the trial court which, therefore, did

not err in ruling without an evidentiary hearing.

IV. CONCLUSION

For the foregoing reasons, we will affirm the judgment of

the trial court sustaining the County's demurrer and dismissing

the Developers' bill of complaint and amended bill of complaint

with prejudice.

Affirmed.

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