UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 97-60285
HOME BUILDERS ASSOCIATION OF MISSISSIPPI, INC.; MARK S.JORDAN;
GOOD EARTH DEVELOPMENT, INC.; MARK S. JORDAN, INC.; HIGHLAND
RIDGE PARTNERS, LP; SMCDC, INC.; POST OAK PLACE; LOCUST LANE
PARTNERS, L.P.; WILLIAM J. SHANKS; WJS & ASSOCIATES, INC.; SOUTH
MADISON COUNTY DEVELOPMENT COMPANY; THOMAS M. HARKINS, SR; THOMAS
M. HARKINS, JR.; NORTH PLACE DEVELOPMENT, INC.; NORTH RIDGE
DEVELOPMENT,INC.; FIRST MARK HOMES, INC.; THOMAS M. HARKINS,
Builder, Inc.; THV, INC.; J.F.P. & CO., INC.; J. PARKER SARTAIN;
BRIAN H.SARTAIN; HABITAT, INC.; J.P.S. BUILDING SUPPLIES, INC.;
SARTAIN ASSOCIATES, INC.; DOUGLAS PLACE PARTNERSHIPS,
Plaintiffs-Appellants,
VERSUS
CITY OF MADISON, MISSISSIPPI; MARY HAWKINS, Individually and in
her official capacity as Mayor of Madison, Mississippi; TIMOTHY
L. JOHNSON, Individually and in his official capacity as Alderman
and elected public official of the City of Madison, Mississippi;
LISA CLINGAN-SMITH, Individually and in her official capacity as
Alderman and elected public official of the city of Madison,
Mississippi; TOMMY E. BUTLER, Individually and in his official
capacity as Alderman and elected public official of the City of
Madison, Mississippi; CHARLES L. DUNN, Individually and in his
official capacity as Alderman and elected public official of the
City of Madison, Mississippi; GRIFFEN C. WEAVER, Individually and
in his official capacity as Alderman and elected public official
of the City of Madison, Mississippi.,
Defendants-Appellees.
Appeals from the United States District Court
for the Southern District of Mississippi
July 1, 1998
Before WISDOM, JOLLY, and HIGGINBOTHAM, Circuit Judges.
WISDOM, Circuit Judge:
I. Introduction
The sole question before us is whether the Tax Injunction Act
of 1937 bars a federal district court from exercising jurisdiction
over a plaintiff’s complaint that a municipal impact fee ordinance
violates the Fifth and Fourteenth Amendments to the United States
Constitution. The district court held that it does, and therefore
dismissed the complaint for want of subject matter jurisdiction.
We affirm.
II. Background
In 1986, the city of Madison, Mississippi, adopted an impact
fee ordinance that required developers and builders in new
residential areas to pay a $700 impact fee for each planned
residential dwelling unit as a necessary condition to obtaining a
building permit. Madison passed the ordinance to alleviate the
problems attendant to providing and maintaining essential
municipal services and facilities in the rapidly-growing city.
Under the terms of the ordinance, collected funds were to be
appropriated in a manner consistent with a contemporaneously-
adopted public improvement plan that was designed to guide the
future development of public facilities.1
In 1995, Home Builders Association of Mississippi (“Home
Builders”) and an assortment of others filed a suit under 42
U.S.C. § 1983 against the City of Madison in which they sought
1
From 1986 to 1994, however, Madison allegedly violated the
ordinance by applying the funds towards capital improvements that
were not delineated in the public improvement plan.
2
(1) a declaration that the impact fee ordinance was
unconstitutional, (2) an injunction prohibiting the assessment,
collection and expenditure of impact fees, and (3) a refund of
all impact fees collected in advance of the litigation.2 Home
Builders’s complaint specifically alleged that “the assessment,
collection and expenditure of any and all impact fees by Madison
... represents and constitutes nothing more than an improper,
unlawful and unconstitutional form of taxation or general tax.”
Madison moved to dismiss the case under Rule 12(b)(1) of the
Federal Rules of Civil Procedure on the ground that the Tax
Injunction Act removed it from the scope of the district court’s
subject matter jurisdiction. The district court denied the
motion but stated that it “may reconsider [the matter] at a later
date.” Following additional discovery and oral arguments on the
constitutionality of the impact fee ordinance, the district court
dismissed Home Builders’s complaint for want of subject matter
jurisdiction. It held that the 1986 impact fee ordinance
constituted a “tax” for purposes of the Tax Injunction Act, and
that the plaintiffs would be forced to seek relief in Mississippi
state court, which could provide them with a plain, speedy, and
efficient remedy. Home Builders timely appealed from this final
2
In 1996, Madison repealed the impact fee ordinance and
replaced it with a traffic impact fee ordinance to which Home
Builders does not object. At this juncture in the litigation,
therefore, Home Builders merely seeks a refund of the impact fees
collected under the 1986 ordinance.
3
judgment.
III. Standard of Review
We review de novo the district court’s grant of Madison’s
12(b)(1) motion to dismiss for want of subject matter
jurisdiction.3 A motion under 12(b)(1) should be granted only if
it appears certain that the plaintiff cannot prove any set of
facts in support of his claim that would entitle him to relief.4
“A case is properly dismissed for lack of subject matter
jurisdiction when the court lacks the statutory or constitutional
power to adjudicate the case.”5
IV. Discussion
The Tax Injunction Act provides:
The district courts shall not enjoin, suspend or restrain
the assessment, levy or collection or any tax under State
law where a plain, speedy, and efficient remedy may be had
in the courts of such State.6
The act imposes drastic limitations on the federal judiciary’s
3
Moran v. Kingdom of Saudi Arabia, 27 F.3d 169, 171 (5th Cir.
1994).
4
Benton v. United States, 960 F.2d 19, 21 (5th Cir. 1992).
5
Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182,
1187 (2d Cir. 1996).
6
28 U.S.C. § 1341. It is well-settled that the statute
applies not only to taxes imposed by states, but also to those
imposed by municipalities. Alnoa G. Corp. v. City of Houston, 563
F.2d 769 (5th Cir. 1977); Folio v. City of Clarksburg, 134 F.3d
1211, 1214 (4th Cir. 1998). It is equally well-settled that the
statute applies to actions like the one before us, in which the
plaintiff seeks a refund of taxes it has already paid. Pendleton
v. Heard, 824 F.2d 448, 451 (5th Cir. 1987).
4
ability to meddle with a local concern as important and sensitive
as the collection of taxes.7 Embodied within the statute is “the
duty of federal courts to withhold relief when a state
legislature has provided an adequate scheme whereby a taxpayer
may maintain a suit to challenge a state tax.”8 In short, the
Tax Injunction Act is a “broad jurisdictional impediment to
federal court interference with the administration of state tax
systems.”9
We employ a bifurcated analysis to determine whether the Tax
Injunction Act bars federal jurisdiction in a given case. First,
because the act is implicated exclusively by matters of state and
local taxation, we must decide whether the law in question
imposes a tax or merely a regulatory fee.10 Only if the law
imposes a tax does the act preclude a federal district court from
exercising jurisdiction. Second, even if the law imposes a tax
7
Rosewell v. LaSalle National Bank, 450 U.S. 503, 522 (1981).
See also Alnoa G. Corp. at 772.
8
Bland v. McHann, 463 F.2d 21, 24 (5th Cir. 1972).
9
United Gas and Pipe Line Co. v. Whitman, 595 F.2d 323, 326
(5th Cir. 1979). See also Fair Assessment in Real Estate Ass’n v.
McNary, 454 U.S. 100, 116 (1981) (“taxpayers are barred by the
principles of comity from asserting § 1983 actions against the
validity of state tax systems in federal court”).
10
What constitutes a “tax” for purposes of the Tax Injunction
Act is a question of federal law. Ben Oehrleins, Inc. v. Hennepin
County, 115 F.3d 1372, 1382 (8th Cir. 1997). The label affixed to
an ordinance by its drafters has no bearing on the resolution of
the question. See Robinson Protective Alarm Co. v. City of
Philadelphia, 581 F.2d 371, 374 (3d Cir. 1978).
5
for purposes of the Tax Injunction Act, a district court may
decline to exercise jurisdiction only if the state court is
equipped to furnish the plaintiffs with a plain, speedy, and
efficient remedy.11 That is, the act does not divest district
courts of jurisdiction if state court remedies are inadequate.
A. Tax v. Fee
Our initial inquiry, then, is whether Madison’s impact fee
ordinance qualifies as a tax for purposes of the Tax Injunction
Act. Home Builders, of course, urges that the ordinance imposes
a fee, in which event the act would not operate as a
jurisdictional bar. For its part, Madison contends that the
ordinance fits squarely within the meaning of a tax as
contemplated by the act. For the reasons that follow, we hold
that Madison’s impact fee ordinance qualifies as a tax rather
than a fee for purposes of the Tax Injunction Act.12
Distinguishing a tax from a fee often is a difficult task.
Indeed, “the line between a ‘tax’ and a ‘fee’ can be a blurry
one.”13 Workable distinctions emerge from the relevant case law,
however: the classic tax sustains the essential flow of revenue
11
Cumberland Farms, Inc. v. Tax Assessor, State of Maine, 116
F.3d 943, 945 (1st Cir. 1997); Collins Holding Corp. v. Jasper
County, South Carolina, 123 F.3d 797, 799 (4th Cir. 1997).
12
We need not and do not express any opinion as to whether the
ordinance constitutes a tax for purposes of other statutes or other
litigation.
13
Collins Holding Corp., 123 F.3d at 800.
6
to the government, while the classic fee is linked to some
regulatory scheme.14 The classic tax is imposed by a state or
municipal legislature, while the classic fee is imposed by an
agency upon those it regulates.15 The classic tax is designed to
provide a benefit for the entire community, while the classic fee
is designed to raise money to help defray an agency’s regulatory
expenses.16
In Mississippi Power & Light Co. v. United States Nuclear
Regulatory Commission,17 we considered whether a Nuclear
Regulatory Commission rule that mandated the payment of a charge
as a precondition to obtaining a license to operate a nuclear
facility qualified as a permissible fee or as an unconstitutional
tax.18 The rule was “designed to recover the costs for
processing applications, permits and licenses as well as the
costs arising from health and safety inspections and statutorily
14
See Folio v. City of Clarksburg, 134 F.3d 1211, 1217 (4th
Cir. 1998); Hager v. City of West Peoria, 84 F.3d 865, 871 (7th
Cir. 1996); San Juan Cellular Telephone Co. v. Public Service
Commission of Puerto Rico, 967 F.2d 683, 685 (1st Cir. 1992);
Mississippi Power & Light Co. v. United States Nuclear Regulatory
Commission, 601 F.2d 223, 227-29 (5th Cir. 1979).
15
San Juan Cellular Telephone Co. at 685.
16
Id.
17
supra note 14.
18
We did not decide this case in the context of the Tax
Injunction Act. Nevertheless, we find its reasoning helpful to the
disposition of the case at bar.
7
mandated environmental and antitrust reviews.”19 We held that
the rule imposed a fee rather than a tax because (1) it was
designed to defray the NRC’s operating costs, and (2) it did not
generate revenues that were intended to provide a benefit for the
general public.20 That holding is consonant with the cases we
cited above that define the paradigmatic fee as one imposed by an
agency upon those it regulates for the purpose of defraying
regulatory costs.21
In Tramel v. Schrader,22 we considered whether a special
street improvements assessment imposed exclusively upon select
businesses was a tax or a regulatory fee. Even though the
assessment was not levied against the community at large, we
concluded that the assessment constituted a tax for purposes of
the Tax Injunction Act.23 We reasoned that a broad construction
of “tax” was necessary to honor Congress’s goals in promulgating
the Tax Injunction Act, including that of preventing federally-
based delays in the collection of public revenues by state and
19
Mississippi Power & Light Co. at 225.
20
Id. at 228-30.
21
See also Union Pacific Railroad Co. v. Public Utility
Commission, 899 F.2d 854, 856 (9th Cir. 1990) (Public Utility
Commission assessment qualified as a fee rather than a tax because
it helped defray the cost of performing the regulatory duties
imposed on the Commission).
22
505 F.2d 1310 (5th Cir. 1975).
23
Id. at 1315-16.
8
local governments.24
With these principles and precedents in mind, we turn to the
question of whether Madison’s impact fee ordinance imposes a fee,
in which case the Tax Injunction Act would not be implicated, or
a tax, in which case the act would divest the district court of
subject matter jurisdiction. As a preliminary matter, it must be
noted that we are far more concerned with the purposes underlying
the ordinance than with the actual expenditure of the funds
collected under it.25 That is, we look principally to the
language of the ordinance and the circumstances surrounding its
passage. In doing so, it becomes clear that Madison’s impact fee
ordinance imposes a tax for purposes of the Tax Injunction Act.
The preamble to the ordinance states that its purpose was:
to alleviate problems attendant to the City of Madison
providing and maintaining the quality of essential municipal
services and facilities to its present and future residents
and to require the developers of and builders in new
residential areas within the City to pay a fair share of
providing and maintaining the essential municipal services
and facilities outlined in the PIP.
The ordinance further states that:
funds collected .... shall be used for street improvements,
fire department improvements, police department
improvements, and parks and recreation improvements as
outlined in the PIP .... This Ordinance shall be used for
the purposes of implementing and funding the PIP and to
otherwise further the protection and promotion of the public
health, safety and welfare of the City of Madison and its
24
Id. at 1316.
25
See Hager,84 F.3d at 870-71 (rather than a question solely
of where the money goes, the issue is why the money is taken).
9
citizens and to regulate the adverse effects of rapid
residential development by insuring adequate public
facilities and services to present and future residents of
the City.
Indeed, it is difficult to imagine that an ordinance designed to
protect and promote the public health, safety and welfare of an
entire community could be characterized as anything but a tax.
Furthermore, Madison’s impact fee ordinance does not bear any
resemblance to other ordinances and statutes that we and other
circuits have construed to impose fees.
Home Builders argues that the impact fee ordinance is
regulatory in nature because it narrowly defines the purposes for
which collected funds should be spent. We implicitly rejected
this argument in Tramel,26 and we decline to reconsider it now.
Home Builders also argues that Madison cannot identify how much
of the impact fees collected under the ordinance were, in fact,
expended on the public improvements outlined in the PIP. That
may be so. Nevertheless, it is an argument that goes to the
merits of the case, and as such, we will not consider it if the
Mississippi courts are equipped to provide Home Builders with an
adequate state remedy.
B. State Remedies
State courts are equipped to furnish a plain, speedy, and
efficient remedy if they provide a procedural vehicle that
26
supra note 22.
10
affords taxpayers the opportunity to raise their federal
constitutional claims.27 That is, a state’s remedy is adequate
when it provides taxpayers with a complete judicial determination
that is ultimately reviewable in the United States Supreme
Court.28 Importantly, though, “the state remedy need not be the
best of all remedies. [It] need only be adequate.”29
We conclude that Mississippi provides its citizens with a
plain, speedy, and efficient remedy for challenging a municipal
tax. Mississippi Code Annotated § 11-13-11 provides:
The Chancery Court shall have jurisdiction of suits by one
or more taxpayers in any county, city, town, or village, to
restrain the collection of any taxes levied or attempted to
be collected without authority of law.
Home Builders argues that the statute does not provide an
adequate remedy in this case because it does not apply to actions
in which taxpayers are seeking a tax refund. This argument is
without merit. In Bland v. McHann,30 we held that Mississippi
Code Title 10 § 1340, a precursor to § 11-13-11, provided a
plain, speedy, and efficient remedy to plaintiffs who sought a
refund of taxes levied improperly by a municipality. We see no
reason why § 11-13-11 does not create an adequate remedy at law
27
Smith v. Travis County Education District, 968 F.2d 453, 456
(5th Cir. 1992).
28
Id.
29
Alnoa G. Corp., 563 F.2d at 772.
30
supra note 8.
11
for these plaintiffs.31 Should Home Builders fail to persuade
the Chancery Court that Madison’s impact fee ordinance is
unconstitutional, it may appeal to the Mississippi Supreme Court,
and seek ultimate review in the United States Supreme Court.32
For the foregoing reasons, we affirm the judgment of the
district court. In doing so, however, we note that principles of
claim preclusion do not bar the plaintiffs from pursuing their
claims in state court. A dismissal under Rule 12(b)(1) is not on
the merits, and therefore cannot have a res judicata effect.33
AFFIRMED.
31
At oral argument, Madison conceded that Mississippi courts
are capable of furnishing an adequate remedy for Home Builders.
32
Federal jurisdiction over § 1983 actions is concurrent, not
exclusive. State actions may be brought under § 1983. Southern
Jam, Inc. v. Robinson, 675 F.2d 94, 98 (5th Cir. 1982). The
Mississippi Supreme Court has stated that its courts “are not free
to refuse adjudication of claims brought under the Constitution and
laws of the United States.” Burrell v. Mississippi State Tax
Commission, 536 So.2d 848, 863 (Miss. 1988).
33
Nowak, 81 F.3d at 1188.
12