Grant County Fire Protection District No. 5 v. City of Moses Lake

Madsen, J.

(concurring/dissenting) — I agree with the majority’s conclusions that the petition methods for seeking annexation at issue here do not violate article I, section 19 of the Washington State Constitution or the equal protection clause of the United States Constitution. I also agree that the state privileges and immunities provision provides a basis for an analysis independent of that of the equal protection clause. However, the majority’s assessment under article I, section 12 of the constitutionality of the petition methods of annexation is insufficient, and provides little guidance for distinguishing those classifications that truly offend the constitution from those that do not. The predictable, and unfortunate, result is that courts will have license to make what are essentially ad hoc determinations of constitutionality under article I, section 12. In addition, I disagree with the majority’s conclusion that the statutes at issue here violate the privileges and immunities clause. In contrast to the majority’s limited consideration of the reasonableness of the classification that the Legislature has drawn, and its reliance on a case that does not support its analysis, there are in fact substantial reasons for permitting the owners of property, based upon the property’s *737valuation, to initiate annexation proceedings. Accordingly, I dissent from the majority’s holding that the petition methods are unconstitutional under article I, section 12.

The majority opinion is the first modern opinion to state that the privileges and immunities clause should be given a construction independent of that of the federal equal protection clause, although this court has alluded to the possibility of independent state analysis in several of its recent opinions. With this in mind, I believe it is essential that the court adhere to a principled analysis under article I, section 12, in order to delineate its protections in a meaningful and consistent manner. An important starting point is that a Gunwall analysis is intended to identify those situations where a state constitutional provision requires a separate and independent constitutional analysis. State v. Gunwall, 106 Wn.2d 54, 720 P.2d 808 (1986). It does not follow, however, that when an independent analysis is employed, unconstitutionality will be found, and the majority does not make that assumption.

Historically, this court issued a number of opinions that illuminate the proper analysis under article I, section 12. As the majority correctly notes, the ultimate inquiry in this case is whether the classification drawn by the Legislature, owners of the statutory percent valuation of the property within the area sought to be annexed, is, as variously stated in the cases, arbitrary or unreasonable, State v. Fraternal Knights & Ladies, 35 Wash. 338, 344, 77 P. 500 (1904), wholly arbitrary and capricious as opposed to predicated on a fair, just or natural basis, State ex rel. Bacich v. Huse, 187 Wash. 75, 81, 59 P.2d 1101 (1936), overruled on other grounds by Puget Sound Gillnetters Ass’n v. Moos, 92 Wn.2d 939, 603 P.2d 819 (1979), i.e., based upon some reasonable and just difference between those within the class and others, McDaniels v. J.J. Connelly Shoe Co., 30 Wash. 549, 555, 71 P. 37 (1902). “The distinctions giving rise to the classification must be germane to the purposes contemplated by the particular law and may not rest upon a mere fortuitous characteristic or quality of persons, or upon *738personal designation.” Huse, 187 Wash, at 84. The purpose of the law itself, of course, must be legitimate. See Ralph v. City of Wenatchee, 34 Wn.2d 638, 209 P.2d 270 (1949).

What I believe the majority has failed to effectuate, however, is the principle that “ ‘[e]very presumption is in favor of the constitutionality of a legislative act, and ... in matters of classification, the legislature has a very broad discretion.’ ” Campbell v. State, 12 Wn.2d 459, 469,122 P.2d 458 (1942) (quoting State v. Kitsap County Bank, 10 Wn.2d 520, 523, 117 P.2d 228 (1941)); see also Huse, 187 Wash, at 80. In this regard, the majority has not sufficiently considered the particular nature of the laws at issue. As the majority recognizes, the type of law at issue may affect the constitutional analysis under article I, section 12. For example, legislative classifications where taxation statutes are concerned call for considerable judicial deference. Here, the particular statutes at issue involve municipal annexation. This is a matter particularly within the Legislature’s power. As this court has recognized, ‘[t]he power to enlarge the boundaries of a municipality by the annexation of contiguous territory is an incident to the legislative power to create and to abolish municipalities at pleasure.’ ” Wheeler Sch. Dist. No. 152 v. Hawley, 18 Wn.2d 37, 43, 137 P.2d 1010 (1943) (emphasis omitted) (quoting 1 John Forrest Dillon, Municipal Corporations §§ 355, 357 at 617 (5th ed. 1911)). Therefore, the court should be heedful of the due deference to be accorded the Legislature in this case. That deference must be given in substance, and not merely as a matter of a pro forma recitation. Otherwise, this court encroaches on the Legislature’s authority and assumes for itself the power to determine what the law should be.

In addition to neglect of the deference due the Legislature, the majority also fails to properly assess the reasonableness of the legislatively drawn classification. Rather than determining whether the Legislature’s classification of those who may petition for annexation is based on reasonable grounds, germane to a legitimate purpose of the law, the majority simply relies on the reasoning in City of *739Seattle v. State, 103 Wn.2d 663, 694 P.2d 641 (1985) that property owners and other residents of an area proposed to be annexed are similarly situated. City of Seattle does not answer the privileges and immunities question in this case, because it involved the constitutionality of a statute under an equal protection and right to vote analysis.

“Under the equal protection clause, persons similarly situated with respect to the purposes of [a] law must receive like treatment.” Gossett v. Farmers Ins. Co., 133 Wn.2d 954, 979, 948 P.2d 1264 (1997) (citing State v. Blilie, 132 Wn.2d 484, 493, 939 P.2d 691 (1997)). The court in City of Seattle was faced with an equal protection challenge to a statute that allowed property owners to block a vote on annexation under the election method. The court found that residents of an area proposed to be annexed were similarly situated to property owners with respect to the law because annexation would affect governmental services and regulation as well as property tax levels, and also property tax levels would indirectly affect rents and costs of local services. City of Seattle, 103 Wn.2d at 672. The court noted that settled law established that the state generally has no compelling interest in granting greater voting rights based on property ownership, and that the state had not shown such an interest in this specific case. Id.

In contrast, in this case the petition methods do not concern the right to vote on an annexation, as the majority correctly concludes. Nor do they concern the final decision on annexation, unlike the election statute at issue in City of Seattle. Instead, if property owners of the proper percentage of assessed valuation in the area proposed to be annexed sign the annexation petition, the question of annexation goes to the city’s legislative body for its final decision as to whether to annex. RCW 35.13.140; RCW 35A.14.130. The legislative body must hold a public hearing and invite interested persons to appear and voice approval or disapproval. RCW 35.13.140; RCW 35A.14.130. If, following the hearing, the legislative body decides to annex, it may annex all or any portion of the proposed area. RCW 35.13.150; RCW 35A.14.140.

*740Thus, the conclusion in City of Seattle that residents of the area proposed to be annexed are similarly situated to property owners for purposes of statutes affecting the right to vote on annexation under the election methods does not carry over to this case, where the challenged laws are completely different. Moreover, the question under the privileges and immunities clause is whether there is a reasonable ground for the classification. Finally, there is no settled law that granting greater rights to initiate consideration of annexation by property owners is unconstitutional, in contrast to the settled law in the voting rights cases. City of Seattle does not resolve the privileges and immunities issue in this case.

Rather than the majority’s summary reliance on an inapplicable case, the privileges and immunities question should be resolved as follows. The challenged laws authorize initiation of annexation proceedings by owners of property in the area proposed to be annexed, but only where the petitioning owners own a specified percentage valuation of the property within the proposed area. As the majority explains, this method of annexation came about because annexation by elections often resulted in veto power on the part of residents in areas proposed to be annexed. At the same time, cities had a need to better control the fringe areas adjacent to them, particularly as their urban areas expanded. These efforts could be completely thwarted by residents voting to block annexation. In addition, the election method proved “cumbersome,” and, it may be added, costly, since the expense of an election must be borne by the municipality.

The Legislature responded with statutes authorizing the petition method of annexation. These statutes plainly have legitimate purposes: to enable cities to annex contiguous land without cumbersome, costly elections, and to provide an alternative method of annexation that does not permit a “veto” by resident voters. In this regard, it must be remembered that a state may authorize annexation even over the wishes of the residents in the area to be annexed, provided *741it does so without violating constitutional principles. Hunter v. City of Pittsburgh, 207 U.S. 161, 28 S. Ct. 40, 52 L. Ed. 151 (1907).

The classification defined by the Legislature is also germane to the purposes of the law. The petition methods allow annexations without the need for elections and regardless of whether residents wish to “veto” the proposed annexation. The statutes thus allow for orderly municipal growth.

Finally, there are reasonable grounds for the classification that the Legislature has drawn. As to this inquiry, early cases indicate that the constitutional standard is not the same as the present equal protection “rational basis” test, where any conceivable legislative reason for a classification will suffice. Instead, the cases indicate a classification must rest on some real difference between those within and without the class that is relevant to the apparent or asserted purpose of the legislation. See Jonathan Thompson, The Washington Constitution’s Prohibition on Special Privileges and Immunities: Real Bite for “Equal Protection” Review of Regulatory Legislation?, 69 Temp. L. Rev. 1247, 1264-65 (1996). While residents and property owners have some similar interests affected by annexation, property owners have interests that are impacted to a much greater degree than residents who do not own property within the affected area.

First, while it is true that all residents of the area proposed to be annexed are likely to be impacted at some point by property taxes assessed on land within the area, a property owner will always and immediately be affected by any increased tax burden. In contrast, a tenant may have the option of moving from an area should rents reflect increased property taxes to a degree unacceptable to the tenant. Thus, the permanency of property taxes distinguishes property owners from other residents. See Goodyear Farms v. City of Avondale, 148 Ariz. 216, 222, 714 P.2d 386 (1986) (quoting Gorman v. City of Phoenix, 76 Ariz. *74235, 37, 258 P.2d 424 (1953)). And, should an owner opt to sell, property taxes will also be a factor in the sale.

In addition, the owners of property with higher value, either because of the quantity or intrinsic value of the property, will suffer these impacts to a greater degree. The amount or value of the land will mean a correspondingly greater share of property taxes. See Goodyear Farms, 148 Ariz. at 222 (citing Torres v. Vill. of Capitan, 92 N.M. 64, 70, 582 P.2d 1277 (1978)).

Further, property owners will be subject to the regulatory burdens resulting from annexation to a greater degree than nonproperty-owning residents. For example, property owners will be directly impacted by zoning and other land use regulations. Again, the applicable regulations will affect sales and price of land and other real property, should the landowner decide to end its status as a property owner within the area. While the impact of regulations may be reflected in uses and types of property and structures enjoyed by tenants, the impact will be most direct, and the greatest, on the landowner. And, reasonably, these impacts will be greater the more property is owned, or the higher the value of the property.

Moreover, the Legislature’s classification based upon property ownership is a reasonable way to provide for an affirmative indication of interested parties’ willingness for annexation to occur without requiring the approval of resident voters in the proposed area. Again, the Arizona court’s observations are pertinent. That court noted, as does the majority, that a municipality is severely handicapped by the election method, and without an alternative method would be “unable to deal with the people living just outside the city, enjoying its advantages without having to pay for them. Such persons would seldom consent to annexation and their nonconsent could threaten the core city.” Goodyear Farms, 148 Ariz. at 222 (citing Adams v. City of Colorado Springs, 308 F. Supp. 1397, 1404 (D. Colo. 1970), aff’d per. mem. 399 U.S. 901, 90 S. Ct. 2197, 26 L. Ed. 2d 555 (1970)).

*743Yet development at the periphery of a municipality owes its presence to the municipality in the first place, and a municipalitys inability to annex that area and share in the growth it has generated “will weaken the city’s ability to continue to provide a high-level of services to the residents and exacerbate the problem of urban decay.” Laurie Reynolds, Rethinking Municipal Annexation Powers, 24 Urb. Law. 247, 252 (1992). Annexation of the

fringe . . . merely confirm [s] the reality that these developments are already a functional part of the city they surround. If the development is commercial or industrial, it undoubtedly depends heavily on city infrastructure. If the development is residential, its residents work, shop, entertain themselves, and use medical and other professional services in the city. The majority of those individuals will spend most of their day within the city limits, yet they will contribute nothing to the city’s cost of providing infrastructure to the wide range of in-city activities of which they partake. Moreover, these nonresidents do not share in the cost of providing municipal services to the poor residents of the city, who live in high concentrations in urban areas. The cost is, however, imposed on city landowners.
Thus, nonresidents avoid paying their proportionate share of two significant city expenses: they neither contribute toward the maintenance of the city services and infrastructure they use on a daily basis, nor do they pay a share of the expenses the city assumes in providing municipal services to the city’s poor. Annexation of the fringe would distribute these costs more equitably.

Id. at 253-54 (footnotes omitted). By providing for the petition methods of annexation, the Legislature has provided a needed alternative to annexation that will avoid “veto” by vote of the area’s residents, and allow for expanding growth to bear some of the cost of city services and provision of services for the poor. The Legislature reasonably keyed this alternative method of initiating annexation procedures to property ownership and, in particular, to those owners who collectively have more or more highly valued property. Those owners will be, in substantial part, *744subject to the permanent municipal property taxes that will pay for city services, including services for the poor.

Because of the greater effects on property owners, and especially on owners of a greater amount or of more highly valued property, and the need for an alternative method of annexation to the election method, the Legislature’s classification of property owners is based upon reasonable grounds.

Aside from the failure to accord the Legislature proper deference in its decision, and to engage in a thorough examination of the reasonableness of the classification drawn by the Legislature, the majority’s conclusion that there is no basis for granting large property owners in particular the ability to commence annexation proceedings is puzzling. The majority draws a line separating owners of “highly valued” property from others. The statutes do not draw this distinction—they refer only to owners of property of the necessary percentage valuation in total. In any annexation proceeding commenced by petition, the nature of the property owners’ holdings will depend upon the area proposed to be annexed. If, for example, it is an area consisting of single-family residences of fairly equal value, there will be no distinction based upon large, or “highly valued” landholdings. The majority has defined a classification that the Legislature did not draw.11

In any event, as explained, there are valid reasons for requiring the owners of a certain percentage of property, based on valuation, to commence annexation proceedings.

Finally, there are other considerations to which the majority has given too little attention. The petition methods of annexation do not grant property owners the final say in whether the proposed area will be annexed. The final decision is in the hands of the municipality’s legislative *745body. And, very importantly, that decision cannot be made until after there has been a public hearing to which interested parties must be invited and given the opportunity to voice approval or disapproval. Therefore, the residents of an area proposed to be annexed have the opportunity to influence the decision-making process regardless of whether property owners seek annexation. Thus, both property owners and residents have a say in the annexation decision, with the final decision to be made by the municipality’s legislative body.

For the reasons stated, I concur in the majority’s analysis under article I, section 19 of the state constitution and the equal protection clause of the federal constitution. I dissent, however, from the majority’s analysis under article I, section 12 of the state constitution.

Johnson, J., concurs with Madsen, J.

The majority’s “line drawing” is also analytically unworkable. In any group of property owners there may be wide variations in the amount of land owned and valuation of that land. At what point on the continuum is the line to be drawn? When does a property owner fall into the favored “high assessed evaluation” class, assuming that is, in the majority’s view, the unconstitutionally favored class?