SUPREME COURT OF ARIZONA
En Banc
NORTHWEST FIRE DISTRICT, an ) Arizona Supreme Court
Arizona fire district, ) No. CV-06-0377-PR
)
Plaintiff/Appellant, ) Court of Appeals
) Division Two
v. ) No. 2 CA-CV 06-0061
)
U.S. HOME OF ARIZONA ) Pima County
CONSTRUCTION COMPANY, an Arizona ) Superior Court
corporation; and U.S. HOME ) No. C20054558
CORPORATION, a Delaware )
corporation, )
)
Defendants/Appellees. ) O P I N I O N
)
__________________________________)
Appeal from the Superior Court in Pima County
The Honorable Carmine Cornelio, Judge
AFFIRMED
________________________________________________________________
Opinion of the Court of Appeals, Division Two
213 Ariz. 489, 143 P.3d 1030 (2006)
VACATED
________________________________________________________________
BENAVIDEZ LAW GROUP, P.C. Tucson
By Thomas A. Benavidez
Christopher B. Wencker
Attorneys for Northwest Fire District
GALLAGHER & KENNEDY, P.A. Phoenix
By Jeffrey D. Gross
Attorneys for U.S. Home of Arizona Construction Company
and U.S. Home Corporation
BANCROFT SUSA & GALLOWAY, P.C. Tucson
By James M. Susa
Michael G. Galloway
Attorneys for Amicus Curiae Arizona Tax Research Association
MILLER LASOTA & PETERS, P.L.C. Phoenix
By Donald M. Peters
Attorneys for Amicus Curiae The Arizona Fire District
Association
________________________________________________________________
R Y A N, Justice
¶1 Arizona Revised Statutes (“A.R.S.”) section 48-
805(B)(14) (Supp. 2004), permits fire districts to “[a]dopt
resolutions establishing fee schedules for providing fire
protection services and services for the preservation of life.”1
Included among the permissible fee schedules are those for
“facilities benefit assessments.” Id. In this case, we must
determine whether the “facilities benefit assessment” charged by
Northwest Fire District constitutes a valid exercise of its
statutory authority. We conclude that it does not.
I
¶2 Northwest Fire District was organized under Title 48,
Chapter 1, Articles 10 and 11 of the Arizona Revised Statutes,
to provide emergency services to district residents. The
District covers more than 140 square miles in the northwest
portion of metropolitan Tucson – an area that has seen some of
the most rapid development in Pima County over the past decade.
1
Section 48-805 has since been amended, and the applicable
provision has been renumbered as (B)(13). 2006 Ariz. Sess.
Laws, ch. 315, § 9. Because the District passed the Resolution
at issue here before this amendment, we will refer to the
provision as (B)(14).
2
This rapid development has strained the District’s resources and
its ability to adequately meet its statutory duties.
¶3 This economic strain results in part from the timing
of property tax assessments. According to the affidavit of the
Pima County Assessor, the value of a residential structure is
not included in the tax assessment until construction is
complete; even then, the value may not be placed on the tax
rolls for up to fifteen months.
¶4 In 2003, the District responded to fires at three
partially constructed homes. Because the value of these
structures was not on the property tax rolls, District resources
were expended to protect property that had not yet been fully
taxed. This situation prompted the District to consider
imposing a fee, due upon application for a building permit, on
new construction.
¶5 In December 2004, the District’s board, relying on
A.R.S. § 48-805(B)(14), approved Resolution 2004-048 authorizing
a facilities benefit assessment on new construction. Section
48-805(B)(14) states that fire districts may:
[a]dopt resolutions establishing fee schedules for
providing fire protection services and services for
the preservation of life including emergency fire and
emergency medical services, plan reviews, standby
charges, fire cause determination, users’ fees,
facilities benefit assessments or any other fee
schedule that may be required.
(Emphasis added.)
3
¶6 According to the Resolution, a facilities benefit
assessment was necessary to pay “the costs of developing
facilities from which to provide services to new construction
areas.” The Resolution stated that because of the delay in
placing new construction on the property tax rolls, current
taxes did not generate sufficient revenue to cover these
expenses, leaving other District residents to bear the added
burden of providing services to new construction.
¶7 The District began assessing new construction on
January 14, 2005, the effective date of the Resolution, by
sending out invoices that stated:
The purpose of this [facilities benefit] assessment is
to provide funding for the purchase of land and the
construction of new fire facilities as needed within
the District. This assessment enables the District to
recoup property taxes not collected due to delays in
placing property improvements, such as a new home or
commercial building, on the property tax rolls.
U.S. Home of Arizona Construction Company and U.S. Home
Corporation (collectively “U.S. Home”), one of the home builders
in the District, refused to pay the assessment. The District
filed a complaint to recover the unpaid facilities benefit
assessments.
¶8 The superior court granted summary judgment in favor
of U.S. Home. The court concluded that a fire district could
raise revenue only through taxes, bond elections, and fee
4
schedules. It further found that the items for which a fire
district could create fee schedules under A.R.S. § 48-805(B)(14)
were “much more limited items . . . which appear to be for a
specific service.” It held that fees could be charged for
actual services rendered, but those charges must reasonably
relate to their purpose, and the District’s assessment did not
satisfy this criterion.
¶9 The District appealed, and the court of appeals
reversed and remanded. Nw. Fire Dist. v. U.S. Home of Ariz.
Constr. Co., 213 Ariz. 489, 495, ¶ 23, 143 P.3d 1030, 1036 (App.
2006). Relying on cases and statutes from other jurisdictions,
the court determined that a facilities benefit assessment is “a
special assessment against real property for public
improvements.” Id. at 491, ¶ 8, 143 P.3d at 1032 (quoting
Barratt Am., Inc. v. City of San Diego, 12 Cal. Rptr. 3d 132,
137 (Cal. Ct. App. 2004)). Under this definition, the court
reasoned, the District’s fee qualified as a facilities benefit
assessment because the District intended to use the money
collected to develop facilities to provide services to the
construction areas. Id. at 491-92, ¶ 8, 143 P.3d at 1032-33.
¶10 In rejecting the superior court’s holding that the fee
could be assessed only for services rendered, the court of
appeals determined that this assessment does provide a service -
the guarantee of adequate facilities to respond to an emergency.
5
Id. at 492, ¶ 10, 143 P.3d at 1033. Further, the court found,
the lack of limiting language in A.R.S. § 48-805(B)(14)
demonstrates the legislature’s intent to create a broad power to
assess. Id. at ¶ 11. The court concluded that if the District
was not entitled to impose these assessments on property owners
that benefited from the District’s facilities, the phrase
“facilities benefit assessment” would be rendered meaningless.
Id. at 493, ¶ 14, 143 P.3d at 1034.
¶11 U.S. Home petitioned for review, arguing that the fee
imposed is not a valid facilities benefit assessment. The
District responded by arguing that the fee charged is
statutorily permitted and that the court of appeals opinion did
not give it unregulated power to raise revenue.
¶12 We granted review because this case raises an
important issue for the more than 130 fire districts in the
state and their residents. We have jurisdiction under Article
6, Section 5(3), of the Arizona Constitution and A.R.S. § 12-
120.24 (2003). Whether a particular exercise of power by the
District falls within its statutory authority is a question of
law, which we review de novo. See Hohokam Irrigation & Drainage
Dist. v. Ariz. Pub. Serv. Co., 204 Ariz. 394, 397, ¶ 5, 64 P.3d
836, 839 (2003).
II
¶13 Fire districts are constitutional and statutory
6
entities, much like municipal corporations. See Ariz. Const.
art. 13, § 7; A.R.S. §§ 48-802 to -834 (2000); Cal. Portland
Cement Co. v. Picture Rocks Fire Dist., 143 Ariz. 170, 174, 692
P.2d 1019, 1023 (App. 1984). As such, a fire district can
exercise only those limited powers granted to it by the
legislature. Cf. Hohokam Irrigation & Drainage Dist., 204 Ariz.
at 397, ¶ 6, 64 P.3d at 839; Local 266, Int’l Bhd. of Elec.
Workers v. Salt River Project Agric. Improvement & Power Dist.,
78 Ariz. 30, 38, 275 P.2d 393, 398 (1954). The revenue-raising
power of fire districts – the power at issue here – has been
limited by the legislature to issuing and selling bonds, A.R.S.
§ 48-806 (Supp. 2006); collecting property taxes, id. § 48-
807(F) (Supp. 2006); and charging fees in accordance with
permitted fee schedules, id. § 48-805(B)(14). It is this last
statutory power on which the District relied in adopting its
“facilities benefit assessment.”
¶14 The legislature has not defined “facilities benefit
assessment.” U.S. Home argues that the superior court correctly
interpreted this provision narrowly by finding that this
assessment could issue only for specific services rendered. The
court of appeals, however, afforded this phrase a broader
interpretation by stating that it permitted “a special
assessment against real property for public improvements.” Nw.
Fire Dist., 213 Ariz. at 491, ¶ 8, 143 P.3d at 1032 (quoting
7
Barratt Am., Inc., 12 Cal. Rptr. 3d at 137).
¶15 We need not decide today between these differing
interpretations. Even assuming the court of appeals correctly
determined that the legislature intended “facilities benefit
assessment” to grant fire districts the power to impose “special
assessments,” we conclude that the District’s fee is not a
special assessment.
A
¶16 A “special assessment” is “an assessment against real
property based on the proposition that, due to a public
improvement of some nature, such real property has received a
benefit.” Barry v. Sch. Dist. No. 210, 105 Ariz. 139, 140, 460
P.2d 634, 635 (1969) (quoting State v. Carney, 139 N.E.2d 339,
340 (Ohio 1956)); Weller v. City of Phoenix, 39 Ariz. 148, 151,
4 P.2d 665, 667 (1931) (defining assessments as “special and
local impositions on property, made for a public purpose, but
fixed in amount with reference to the special benefit which such
property derives from the expenditure” (emphasis omitted)). A
special assessment therefore may not be levied against
particular property if the property will not receive a specific
benefit from the improvement funded by the assessment. See
Mosher v. City of Phoenix, 39 Ariz. 470, 480, 7 P.2d 622, 626
(1932), overruled on other grounds by In re Forsstrom, 44 Ariz.
472, 493-94, 38 P.2d 878, 887 (1934). “The rationale of special
8
assessment is that the assessed property has received a special
benefit over and above that received by the general public.”
J.W. Jones Cos. v. City of San Diego, 203 Cal. Rptr. 580, 584
(Ct. App. 1984) (quoting Solvang Mun. Improvement Dist. V. Bd.
Of Supervisors, 169 Cal. Rptr. 391, 395 (Cal. Ct. App. 1980)).
¶17 Because property may be assessed its proportion of
specified costs only if it receives a special benefit from the
improvement that is different than the benefit received by other
properties, any evaluation of a special assessment must begin by
reviewing the improvements funded by the assessment and their
estimated costs. Cf. A.R.S. § 48-577 (2000) (stating that a
municipal special assessment requires preliminary plans for
improvements and cost estimates and also requires that no lot be
assessed more than “its proportion of the estimate”). Without a
specific plan and cost estimate, there can be no way of knowing
the property owner’s share of the improvement costs or whether a
particular property will be benefited at all, let alone whether
it will receive a benefit different than all other properties in
the district.
¶18 The District’s Resolution did not set forth or refer
to any specific plan for the construction of new facilities.
The District thus cannot demonstrate the cost of such facilities
or the associated benefit to each assessed property.
¶19 Furthermore, the District has not shown that the funds
9
collected under this assessment will be spent on facilities that
uniquely benefit the assessed property. The funds collected
were not segregated; instead they were placed into the
District’s general fund. The District’s proposed budget for
2005-06 showed these funds being spent without any indication
that they were earmarked for facilities that specially benefited
the assessed properties. Moreover, even assuming that the
District will eventually use the money for facilities, there is
no way to conclude on the current record that the assessed
property will benefit in a way that other property within the
District does not. The District’s general plans to use the
funds for facilities to benefit the new construction are not
enough. For example, the District could fulfill this aspiration
by simply expanding a current fire station or acquiring the
adjacent lot for new facilities. In that situation, there would
be no special benefit to new construction that would not also be
shared by the prior District residents served by that station.
See Mosher, 39 Ariz. at 480, 7 P.2d at 626.
B
¶20 Nonetheless, the District asserts that its facilities
benefit assessment did not exceed the power granted by A.R.S. §
48-805(B)(14) because the fee assessed to U.S. Home and others
was meant to ensure adequate facilities for new construction.
The District further argues that its failure to formulate a plan
10
for the construction or improvement of facilities to benefit the
new construction should not be determinative because its
decision is a legislative decision, not one for the judiciary.
¶21 The District’s interpretation of “facilities benefit
assessment,” however, would effectively permit it to circumvent
statutory protections for fire district property owners. Such
an interpretation would render the statutory protections largely
illusory. See Jennings v. Woods, 194 Ariz. 314, 320, ¶ 21, 982
P.2d 274, 280 (1999) (interpreting statutory provisions so as
not to render a provision meaningless).
¶22 For instance, under the District’s theory, a fire
district could request a lower property tax authorization or
issue fewer bonds to appease qualified electors, and then levy a
facilities benefit assessment against certain district property
owners, such as U.S. Home, to cover the district’s facilities
costs. Such an assessment could exceed the three and one-
quarter percent property tax cap of A.R.S. § 48-807(F) or the
six percent bond cap of A.R.S. § 48-806(D) and thereby evade
these statutory limitations. The assessment would also evade
electoral approval and the statutory requirement that proceeds
from the sale of bonds be placed in a separate fund and used
only for a specific purpose. Id. § 48-806(D), (G). Without a
specific plan to improve or build facilities, the assessed
property owners have not only lost these statutory protections,
11
but they also have no assurance that the assessment was
necessary or that they will benefit from the facilities they
have funded.2 An interpretation of “facilities benefit
assessment” that allows this result cannot have been what the
legislature intended in passing A.R.S. § 48-805(B)(14).
¶23 Unlike the court of appeals, we are not persuaded that
the political accountability of the District’s board offers
appropriate protection for District property owners. See Nw.
Fire Dist., 213 Ariz. at 492, ¶ 12, 143 P.3d at 1033. The
assessment here was not levied against qualified electors of the
District. See A.R.S. § 48-802(C) (Supp. 2004) (stating that
only qualified electors who are district residents may vote in a
district election). It was the builder, not a qualified
elector, who was charged the assessment upon application for a
building permit. Therefore, the public accountability check on
this assessment was lacking.
III
¶24 Finally, the District argues that our opinion in Home
Builders Association of Central Arizona v. City of Scottsdale,
187 Ariz. 479, 930 P.2d 993 (1997), controls the outcome of this
case. We find that opinion distinguishable on several grounds.
2
Remedying a shortfall in tax revenue through a facilities
benefit assessment, as the District did here, raises the same
concerns.
12
First, the fee under consideration in Home Builders was a
development fee. Id. at 480, 930 P.2d at 994. Fire districts,
unlike municipalities, do not have the power to impose
development fees.3 See, e.g., A.R.S. § 9-463.05 (Supp. 2006);
cf. Hohokam Irrigation & Drainage Dist., 204 Ariz. at 397, ¶ 6,
64 P.3d at 839 (stating that irrigation districts’ powers are
limited to those enumerated in the constitution or statutes).
¶25 Second, the ability to impose a development fee is
broader than the ability to impose a special assessment. Home
Builders, 187 Ariz. at 483, 930 P.2d at 997. Specific plans are
not required to impose a development fee, unlike a special
assessment. Id. Because we assume for purposes of this opinion
that a facilities benefit assessment is a special assessment,
the District’s assessment cannot be afforded the same
flexibility as the development fee in Home Builders.
¶26 Third, the city’s plan in Home Builders was much more
specific than that put forth by the District. The city
specifically delineated its program for meeting its future water
needs, including how the water would be obtained and estimating
3
Development fees are designed to “offset costs to [a]
municipality associated with providing necessary public services
to a development.” A.R.S. § 9-463.05(A) (Supp. 2006). They are
“designed to assist in raising the capital necessary to meet
needs that surely will arise in the foreseeable future but whose
precise details may not at the outset be quite clear.” Home
Builders, 187 Ariz. at 483, 930 P.2d at 997.
13
the total costs associated with bringing these resources to the
city. Id. at 480-81, 930 P.2d at 994-95. The city then
determined the cost of bringing each acre-foot of water to the
city and the average amount of water certain types of
development require. Id. at 485, 930 P.2d at 999. The
development fee was then calculated based on the estimated cost
for providing water to the type of development being charged.
Id.
¶27 Here, the District has not created a plan for any
particular facilities to benefit those assessed, nor has it
determined what facilities are necessary for the new
construction. Therefore, the District cannot accurately
determine how much to assess the property owners because it has
no estimated cost for the necessary facilities. Although plans
supporting special assessments are required to be more specific
than those for development fees, id. at 483, 930 P.2d at 997,
the District’s plan is far less developed than that in Home
Builders. Thus, the District’s reliance on Home Builders is
unavailing.
IV
¶28 For the foregoing reasons, we hold that the
“facilities benefit assessment” promulgated by the District was
not authorized by A.R.S. § 48-805(B)(14), and is therefore
14
invalid.4 Accordingly, we affirm the trial court’s grant of
summary judgment in favor of U.S. Home and vacate the opinion of
the court of appeals.
_______________________________________
Michael D. Ryan, Justice
CONCURRING:
_______________________________________
Ruth V. McGregor, Chief Justice
_______________________________________
Rebecca White Berch, Vice Chief Justice
_______________________________________
Andrew D. Hurwitz, Justice
_______________________________________
W. Scott Bales, Justice
4
Because we conclude that the District’s assessment exceeded
its authority under A.R.S. § 48-805(B)(14), we need not address
the other issues raised by the parties.
15