Heartland Apartment Ass'n v. City of Mission
111521
| Kan. | Apr 7, 2017Background
- In 2010 the City of Mission enacted a Transportation User Fee (TUF) levied on owners of all developed real property, calculated by estimated vehicle "trips" per parcel (using the ITE Trip Generation manual) and billed with property tax notices; revenues earmarked for street maintenance.
- Plaintiffs (two property-owner associations and several individual property owners) paid TUFs and sued for declaratory and injunctive relief, arguing the TUF is an impermissible excise tax under K.S.A. 2016 Supp. 12-194.
- The district court granted summary judgment to Mission, concluding the TUF was a tax (not a fee) but not an excise tax as defined in Kansas precedent and thus within city home‑rule authority.
- The Kansas Court of Appeals reversed, holding the TUF was an excise tax (because it is assessed in part on property use) and therefore prohibited by K.S.A. 2016 Supp. 12-194; Mission sought review.
- The Kansas Supreme Court affirmed the Court of Appeals: it held the TUF is a tax (a general revenue measure, not a voluntary fee) and, under Callaway’s formulation, an excise tax because it taxes the use/enjoyment of property; the 2006 amendment to K.S.A. 12-194 broadened the statutory prohibition to bar excise taxes unless specifically excepted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the TUF a tax or a fee? | TUF is a tax: a forced contribution for general public services (streets). | TUF is a fee: akin to stormwater/sewer utility fees — payment for service tied to use. | Held: TUF is a tax (general revenue measure, mandatory, benefits are general). |
| If a tax, is it an excise tax prohibited by K.S.A. 12-194? | TUF is an excise tax because it is assessed based on use/enjoyment of property (trips generated). | TUF not an excise tax because it is assessed on property ownership/annual basis, not transactional. | Held: TUF is an excise tax (tax on enjoyment/use), and not within statutory exceptions, so prohibited. |
| May Mission recharacterize the TUF as a "special fee" to avoid prohibition? | Plaintiffs: recharacterization invalid — substance controls; special‑fee concept would swallow statutory limits. | Mission: adopt a special‑fee category (citing Bloom) to classify TUF as service‑cost recovery. | Held: Court rejects adopting a broadly defined "special fee" category; Kansas fee/tax framework suffices and TUF remains a tax. |
| Effect of 2006 amendment to K.S.A. 12-194 on scope of prohibited excise taxes? | Plaintiffs: amendment broadened prohibition so virtually all excise taxes are barred unless excepted. | Mission: urges narrower Callaway reading limiting prohibition to transaction‑based excises. | Held: 2006 amendment removed former transactional language and widened the statutory prohibition; permitted excises before may now be prohibited. |
Key Cases Cited
- Executive Aircraft Consulting, Inc. v. City of Newton, 252 Kan. 421 (1993) (distinguishes taxes from fees — tax = forced contribution for public services; fee = voluntary cost‑recovery for specific service)
- Callaway v. City of Overland Park, 211 Kan. 646 (1973) (defines "excise tax" as a tax on an act, occupation, or enjoyment of a privilege and analyzes limits on municipal excises)
- United States v. Mississippi Tax Comm'n, 421 U.S. 599 (1975) (characterizes taxes vs. fees in federal context; discusses "enforced contribution" notion)
- United States v. Wells Fargo Bank, 485 U.S. 351 (1988) (distinguishes excise taxes levied on use/transfer from direct/property taxes)
- Bloom v. City of Fort Collins, 784 P.2d 304 (Colo. 1989) (upholds a municipal transportation utility fee as a "special fee" under Colorado law — relied on by Mission but not adopted)
- Mount Hope Cemetery Co. v. City of Topeka, 190 Kan. 702 (1963) (explains special assessments/taxes require a special, cognizable benefit to the charged property)
- Von Ruden v. Miller, 231 Kan. 1 (1982) (identifies taxes that do not neatly fit ad valorem or excise categories; instructive on classification limits)