Hill-Vu Mobile Home Park v. City of Pocatello, 162 Idaho 588

Background

City of Pocatello operated municipal water and sewer systems and adopted a "rate of return" (return on equity) and a PILOT (payment-in-lieu-of-taxes) charge to generate revenue for its general fund in addition to rates required to make systems self-supporting.
The additional charges increased customer bills by roughly 10% (about $4 million from 2006–2011); the City later discontinued the return-on-equity (2012) and PILOT (2014).
Deputy Idaho AG advised the City in 2007 that the rate-of-return revenue dedicated to the general fund appeared contrary to Loomis v. City of Hailey.
Building Contractors Association sued the City over PILOT; the district court held PILOT unlawful and enjoined its use in calculating user/connection fees.
Plaintiffs (Hill-Vu Mobile Home Park and Ed Quinn) sued seeking refunds and class certification for amounts paid; the district court granted summary judgment to the City, concluding plaintiffs’ state-law claims were barred by Idaho Code § 6-904A, no compensable taking occurred, and Building Contractors would not apply retroactively.
Idaho Supreme Court vacated the dismissal and remanded, holding the district court erred on key legal rulings and awarding appellants costs on appeal.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether state-law claims are barred by Idaho Code § 6-904A (immunity for assessment/collection of tax/fee)	PILOT/return charges were unauthorized fees/exactions (not an authorized tax), so § 6-904A immunity does not apply	The charges were effectively a tax/fee assessment; claims arise from collection and are barred by § 6-904A	Reversed: § 6-904A does not bar recovery because City lacked legislative authority to impose such a tax and the charges were not an authorized tax for purposes of the statute; statute cannot constitutionally limit takings recovery
Whether the PILOT/return constituted a compensable taking of property under U.S. and Idaho Constitutions	Money paid under an unlawful exaction is property; excessive user fees meant to raise revenue can be a taking requiring just compensation/refund	Fees were legitimate user charges or merely an improper revenue mechanism—not a constitutional taking	Reversed: money is property for Takings Clause purposes; an unreasonable/excessive user fee imposed to raise general revenue can constitute a taking; PILOT was not a reasonable user fee here
Whether the district court’s judgment in the Building Contractors case should be applied to these plaintiffs (retroactivity)	The earlier decision declaring PILOT unlawful should apply to this case and permit recovery	The district court declined to apply Building Contractors retroactively and dismissed the plaintiffs	Reversed: trial courts do not have discretion to refuse to apply their legal rulings in other cases; this Court’s holdings apply unless this Court itself limits retroactivity
Whether respondents are entitled to attorney fees on appeal (ITCA / other statutes)	City sought fees under I.C. § 6-918A and § 12-121	Plaintiffs argued statute limits awards to trial court discretion; City argued appellate fees appropriate under other statutes if prevailing	Held: Court did not award fees; I.C. § 6-918A awards are discretionary "at the trial court" and do not authorize appellate awards; prevailing-party fee under § 12-121 not addressed because City did not prevail on appeal

Key Cases Cited

Loomis v. City of Hailey, 119 Idaho 434, 807 P.2d 1272 (1991) (fees collected under Revenue Bond Act allocated away from system operation are treated as taxes and unlawful)
Brewster v. City of Pocatello, 115 Idaho 502, 768 P.2d 765 (1989) (distinguishes fees for direct public services from taxes; regulatory fees must reasonably relate to enforcement costs)
BHA Investments, Inc. v. City of Boise, 141 Idaho 168, 108 P.3d 315 (2004) (city lacks authority to impose an unauthorized fee or tax; payment-under-protest rule inapplicable to denominated fees where city lacked authority)
Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980) (interest retained by clerk from deposited funds constituted a taking—money is property under Takings Clause)
United States v. Sperry Corp., 493 U.S. 52 (1989) (user-fee analysis: reasonable fee as fair approximation of government cost is not a taking; conversely, clearly excessive fees can be takings)
Potts Constr. Co. v. N. Kootenai Water Dist., 141 Idaho 678, 116 P.3d 8 (2005) (municipal fees used primarily for revenue raising are effectively taxes and unlawful if not authorized)
Lewiston Indep. Sch. Dist. No. 1 v. City of Lewiston, 151 Idaho 800, 264 P.3d 907 (2011) (municipalities may collect fees incidental to regulation under police power when reasonably related to enforcement costs)