City of Hammond, Appellant (Plaintiff) -v- Herman & Kittlе Properties, Inc., Appellee (Defendant) and State of Indiana, Appellee (Intervenor)
Supreme Court Case No. 19S-PL-148
Indiana Supreme Court
March 15, 2019
Argued: September 13, 2018 | Decided: March 15, 2019
Appeal from the Marion Superior Court, No. 49D07-1601-PL-531, The Honorable Michael D. Keele, Judge
On Petition to Transfer from the Indiana Court of Appeals, No. 49A04-1612-PL-2784
Opinion by Chief Justice Rush; Justices David, Massa, and Goff concur; Justice Slaughter not participating.
ATTORNEYS FOR APPELLANT
Bryan H. Babb
Bradley M. Dick
Bose McKinney & Evans LLP
Indianapolis, Indiana
ATTORNEYS FOR APPELLEE
Steven C. Shockley
Russell C. Menyhart
Taft Stettinius & Hollister LLP
Indianapolis, Indiana
ATTORNEYS FOR INTERVENOR
Curtis T. Hill, Jr.
Attorney General of Indiana
Thomas M. Fisher
Solicitor General
Frances H. Barrow
Julia C. Payne
Deputy Attorneys General
Indianapolis, Indiana
Our analysis of special legislation begins with the oft-stated presumption in favor of a statute‘s constitutionality. With that presumption in mind, we then determine whether the statute‘s proponent has met its burden to show that a general law cannot be made applicable. This burden is met by demonstrating that an affected class has unique chаracteristics that justify the particular form of differential treatment provided by the special law. Given the overarching presumption in favor of the law‘s constitutionality, this burden is low—but it is still a burden that the proponent of the law must meet.
Here, a special law singles out the cities of Bloomington and West Lafayette for preferential treatment. That law is the “Fee Exemption,” a provision in
Unhappy with the special treatment afforded to Bloomington and West Lafayette, the city of Hammond challenged the Fee Exemption as unconstitutional under
Both the State and Herman & Kittle Properties—a Hammond landlord—defend the Fee Exemption‘s constitutionality. They contend that the statute‘s special treatment is warranted by three characteristics unique to Bloomington and West Lafayette: the cities’ high percentage of renter-occupied properties, their large universities that draw young and unsophisticated renters, and their long-running rental-fee programs. But simply pointing to these characteristics is not enough to overcome the burden placed on a law‘s proponents. The State and Herman & Kittle also needed to establish a connection between the cities’ alleged uniqueness and the Fee Exemption—by explaining how the unique characteristics justify that special treatment. Since the law‘s proponents did not carry their burden here, the Fee Exemption is unconstitutional special legislation that must be struck down.
Although the Fee Exemption is unconstitutional, the remainder of
Facts and Procedural History
In recent years, local programs that charge fees for required inspection or registration of rental units have become a subject of growing legislative interest. As more Indiana political subdivisions began enacting rental-fee programs, some established programs started raising their per-unit fees.
A flurry of legislative activity to regulate these programs eventually culminated in the current version of
Hammond challenged the “Fee Exemption” provision of
I. Hammond‘s rental-fee programs
To protect the public health, safety, and general welfare of the city, Hammond created two programs—an inspection program and a rental-registration program. Both programs charge fees for rental units.
The inspection program was created in 1961. It authorized city officials to inspect all dwelling units—both owner-occupied and rented. And it specifically required a $5 annual inspection fee for hotels and rooming houses.1
Decades later, in 2001, Hammond created its rental-registration program. That program required owners of rental housing to register their units with the city and to pay a per-unit $5 annual registration fee.
The eight-fold increase was Hammond‘s response to the 2010 state constitutional amendment placing caps on property taxes, including a 2% cap on rental properties. That amendment led to substantial savings for landlords but also significantly strained many municipal budgets—especially for municipalities, like Hammond, whose tax bases were shrinking.
II. Other rental-fee increases and legislative response
Hammond was not the only municipality to address fiscal restraints by way of rental-unit fees. East Chicago, Griffith, Munster, Nappanee, and Speedway adopted programs to increase rental-fee revenue before the tax caps went into effect. After 2010, Bloomington joined Hammond in raising rates; and Crown Point, Evansville, and Valparaiso started charging rental-unit fees.
A. House Bill 1543
In 2011, the year after the tax caps took effect, the General Assembly introduced House Bill 1543, which added a chapter to the Indiana Code:
That provision, however, was left out of the final bill. As enacted,
B. House Bill 1313
Two years later, in 2013, the General Assembly introduced House Bill 1313. This bill initially contained a provision barring local inspection and registration fees on rental units. But it too was removed, and the final bill instead placed an approximately one-year moratorium on imposing new, or increasing existing, inspection or registration fees. See P.L. 149-2013, § 1 (codified at
Thаt fall, the committee heard testimony on the issue. One side was concerned that the fees were becoming too costly, negatively impacting housing affordability and new rental development. Yet others claimed that the fees charged were fair and reasonable, and that they failed to even cover program administration costs.
Among the fees’ defenders were representatives from Bloomington and West Lafayette. A representative from Bloomington testified that its program began in 1961, that renters make up 67% of its housing market, and that the city‘s program protects the welfare of its citizens and the character of the city itself. West Lafayette representatives explained that the city has had an inspection program since 1976, the number of rental units is increasing, and the “program protects property and assures parents of students that housing is safe.”
Several months later, in January 2014, the General Assembly introduced House Bill 1403 to significantly amend
The Legislative Services Agency issued a fiscal impact statement analyzing the proposed legislation. The statement concluded, “[t]here are 14 cities or towns that have rental inspection programs . . . . Two of those programs, Bloomington and West Lafayette, would not be affected by the proposed changes to the law as they were established prior to July 1, 1984.” Ultimately, House Bill 1403 was enacted with both the Fee Restriction and the Fee Exemption. See P.L. 193-2014, § 8 (codified at
In May 2014, Hammond notified Herman & Kittle Properties that it owed around $86,000 in rental-registration fees and penalties for 2014 on two apartment complexes it oрerated in the city. Herman & Kittle refused to pay that amount: it cited the recently enacted Fee Restriction and contended that its rental-registration fees would “significantly reduce” after the Fee Restriction went into effect on June 30.
But Hammond disagreed. So the city filed a complaint, seeking a declaratory judgment that it could continue charging its $80 per-rental fee. It argued that its rental-fee program was not subject to the Fee Restriction‘s $5 cap because the Fee Exemption applied. Hammond pointed to the fact that it had created its inspection program in 1961—well before July 1, 1984.
D. House Bill 1165
While Hammond‘s lawsuit was pending, the General Assembly introduced House Bill 1165, proposing two notable changes to
The bill initially proposed language that would have made the Fee Exemption applicable only to political subdivisions “with a rental registration or inspection program created after July 1, 1977, and before July 1, 1984.” This would have removed Hammond from qualifying for the Fee Exemption because its inspection program began in 1961. But it would also have excluded Bloomington, “which began [its program] in the early 1970s,” according to the relevant fiscal impact report.2 Ultimately, the language narrowing the Fee Exemption was taken out.
Another part of the proposal that would have excluded Bloomington—along with Hammond—from the Fee Exemption was likewise rejected; this part had to do with the definitions of “rental registration or inspection program” and “rental unit.” Those definitions determined the scope of the Fee Exemption, which applied only “to a political subdivision with a rental registration or inspection program created before July 1, 1984.” The proposal sought to define “rental registration or inspection
Since Hammond‘s program required inspection of rooming houses, it would not qualify for the Fee Exemption under the proposal. But neither would Bloomington‘s program, because it required inspections and registrations of each “residential renting unit”—a term explicitly defined by the city to include a “rooming house.”
The final bill, though, did not adopt definitions that excluded all programs that inspected rooming houses. Instead, it adopted definitions that excluded Hammond‘s program—but not Bloomington‘s or West Lafayette‘s—from the Fee Exemption. Here‘s how: The enacted act defined a “rental registration or inspection program” as “a program authorizing the registration or inspection of only rental housing. The term does not include a general housing registration or inspection program or a registration or inspection program that applies only to rooming houses and hotels.” P.L. 65-2015, § 1 (codified at
This excluded Hammond from the Fee Exemption on two fronts: (1) because it had a general inspection program that permitted the inspection of non-rental housing, and (2) because it required the inspection only of rooming houses and hotels. Howevеr, the amended language no longer excluded Bloomington because its program applied only to rental housing. So under the final bill, both Bloomington and West Lafayette qualified for the Fee Exemption, while all other political subdivisions were subject to the Fee Restriction—meaning only Bloomington and West Lafayette could charge a higher-than-$5 annual rental-registration fee.
E. Constitutional challenges to the Fee Exemption
This legislation prompted Hammond to amend its complaint to add state constitutional claims challenging the Fee Exemption. Hammond argued that the Fee Exemption violated both
On cross-motions for summary judgment, the trial court held that Hammond had standing to challenge the constitutionality of the Fee Exemption; Hammond qualified for the Fee Exemption in 2014; and although the Fee Exemption is special legislation intended to benefit only Bloomington and West Lafayette, it is nonetheless constitutional.
The Court of Appeals partially reversed the trial court, holding that the Fee Exemption does violate
Both the State and Herman & Kittle petitioned to transfer.3 We now grant transfer, vacating the Court of Appeals opinion. Ind. Appellate Rule 58(A).
We summarily affirm the excellently crafted Court of Appeals decision that Hammond has standing to pursue its constitutional challenges. See Ind. Appellate Rule 58(A)(2).
The constitutionality of an Indiana statute and the propriety of summary judgment are both questions of law that we review de novo. State v. Norfolk S. Ry., 107 N.E.3d 468, 471 (Ind. 2018); Paul Stieler Enters. v. City of Evansville, 2 N.E.3d 1269, 1272 (Ind. 2014).
Discussion and Decision
The Indiana Constitution provides two provisions aimed at limiting special legislation, which is a law that “pertains to and affects a particular case, person, place, or thing, as opposed to the general public,” Mun. City of S. Bend v. Kimsey, 781 N.E.2d 683, 689 (Ind. 2003) (quoting Black‘s Law Dictionary 890 (7th ed. 1999)). These provisions are
In all the cases еnumerated in [Section 22], and in all other cases where a general law can be made applicable, all laws shall be general, and of uniform operation throughout the State.
Hammond maintains that the Fee Exemption is special legislation that violates both sections of Indiana‘s Constitution, and that the special legislation is not severable from the remainder of
After careful consideration, we hold that the Fee Exemption violates
Even though the Fee Exemption is invalid and so must be struck down, it is severable from the remainder of
Deciding the constitutionality of special legislation is no easy task. It involves a consideration of
So to fully explain the holding we reach today, we begin with the intent behind framing and ratifying
specific provisions.” Id. (alteration in original) (quoting Ind. Gaming Comm‘n v. Moseley, 643 N.E.2d 296, 298 (Ind. 1994)).
I. The history behind state constitutional limits on special legislation
Over a nineteen-day span in 1816, representatives met in Corydon, Indiana, where they framed and signed our State‘s first constitution. William W. Thornton, The Constitutional Convention of 1850, in Report of the Sixth Annual Meeting of the State Bar Association of Indiana 152, 152 (1902). The original framers knew that Hoosiers might wish to amend their work, so Article 8 provided for a vote every twelve years on whether a convention should be called to “revise, amend, or change the constitution.” Ind. Const. of 1816, art. VIII, § 1. When this question was put to Indiana voters in both 1828 and 1840, the calling of a convention failed each time. Thornton, supra, at 153.
The lack of interest in amending the 1816 Constitution began to change with the election of Governor James Whitcomb in 1843. Id. at 153–54. In his inаugural address, Governor Whitcomb began the push for revision because of the “growing evils of excessive legislation.” Id. at 153. He remarked, “It is of the greatest importance to the welfare of the people, that the laws should be generally known and well understood.” Id. at 153–54. In response, the legislature did not call for a constitutional convention, but the judiciary committee conceded in a report that the constitution could be revised at any time, not just at the end of the constitutional period of twelve years. Id. at 154–55.
In December 1845, Governor Whitcomb again highlighted a need for constitutional change, because “[m]uch the greater part of the legislature is occupied in passing local and private acts, for most of which, it is well worthy of consideration whether ample provision can not be made by a few general laws.” Id. at 155. The legislature responded, putting the question of calling a constitutional convention to the voters on the August 1846 ballot. Id. at 156.
The election was held, and more votes were cast in favor of hоlding a convention than against. Id. However, the 1816 Constitution required “a majority of all the votes given at such election” to call for a constitutional convention, Ind. Const. of 1816, art. VIII, § 1, and the governor and legislature interpreted this as requiring “a majority of all the votes cast at the election, regardless of the [votes cast on the] question of the convention.” Thornton, supra, at 157. Because there were 126,123 votes cast in the governor‘s race, but only 62,018 votes cast on the question of holding a convention—with 33,175 Hoosiers voting in favor—the required “majority of all the votes cast” was apparently lacking, and the measure failed. Id. at 156-57.
Governor Whitcomb, however, did not quit. In 1848, he again emphasized the need for a constitutional convention to address “the growing amount of . . . our local and private legislation.” Id. at 162–63. He further remarked, “[i]f calling a convention to amend the constitution were productive of no other result than furnishing an effectual remedy for this growing evil, it would be abundantly justified . . . .” Id. at 165.
The legislature again responded to the governor‘s plea, and the question of holding a constitutional convention was put on the August 1849 ballot. Thornton, supra, at 170. This time it passed. Id.
By the time the delegates met a little over a year later on October 7, 1850, it was clear that “[t]he prevention of special and private legislation was the most potent argument for revision.” Id. at 177–78. Thus, throughout the 127-day convention, id. at 180, curtailing special legislation was a topic of great debate. During one such discussion, Delegate John Pettit of Tippecanoe County expressed his view that
the laws should be general in every instance. Sir, if this is not done, you are just leaving undone the very thing which, most of all others, we are sent here to do—to cut down this whole system of local legislation, so that a man, in stepping over the boundary line of one county into another county, might not be
under the painful uncertainty as to whether he was living under the same system of laws.
2 Report of the Debates and Proceedings of the Conventiоn for the Revision of the Constitution of the State of Indiana 1009, 1765–66 (Wm. B. Burford Printing Co. 1935) (1850) [hereinafter 2 Debates]; 1 Report of the Debates and Proceedings of the Convention for the Revision of the Constitution of the State of Indiana 4 (1850) [hereinafter 1 Debates].
Pettit‘s remarks echoed those of Delegate David M. Dobson from the Owen and Green district, who said, “It should be remembered that the Legislature are to have no power of passing local laws; yet the power should be vested somewhere, and it should be done under a general law.” 2 Debates, supra, at 1765; 1 Debates, supra, at 3. Pettit later explained the reasoning for Dobson‘s assertion: “our object ought to be to make our laws uniform, so that wherever a man treads the soil of Indiana, he shall have the same rights and privileges, and stand in all respects surrounded by the same laws, and be governed by them.” 2 Debates, supra, at 1767.
Delegates Pettit and Dobson were not alone. Convention President George W. Carr noted in his closing remarks that the newly drafted constitution provided “an effectual remedy for that most injurious evil in our legislation for many years past, known as local and special enactments.” Id. at 2077; 1 Debates, supra, at 4, 6. That remedy came in the form of
This history is telling. Special legislation drew an impassioned response, culminating in significant changes to our state constitution—including
In the years following the 1850–1851 Convention, this section has remained unaltered: “In all the cases enumerated in [Section 22], and in all other cases where a general law can be made applicable, all laws shall be general, and of uniform operation throughout the State.”
II. The evolution of special-legislation analysis
In the 1850‘s and 60‘s, our Court wrestled with whether the legislature alone could decide if “a general law can be made applicable.”
Next came a string of cases involving
Yet, in others, we found
because the population did not “bear[] a rational relationship to the subject dealt with”); State Election Bd. v. Behnke, 261 Ind. 540, 543, 307 N.E.2d 56, 58 (1974) (striking down law under
From these cases, twо guiding principles developed. First, although population alone was not a proper basis for legislative classification, the law would be upheld if the population classification had a “rational relationship” to the law‘s subject matter. See Perry Civil Twp., 222 Ind. at 91, 51 N.E.2d at 374. Second, a law was classified as “general” if it was possible for other political subdivisions to move into the population category in the future; it did not matter if, at the time of passage, a law applied to only one locale. See Graves, 255 Ind. at 363–64, 264 N.E.2d at 610-11.
These principles, though, were later replaced by a more fine-tuned approach. It started in 1994 with Moseley, which observed that even if a law is general in form, it may be unconstitutional special legislation as applied if the unique characteristics of a political subdivision do not justify the law‘s different treatment. Ind. Gaming Comm‘n v. Moseley, 643 N.E.2d 296, 301 (Ind. 1994).
In that case, this Court examined a statute that, through population categories, permitted only Lake County to vote on riverboat gambling by city (versus by county). Id. at 298. In evaluating the
In upholding the law, the Court reasoned that the statute was not subject to a uniform law of general applicability because “not every county is home to a suitable body of water.” Id. And even though the law treated Lake County differently than other waterfront counties, we found the differential treatment fit into the purpose of the law. Id. A unique characteristic of Lake County—namely, that its whole waterfront was covered by substantial cities—justified the distinction. Id.
Two years later, this Court built on Moseley‘s analytical framework, focusing on when special legislation is “constitutionally permissible.” In Hoovler, we analyzed a special law that helped Tippecanoe County address the financial burden of cleanup costs associated with a “Superfund” landfill site. State v. Hoovler, 668 N.E.2d 1229, 1234 (Ind. 1996). In doing so, we examined “circumstances surrounding [the Act], including language in the Act itself,” and determined that the statute was special legislation because the legislature intended that it apply to only Tippecanoe County. Id.
We then concluded that the law was constitutional because Tippecanoe County‘s “Superfund” landfill site possessed a characteristic that justified the special legislation. Id. at 1235; see also Kimsey, 781 N.E.2d at 694 n.8. Specifically, the EPA gave a special designation to Tippecanoe‘s particular “Superfund” site, exposing that county to unique potential financial liability. Hoovler, 668 N.E.2d at 1235. And, so, a general law could not apply uniformly in all counties. Id. Ultimately, by building upon Moseley‘s analytical framework, Hoovler provided valuable guidance for analyzing the constitutionality of a special law.
With Moseley and Hoovler as our guides, we next explained in Williams that analyzing a challenge under
In that case, we reviewed a statute that provided for the appointment of magistrates only in Lake County courts. Id. After determining that the magistrate statute was special—given that it provided for the appointment of magistrates solely in Lake County—this Court upheld the law as constitutionally permissible. Id. at 1085–86. We reasoned that the unique characteristics of Lake County, a large county with a large case docket, made the special treatment appropriate. Id. at 1086.
The approaches taken in Moseley, Hoovler, and Williams—looking to the actual effect of and underlying reasons for the statute—laid the
groundwork for this Court‘s Kimsey decision. In that case, the legislature passed a law permitting counties with a population between 200,000 and 300,000 to defeat a proposed annexation if a simple majority of landowners opposed it. Kimsey, 781 N.E.2d at 684. The challenged law applied exclusively to St. Joseph county; for all other counties, the statute required the opposition of 65% of landowners to defeat annexation. Id. at 684-85.
This Court noted that “if there are characteristics of the locality that distinguish it for purposes of the legislation, and the
But unlike the laws in Moseley, Hoovler, and Williams, the special legislation in Kimsey was unconstitutional because a general law could be made applicable to deal with the targeted conditions. Id. at 694. We explained, “if the conditions the law addresses are found in at least a variety of places throughout the state, a general law can be made applicable and is required by”
In this way, Kimsey helped illuminate when special legislation is unconstitutional. But perhaps Kimsey‘s most significant contribution to
bears the burden of establishing that an affected class‘s unique characteristics justify the particular differential treatment.
Kimsey‘s discussion of the proper analysis for
In Lake Superior Court, we examined two countywide reassessment statutes that applied only to Lake County. State ex rel. Att‘y Gen. v. Lake Superior Court, 820 N.E.2d 1240, 1250–51 (Ind. 2005). We determined that the law did not run afoul of
Similarly, in Buncich, we upheld a special law—again applying only to Lake County—aimed at reducing costs of administering elections by consolidating smaller precincts. State v. Buncich, 51 N.E.3d 136, 141 (Ind. 2016). Buncich began by reinforcing the general principle that a statute is “clothed with the presumption of constitutionality.” Id. (quoting Boehm v. Town of St. John, 675 N.E.2d 318, 321 (Ind. 1996)).
Then, in addressing the special law at issue, the Court noted that the competing arguments involved “a question of degree.” Id. at 143. Specifically, while the State pointed to the high number of small precincts
Lake County become a defining characteristic such thаt it justifies special legislation?” Id. at 143 (emphasis omitted).
This Court concluded that the opponent of the special law failed to “rebut[] the presumption that the legislature determined Lake County to be past that point,” noting that Lake County had not only the “largest number of small precincts in the state” but also “more than twice as many as all other counties.” Id. Recognizing that statistics “may be pliable,” id., the Court threw “the benefit of the doubt in favor of the constitutionality of the law,” id. (quoting Moseley, 643 N.E.2d at 300). Accordingly, we determined that the special legislation was constitutionally permissible. Id.
Conversely, this Court struck down special legislation in Alpha Psi, determining that the differential treatment wasn‘t warranted because there was “nothing unique” about the specified class. Alpha Psi Chapter of Pi Kappa Phi Fraternity, Inc. v. Auditor of Monroe Cty., 849 N.E.2d 1131, 1138 (Ind. 2006). In that case, we addressed a statute that essentially gave filing extensions to three Indiana University fraternities for their property-tax-exemption applications. Id. at 1133. In finding an
So, what can be distilled from this review of
circumstances of an affected class that warrant the special treatment—meaning that a general law could be made applicable. See Alpha Psi, 849 N.E.2d at 1138–39; Kimsey, 781 N.E.2d at 694.
With this test, though, we keep in mind two considerations.
First, because a special-legislation challenge is a type of constitutional challenge, there is an overarching presumption that the statute is constitutional. See, e.g., Buncich, 51 N.E.3d at 141. So in close cases, the special law will be upheld. See id. at 143.
Second, оnce a special-legislation claim is lodged and the court determines that the law is indeed special, the burden is on the proponent to show that a general law can‘t be made applicable. See id. This requires the legislation‘s proponent to clear a low bar by establishing a link between the class‘s unique characteristics and the legislative fix. See id. If the proponent overcomes its initial hurdle to show a link between the unique characteristics
With that multi-layered analytical framework, we turn to thе Fee Exemption‘s constitutionality.
III. Applying the current analytical framework to the Fee Exemption
Since the parties agree that the Fee Exemption is special legislation, we face the question, “Is the special legislation constitutionally permissible?” To answer that question, we apply the framework outlined above.
As the proponents of the Fee Exemption, Herman & Kittle must establish why the law couldn‘t operate statewide. Again, this burden is
overcome—at least initially—by demonstrating a link between the class‘s unique characteristics and the legislative fix. Herman & Kittle argues that the special law is justified because of three unique characteristics in Bloomington and West Lafayette: (1) a higher-than-average share of renters; (2) a large percentage of young, unsophisticated renters; and (3) a history of regulating landlords in the rental markets through inspection and registration programs. We address each of these proffered justifications in turn.
According to 2010 census data, Bloomington and West Lafayette do have the highest percentages of renter-ocсupied housing units in Indiana, at 67% and 67.6%, respectively. Herman & Kittle links these percentages to the Fee Exemption‘s special treatment by arguing that the rental percentages in Bloomington and West Lafayette “giv[e] landlords unequaled control over the supply of housing.” Though this may be enough to overcome the proponent‘s initial burden, the rental-percentage characteristic raises a question of degree, and Hammond has shown that those percentages are not defining enough to justify the differential treatment.
The same data that identifies Bloomington‘s and West Lafayette‘s percentages of renter-occupied units shows that other Indiana municipalities have similarly high percentages of renter-occupied housing units: East Chicago at 58.5%, Speedway at 51.5%, Elkhart at 49.2%, Lafayette at 48.7%, Muncie at 48.6%, Gary at 47.3%, Valparaiso at 44.6%, Terre Haute at 44.5%, Indianapolis at 44.2%, and Evansville at 44%. Thus, we agree with Hammond that the moderately higher percentages found in Bloomington and West Lafayette are not defining charаcteristics that can justify the preferential treatment provided to just those two cities. Cf. Buncich, 51 N.E.3d at 143.
Herman & Kittle‘s second explanation to support the Fee Exemption is that Bloomington and West Lafayette have high percentages of students who are “often unsophisticated first-time renters” because the cities are home to Indiana University and Purdue University, respectively. Yet, Herman & Kittle gives no reason why these types of renters are grounds to permit rental-registration fees over $5.
Nor are Bloomington and West Lafayette the only two cities in Indiana containing a large public university with many students who are “often unsophisticated first-time renters.” For example, Muncie has Ball State University; Indianapolis has Indiana University–Purdue University;
Herman & Kittle finally argues that Bloomington and West Lafayette have uniquely long histories of regulating landlords in the rental-housing market. True, the evidеnce before us shows that Bloomington created its program either in 1961 or in the early 1970s, and West Lafayette‘s program began in 1976. But Herman & Kittle has failed to establish that these are uniquely long-running programs, particularly compared to Hammond‘s, which was created in 1961, and the City of Goshen‘s, which has spanned more than 25 years. Since Bloomington and West Lafayette do not have uniquely long-running programs, Herman & Kittle cannot link them to the Fee Exemption‘s special treatment. Thus, the evidence before us shows that the Fee Exemption is amenable to being applied generally throughout the State.
Ultimately, Herman & Kittle‘s proffered justifications do not support the differential treatment the Fee Exemption gives to Bloomington and West Lafayette. In other words, this case is starkly different from prior cases in which this Court found a relationship between an affected class‘s unique characteristics and the special treatment granted to that class.
To be sure, this case is unlike Hoovler, where the unique financial liability Tippecanoe County faced was directly related to the tax-increase relief it received through special legislation. Hoovler, 668 N.E.2d at 1235. It‘s also unlike Williams, where the unique needs of Lake County justified the special law providing for the appointment of magistrates in that county alone. Williams, 724 N.E.2d at 1085–86. The circumstances here also differ from those in Lake Superior Court, where the unique scale, complexity, and tortured history of property taxation in Lake County warranted the special legislation aimed at fixing the issue through
reassessment. Lake Superior Court, 820 N.E.2d at 1250–51. And, finally, this case is dissimilar to Buncich, where a uniquely large number of small precincts in Lake County directly related to the special legislation reducing the number of small precincts. Buncich, 51 N.E.3d at 143.
Unlike the special legislation described above, the Fee Exemption cannot survive an
The Fee Exemption is precisely the type of law our framers sought to eliminate during the 1850–1851 Constitutional Convention. While the bar to establish the constitutionality of special legislation is by no means a high one, the proponent still must justify the special treatment afforded
For two of the proffered “unique characteristics,” Herman & Kittle failed to establish a link between those characteristics and the Fee Exemption‘s preferential treatment. Specifically, Herman & Kittle didn‘t explain why populations of young, unsophisticated renters or long-running rental-fee programs justify allowing Bloomington and West Lafayette to charge rental fees over $5. For the third alleged “unique characteristic“—that the two cities have high percentages of renter-occupied properties—Herman & Kittle managed to link thе characteristic to the legislative remedy. But Hammond then pointed to similarly high rental-occupancy percentages throughout the state, showing why that
characteristic was not defining enough to justify preferential treatment to only Bloomington and West Lafayette. Thus, a general law can be made applicable, which means the Fee Exemption is unconstitutional special legislation.
Because the Fee Exemption is constitutionally defective under
IV. Severability of the Fee Exemption
“A statute bad in part is not necessarily void in its entirety.” Paul Stieler, 2 N.E.3d at 1279 (quoting Dorchy v. Kansas, 264 U.S. 286, 289 (1924)). Rather, we must determine whether the infirm provision of a statute is severable, leaving the remainder intact. Id.
To make this determination, we ask whether the statute can stand on its own without the invalid provision, and whether the legislature intended the remainder of the statute to stand if the invalid provision is severed. Id. If we answer either question in the negative, the offending provision is not severable, and the whole statute must be stricken. See id.
Herman & Kittle and Hammond understandably take diverging positions on this issue. While Herman & Kittle advocates for severability of the Fee Exemption, Hammond does not. Accepting Herman & Kittle‘s position would mean that the Fee Restriction remains valid; that it would apply to every political subdivision across the state; and that, consequently, no political subdivision could charge more than a $5 per-rental-registration fee. Accepting Hammond‘s position, however, would mean that
Siding with Hammond, the Court of Appeals struck down the whole statutory section, finding the Fee Exemption nonseverable. City of Hammond, 95 N.E.3d at 144. In doing so, the panel relied on certain legislative history to conclude that the General Assembly would not have approved the Fee Restriction without an exemption for Bloomington and West Lafayette. See id. at 143-44.
Notably, in its analysis, the Court of Appeals pointed out that
Herman & Kittle argues that the Court of Appeals failed to acknowledge and apply the correct presumption—one created by
(b) Except in the case of a statute containing a nonseverability provision, each part and application of every statute is severable. If any provision or application of a statute is held invalid, the invalidity does not affect the remainder of the statute unless:
(1) the remainder is so essentially and inseparably connected with, and so dependent upon, the invalid provision or application that it cannot be presumed that the remainder would have been enacted without the invalid provision or application; or
(2) the remainder is incomplete and incapable of being executed in accordance with the legislative intent without the invalid provision or application.
See 1987 Ind. Acts 1, P.L. 1, § 1 (codified at
Exemption is severable from the remainder of the statute. The landlord further claims that the statute‘s history shows that the legislature‘s primary focus was on addressing the escalating rental-registration fees throughout the State and their negative effects—not on exempting Bloomington and West Lafayette from the caps on fees.
Succinctly put, the issue before us is whether the legislature intended the Fee Restriction to live and die with the Fee Exemption. Because the General Assembly did not include a nonseverability clause, under
In support of Hammond‘s argument that the legislature would not have passed the Fee Restriction without the Fee Exemption, the city points to three failed legislative attempts to impose fee restrictions statewide: (1) HB 1543, which, as introduced, barred all political subdivisions from requiring rental-unit registration; (2) HB 1313, which, as introduced, barred all
Hammond asserts that none of these bills exempted Bloomington and West Lafayette from fee restrictions and that HB 1403 passed only after the Fee Exemption was added. Thus, according to Hammond, the legislature would not want a provision limiting rental-registration fees to just $5 (the Fee Restriction) unless Bloomington and West Lafаyette were spared from that restriction (Fee Exemption).
Herman & Kittle responds that the Fee Restriction‘s vitality doesn‘t depend on the validity of the Fee Exemption. The landlord points out that the primary legislative concern in enacting the Fee Restriction was rising fees that were negatively impacting the affordability of rental housing and stifling rental development. Herman & Kittle maintains that, given this primary concern, we must presume the legislature intended for the Fee Restriction to apply to all political subdivisions—including Bloomington and West Lafayette—rather than having no rental-fee restrictions statewide. We agree.
Although both parties present defensible arguments,
Conclusion
Under
Here, as the proponents of the Fee Exemption, the State and Herman & Kittle bore the burden to demonstrate why Bloomington and West Lafayette should be able to charge any amount for rental-registration fees, when all other political subdivisions across the state are capped at $5. Because they failed to make that showing, the Fee Exemption is unconstitutional special legislation that must be stricken.
But the Fee Exemption is severable from the remainder of
Accordingly, the judgment of the trial court in favor of Herman & Kittle is reversed to the extent the trial court found the Fee Exemption constitutional. The case is remanded to the trial court with instructions to enter a judgment in favor of Herman & Kittle on the issue of severability and for further proceedings consistent with this opinion.
David, Massa, and Goff, JJ., concur.
Slaughter, J., not participating.
ATTORNEYS FOR APPELLANT
Bryan H. Babb
Bradley M. Dick
Bose McKinney & Evans LLP
Indianapolis, Indiana
ATTORNEYS FOR APPELLEE
Steven C. Shockley
Russell C. Menyhart
Taft Stettinius & Hollister LLP
Indianapolis, Indiana
ATTORNEYS FOR INTERVENOR
Curtis T. Hill, Jr.
Attorney General of Indiana
Thomas M. Fisher
Solicitor General
Frances H. Barrow
Julia C. Payne
Deputy Attorneys General
Indianapolis, Indiana