*1 a is of the rejection implication opinion possibility the verdict could be on the of the to upheld basis duty procure cover regardless would policy injury passenger Harrell, said, we fault. Stokes v. “It Citing supra, duty holder to educate himself matters of concerning insur- policy ance.”
The has also with Agency raised issue respect instructions be given jury. must reversed judgment instructions, and dismissed so we do not regardless address the point.
Reversed and dismissed.
Glaze, J., not participating. CITY OF LITTLE ROCK and Arkansas Service Public
Commission AT&T COMMUNICATIONS SOUTHWEST, OF THE INC.
93-1251
Supreme Arkansas delivered November Opinion [Rehearing denied December 1994.*] Corbin, J., *Special Roscopf joins. Justice grant rehearing. Charles would New bern, J., participating. not *3 Stewart, A. David by: City Att’y, M. Carpenter, Thomas Black, III, for appellant W. Anthony C. Mann William Little Rock. Ward, Public Service Commis- Arkansas for Paul appellant sion. Norton, Roy M. Jr. and N. & Jennings, by: Lindsey
Wright, Cox, Jr., appellee. F. for decided by was originally This case Glaze, Justice.
Tom valid- which upheld Service Commission Arkansas Public AT&T Communica- Rock ordinance required of a Little ity Southwest, fees Inc. to certain privilege of the pay tions had of Little Rock streets. The City using City’s public each of interstate granted provider ordinance adopted distance) services the City (long intrastate toll telephone The ordinance also ways. use the City’s public a franchise to $.004 on all minute charge levied a per AT&T filed its com- are service address. calls that billed to city PSC, validity with the challenging plaint law to hear administrative designated judge the Commission the complaint. the ordinance finding issued Order No.
The law judge The Commission sub- AT&T’s dismissing complaint. valid *4 17 its AT&T from Order No. as оwn. appealed sequently adopted and set decision to the court of out appeals the Commission’s is (1) for reversal: The ordinance unlawful the following points fee, Ark. Code by a tax or and in is not authorized particular, as 23-17- 14-200-101 and is barred Ark. Code Ann. by Ann. § § 101; an (2) arbitrary, the ordinance is alternatively, capricious of whatever fran- unreasonably discriminatory and application (3) and ordinance City may chise authority possess; therefore burden on inter- an unreasonable and unconstitutional favor, ruled in AT&T’s The court appeals state commerce. AT&T v. the Commission’s decision. Communications reversing Rock, (1993). 44 Ark. S.W.2d City App. it with AT&T’s first that the agreed City’s point Specifically, an unauthorized tax. The court of found appeals levied ordinance on AT&T’s other two Little Rock points. rule unnecessary case, review the аnd we this court to and the PSC petitioned so, that we first granted doing consider court of petition. decision which invalidated the ordinance as appeals’ levy- an unauthorized tax. ing decision,
In reaching its
the court of
mis
423,
appeals put
Baioni,
reliance
Marion v.
placed
upon City
(1993),
As previously court relied appeals this court’s rationale in Baioni in holding Rock’s franchise
621 so, tax, the court in doing but is an unlawful or assessment fee Baioni and related the fact that overlooked completely of appeals fee cases. were not franchise in that decision cited cases water fees Baioni, sewer and Marion charged In There, its decision by court reached this certain developers. to in rule such light applicable the evidence analyzing fee, be denom- in order not to or that a governmental cases tax, reasonable and and bear a be fair reasonable inated must those ser- receiving conferred on to the benefits relationship it, Baioni, directly like involved fees charged and cases vices. construction or extension or residents for the to developers water, and the general for such as sewer certain services must be segregated for such purposes rule that thе fees obtained only. and used those purposes to situa
The Baioni holding inapplicable simply public are authorized to assess where cities statutorily tions the cities’ occupancy the use or utilities fees for franchise rec wrong failing The court of appeals distinction. legal statutory this ognize above, (a)(1) As out 14-200-101 empow pointed § to assess franchises utility operating Arkansas municipalities ers are not companies within the municipalities, telephone (1987); 23-4-201 S.W. See Ark. Code Ann. excluded. also § 271 S.W.2d Fayetteville, Co. v. Ark. 609 Bell Tel. (1980); Co. v. Hot Light Springs, Elec. Springs Hot (1902) (court recognized a municipal Ark. S.W. had to enact an ordinance to pay ity right requiring company in the streets for maintaining a fee for erecting poles city other S.W. electric or certain light, telephone purposes). case, court out that 14-200-101 Bell Tel. Co. this pointed § 73-208) cities the (then authority Ark. Stat. Ann. granted § conditions, which included a terms and determine reasonable for the use of streets. Signifi franchise payment/fee, to a 14-200-101 was found court to cantly, apply § to construct its utility deriving right sys telecommunications 23- Act Code Ann. tem under Telephone [Ark. Company that, (1987)]. with In this AT&T argues 17-101—307 respect, Act telephone allows Company out exception, Telephone without use streets city companies right highways that, concedes, however, over the years, It charge.
622 course, have franchise fees on local calls. Of companies paid true, if AT&T’s construction the Act were fees municipal on either local or would charged service bе unlaw- ful and would undoubtedly greatly on munici- impact present revenues. pal
As AT&T concedes the by acknowledging of franchise fees companies’ payment during past years, pro posed construction the Act has not been the one applied by cities, and, and telephone companies Act’s ascertaining intent, this court examines statute historically, as well as the enactment, contemporaneous conditions at the time of its con and matters of sequences interpretation, common knowledge Mears, within the limits of this court’s jurisdiction. County Judge 844, v. Ark. State (1979); 265 Ark. 581 Hospital, S.W.2d 339 Co., 300, see also Hot Springs Light Elec. Ark. 67 S.W. 762. It clear that appears telephone companies, municipalities this court have recognized franchise over fees pаst years, now, does AT&T only claim the 1885 Telephone Act Company event, invalidates such fees. 14-200-101 has any been enacted Act, statute, since and that passage later as dis above, cussed empowers such municipalities impose fees. For reasons, these we conclude the Little Rock franchise and fee law, ordinance is authorized and the court of appeals wrong otherwise. holding
We next turn to AT&T’s second
argument
Little
Rock’s ordinance and franchise fee is an arbitrary, capricious
and unreasonable
application
franchise
City’s
authority.
issue,
In considering this
we
that our review
emphasize
is of the
decision, therefore,
PSC’s
we are bound by
law
long-settled
gov
this
erning
court’s limited review of PSC administrative rulings.
The Commission has broad
powers
is vested with wide dis
сretion; that, if the order
Commission is supported by sub
evidence,
stantial
is free from fraud and not
arbitrary,
duty
of this court to let it stand even
though
court might disagree
with the
wisdom of
order. And for the Commission’s order
invalid,
to be
the Commission’s action must lack rational basis.
Co.,
In Re Sugarloaf
Mining
Here, Rock, assessed AT&T like utilities franchise fees based the use of Little other Rock streets. These utilities obtained enormous revenues gross *7 calls within the PSC from handling long city. agreed that, with Little the inherent nature of Rock communica- given utilities, tion services rational provided by telephone only basis for fees is in time in units. Under assessing measuring law, Arkansas Little Rock’s time-unit method- using fee, in AT&T’s is law rea- ology establishing presumptively (a)(1) (1987). sonable. Ark. Code Ann. 14-200-101 AT&T had burden to show Little Rock fee ordinance is unreason- able, Venus, but even Dr. its own Charles testified he did expert, not think knows whether the “anyone this relationship partic- sum, ular case is reasonable or unreasonable.” In Little Rock’s a fee on for the imposition per-minute basis effective use of the city’s has not been shown to be rights-of-way unreasonable or without a rational basis. this court on review
Although must the PSC’s accept ruling unless it is or arbitrary (and AT&T capricious, dissenting opin- ion) would force PSC to franchise fees require based upon the number (and miles of facilities AT&T utilities) like had located within the city’s No is cited authority formula, such requires or mileage methodology and we fact, know of none. In Court Supreme has cautioned against such rigid formulas when with dealing telecommunication busi- nesses which involve “the morе intangible movement of elec- tronic impulses through computerized networks.” v.
Goldberg Sweet, (1989). 488 U.S. While other businesses may be more reasonably assessed on the basis of number of units traveled, owned or number of miles the Goldberg Court opined that a formula based upon “mileage some other geographic division of individual calls would telephone insur- produce mountable administrative and technological barriers” because “the exact of thousands of path electronic can signals neither be 264-265, traced nor recorded.” Id. at 266. it
Finally, significant out that the point time-use selected methodology Rock and the PSC approved by results in the of treatment of all equality carriers. interexchange hand, On the other if Little Rock and the PSC had chosen the AT&T, formulа mileage right-of-way suggested by disparity between could be as AT&T companies argued does to mandate that the is not required The PSC in this appeal.
now fee establishing charges methodology a mileage use business, that formula is when especially telecommunications in nature.1 discriminatory arguably in Goldberg Court’s reasoning light Supreme that AT&T Sweet, the PSC’s (1989), finding U.S. was unreason method of assessment the City’s failed to show able, As to determine otherwise. court is not in position this communications, cellular continue including technologies, newer evolve, for simplistic this must abandon antiquated court AT&T. Because there is sufficient as that suggested by mulas that the assessment based the PSC’s finding evidence to support $0,004 reasonable, ruling. we affirm that minute of use is on per *8 that the fee or we AT&T’s argument consider
Finally, an unreason the Little Rоck ordinance constitutes under charge Clause. AT&T cites in violation of the Commerce able burden Sweet, the valid wherein the Court upheld Goldberg Supreme Act, Excise finding an Illinois Telecommunications ity In so hold under the Commerce Clause. scrutiny Act withstood that the Illinois Act satisfied Court held ing, Supreme Transit, Inc. v. Brady, test set forth in Auto Complete four-pronged (1) be that the tax must applied 430 U.S. required state, (2) is with a nexus with the taxing substantial activity (3) does not discriminate interstate against fairly apportioned, commerce, (4) related to the services provided by is fairly the state. usage 1interestingly, charged per-minute of Little Rock’s the fee AT&T for its percentage
rights-of-way percentage than the of rev amounts to a lower of its revenue one) (except paid by following the other utilities: enue COMPANY_______PERCENTAGE 1.69 ALLTEL 5.20 AP&L 4.42 ARKLA ROCK) (IN LITTLE 5.20 ARKLA (IN ROCK) LITTLE 1.92 AT&T WATER WORKS 5.00 LITTLE ROCK 3.67 SOUTHWEST ARK. ELEC. COOP. CORP. COMPANY 2.43 SOUTHWESTERN BELL TELEPHONE BELL TELEPHONE COMPANY SOUTHWESTERN (IN ROCK) 7.32 LITTLE ROCK) (IN 3.00 CABLE LITTLE STORER Here, three test fac AT&T does not first question above, it Little Rock’s ordinance fails tors set out but urges ordinance does fourth criterion because the assessed by AT&T not relate to the services Little Rock. fairly by provided that it license and specifically argues already pays privilege and the added benefit sales taxes for services general city only to confer its ordinance is franchise or City purports by Little license to Rock’s streets. To state obvi occupy public ous, all businesses do not same amounts sales taxes. pay It is a few businesses have the equally only apparent privi showed that AT&T lege occupy public rights-of-way. proof less than the revenues paid significantly percentage gross paid electric, and water utilities Rock gas using addition, we note that as a result of its use these AT&T has derived substantial benefits via rights-of-way, commercial, from its gross receipts providing profit-making, pub lic service to the citizens of Little Rock. utility AT&T’s conclu sory disagreement concerning right con occupancy tention that the fee franchise is excessive in to the comparison benefits afforded Little Rock Because simply unpersuasive. AT&T failed to show the fee City’s franchise is an unreasonable commerce, burden on interstate we affirm the PSC’s ruling. above, For reasons we given reverse the court of appeals’ tax, decision that the Little Rock ordinance levied an unauthorized and affirm the PSC decision in all respects. *9 Dudley Special Corbin, JJ., dissent; and Justice Charles
Roscоpf Newbern, J., joins this not opinion; participating. Justice, Dudley,
Robert H. AT&T Communi- dissenting. Southwest, cations of Inc. filed a with the Arkansas complaint Public Service Commission challenging by levy City $.004 Little Rock of minute on all per distance calls billed interexchange long to a service telephone companies address within the The City. charge, is based on entirely use, the number of minutes of is billed to a telephone telephone address, service and the be on to the charge may passed phone user.
An Administrative Law for the Public Service Judge Com- mission heard the he ruled that the complaint. summary, levy
626 tax; fee, that the ordi- and not a enacted franchise validly
was interstate com- an unreasonable burden on nance does not impose reasonable; merce; that a and ratio- that the amount of the fee is the cellular the differentiation between nal basis exists for carriers. and interexchange telephone companies the Administrative filed a for with rehearing AT&T petition denied. AT&T filed a for petition Law The Judge. petition Commission, the full Service and upheld with Public rehearing AT&T then appealed the Administrative Law Judge’s ruling. and, reversal, (1) relied on three points: the court of appeals (b) the enact the (a) the lacked authority tax; (2) the amount of the fee is arbi- was an unauthorized levy AT&T; as discriminatory trary, capricious, applied burden on interstate com- (3) the ordinance is unconstitutional tax, The held that the constituted a levy merce. and, court of appeals it had not been at an election qual- because adopted ified electors of the it was invalid. AT&T Communications city, 30, Rock, (1993). 866 414 v. 44 Ark. S.W.2d App. the Public Service The court of reversed the ruling appeals Commission, but in so did not reach the issues of whether doing or whether it discriminatory, arbitrary, capricious, an unconstitutional burden on interstate commerce. constitutes Little Rock and the Arkansas Public Service City of review of the Commission both this court for decision petitioned Thus, -2(f). the court of See Ark. Ct. R. appeals. Sup. case is in the court on certiorari to court of appeals supreme the Arkansas Public Ser- to review its reversal of decision of vice Commission.
I.
on a
of certiorari to
court of
Procedurally,
grant
appeals,
if it were
we will consider
case as
to this
initially appealed
447,
v.
Memorial
316 Ark.
Maloy
Hosp.,
court.
Stuttgart
(1994).
On certiorari we can affirm the trial court in
S.W.2d
See,
e.g., Henry
reverse
court
part
appeals
part.
Hair,
(1981);
273 Ark.
S.W.2d 632
Hair v.
Kennedy,
We can
(1981).
286 Ark. S.W.2d 842 691
627 court, Commission, The Public Service in its brief to this dis- review of the Administrative Law Judge’s cusses standard of fact, that not a real in this There of but is issue findings appeal. whether the Administrative Law is no about dispute Judge were error in fact. Some of the facts clearly determining any witnesses, of interested and some developed by testimony by ordinances, introduction of documents such as but the vast city facts were The real majority stipulated parties. law, and, are issues if the Administrative Law questions Judge law, Public Service Commission is aon wrong question we will rеverse. majority opinion affirms Public Service Commis-
sion, and reverses court of is appeals’ holding a tax that is invalid because was not at an election adopted electors of the qualified See Ark. Code Ann. 26-73- City. (1987). 103
II. Section 14-200-101 of the Arkansas Code Annotated of 1987, case, statute in this controlling that a can provides city “determine” the “terms conditions” for utilities’ use public of city streets and The statute contains three pro- visions that are to the significant outcome of this case.
A. The first of the significant provisions is contained in sub (a)(1), section that a provides can determine the city “terms” which a be public utility may “to permitted occupy streets, or other highways, within the public places municipality.” The word “terms” in such a statute means “time and amounts of payment.” Dist., Nakdimen v. Ft. Smith & Van Buren Bridge 194, 208, 272, 172 (1914). S.W. In Southwestern Bell Co. v. Telephone Fayetteville, Ark. (1980), dictum, S.W.2d 914 we said section 14-200-101 granted to cities to determine authority reasonable terms for the use by utilities public streets. Id. at S.W.2d at 918. Thus, (a)(1) section 14-200-101 authority municipality for the use of its public utility streets and rights-of- way.
B. The second is also contained in sub- significant provision (a) section that a can enact the ordi- provides city charge “by Thus, nance or resolution.” it is not for necessary qualified electors to terms of ordinance the amount approve setting of for the use of a streets and charge city’s rights-of-way by a Because the statute public utility. authorizes to be charge resolution,” ordinance or it adopted “by follows that logically is not invalid charge because there was no election electors of qualified city.
The court of held that the is a tax and that the appeals tax invalid is because there was That no election. is based holding Baioni, our City case of Marion v. Ark. of (1993). S.W.2d 1 There we discussed the distinctions between a fee and a tax in situations which there is no statute. applicable The issue was whether a to connect onto a water charge city’s sewer a fee system was tax. Since there was no statute autho- we had to look at all rizing charge, factors involved to case, determine the issue. To the in this there is a statute contrary, that specifically authorizes for the charge use of streets city This is not a rights-of-way. charge maintaining regular services, and traditional governmental but rather is rent for occu- streets and pation city Since the applicable statute authorizes rental specifically this the case charge, of Thus, Marion is not in I concur with point. that of the part that majority holds that the of Little opinion Rock is autho- rized by statute to for the use and of its streets occupation and rights-of-way.
C. statute, The third significant (b)(1), section of the subsection rent requires any charged for use of a city’s streets or be reasonable. In rights-of-way pertinent part, provides: affected Any public utility such by any ordinance rent for . [charging . . rights-of-way] may from the appeal action council ... ... a written by filing complaint with the Public commission [Arkansas out setting Service] unreasonable, wherein the ordinance ... unjust, or unlaw- ful, the commission whereupon shall . . . with the proceed that it would other com- any same procedure dispose . . . plaint. added). (b)(1) (1987) Code Ann. 14-200-101 (emphasis
Ark. Even the rebuttable of reasonableness granting presumption *12 (2), in the rent assessed AT&T in as set out subsection charge, and unreasonable. the ordinance is unjust that the amount AT&T is charged The ordinance provides facts, the use public rights-of-way.” stipulated “for facts, those evidence are sum- using computations undisputed marized as follows: 1,198 streets, roads,
There are miles of approximately utilities, in the and the received as alleys City, from public $718,415.43 fees for the use of its rights-of-way, $703,970.24 in 1991. cables,
AT&T maintains miles of fiber twenty-three optic and one-half miles of those are eight facilities on City’s $290,715.15, AT&T’s rental rights-of-way. 1990 was payment $264,195.72, and in 1991 was or an annual rent of average 277,455.00 $34,682.00 $ This to an amounts mile average per own, for use of the AT&T City’s does not rights-of-way. pos- sess, or maintain other within the operate, any facility City’s rights-of-way.
Arkansas Louisiana Gas maintains miles of Company facilities, and 850 miles are approximately of those facilities on Arkla an City’s rights-of-way. $2.5 million paid average dollars, $2,940.00 or about mile for use of the per City’s rights- of-way.
Southwestern Bell annual Telephone Company’s average $2 rental is million dollars. About one-half of South- payment
western Bell’s facilities are on and about City’s rights-of-way, one-half are on In the private of its brief property. argument part the Public Service Commission cites the record and states that 1,000 Southwestern Bell has facilities on about miles rights- in the of-way City. of tele- Assuming ubiquitous availability service, Southwestern Bell’s phone on occupanсy probably half, about or miles of the From these City’s rights-of-way. facts, $2,750.00 that Southwestern Bell about appears pays per mile for use of the City’s rights-of-way.
Arkansas Power and maintains miles Light Company of overhead in the facilities and about 775 miles City, of those facilities are on the City’s It main- additionally conduit, tains underground estimated AT&T to be over 250 million, $8.8 miles. AP&L rent of about paid average $11,350.00 mile if the overhead per just facilities are counted. counted, If the conduit are underground cost mile average per $5,900.00. would be statistics,
From above AT&T concludes that it four- pays Arkla, teen times as much rent mile as thirteen per times as much Bell, as Southwestern and six times much as as AP&L. Neither nor the Public Service Commission AT&T’s con- dispute clusions.
III. The City does not that it deny AT&T a charges greater *13 amount than the other utilities when the fee is considered on a basis, blush, mile and the per Commission admits that “at first does make the charge assessed seem [it] disproportionately high.” However, Commission, the City, and the majority opinion to AT&T’s respond argument two ways.
A. First, the and the Commission that AT&T’s cost argue 1,000 mile is not valid per comparison because it ignores miles of the City’s used rights-of-way Southwestern Bell to customers, and, contend, access to gain they without that arrangement, AT&T would have to maintain its own physi- cal facilities. This response, questioning costs comparative per mile, will not stand for either scrutiny of two reasons. The first is that AT&T or pays charges tariffs to Southwestern Bell that are the Public regulated by Service Commission and the Federal Commission, Communications and AT&T cannot direct South- western Bell to route distance calls long over either its City rights- which of-way, constitutes about one-half of Southwestern Bell’s or rights-of-way, over owned privately which right-of-way, con- stitutes the other one-half of Southwestern Bell’s rights-of-way. Moreover, the argument is inconsistent with the ordinance itself because the ordinance the rental to be requires charge to applied calls, all of AT&T’s even those deliv- including rights- that are on private facilities Bell’s Southwestern ered over of-way.
B.
is that
the Commission
response
second
The
as
is not unrea-
rent
revenue
of a percentage
gross
a charge
charged
the rentals
compared
when
discriminatory
sonable
majority
The
City.
within
utilities that operate
other public
that a
can
city
statute
this
The
provides
rationale.
opinion adopts
per-
be
utility may
public
the terms “upon
determine
streets,
places
or other public
highways,
mitted to occupy
(a)( 1)
Code Ann.
14-200-101
Ark.
municipality.”
within the
that a city may
section
(1987)
This
(emphasis
provides
supplied).
area of the streets
charge
geographical
a
for
occupying
in terms of
occu-
physical
It written
other rights-of-way.
a “franchise fee”
The
not authorize
statute does
space.
pation
it
not
the City
for
use of the
and does
rights-of-way,
authorize
in uphold-
a
The
receipts
majority opinion,
charge gross
fee.
Sweet,
a fee on
refers
the case
ing
Goldberg
gross receipts,
a
(1989),
The majority notes that “AT&T opinion by acknowledging telephone companies’ payment franchise during years, fees construction past Act has proposed been not the one and cities.” applied by telephone companies The observation is valid and citation of Mears Arkansas State Hospital, (1979), 581 S.W.2d in How- point. ever, one reason for AT&T’s in apparent change while position, AT&T, not admitted is sufficient by to disregard past pay- ments that were made without objection by AT&T. In past most, all, if not holders of franchises from the held exclu- sive franchises. AP&L holds an exclusive franchise on furnish- within the ing electricity City, ARKLA holds exclusive fran- on gas, chise natural and in the furnishing AT&T held an past exclusive franchise on furnishing long service. Such franchise holders are allowed the PSC rate suffi- charge cient for a “reasonable rate return.” It would seem logical that an exclusive franchise holder would that “reasonable rate prefer of return” to be on the amount largest For if possible. example, the reasonable rate in of return one were any determined year be ten the franchise holder percent, would prefer to make ten return percent on two million dollars instead of on one mil- only lion dollars. The inherent with “cost ten” difficulty con- plus is that such a cept system encourages costs. It is most high likely that while AT&T held an exclusive franchise on the long dis- service, tance it relished the idea of higher costs paying Now, fee. franchise after the breakup parent American Teleрhone and Telegraph it is in Company, with competition MCI, and LDDS. Sprint, The of a concept guaranteed “cost plus ten” is must gone, AT&T now change its to meet position But competition. change affects more than position AT&T. user, The change citizen, benefits the position Their rates should be lower. taxpayer. Under these circum- stances, the of the fee without past payment should not protest defeat AT&T’s current position.
IV. are authorized for a Charges public utility’s occupation streets, “the or other highways, within the munic- places Ark. Code Ann. ipality.” (a)(1) (1987). 14-200-101 Such charges § (b)(1). cannot be unjust unreasonable. Id. levied AT&T under against when compared charges *15 utilities, high is disproportionately public levied on other to AT&T is the AT&T. Because against discriminates unreasonable, the major- from dissent I respectfully unjust ity opinion. J.,
Corbin, in this dissent. joins review, Corbin, Justice, I agree dissenting. Upon L. Donald Communica- AT&T the court of appeals, of with decision Rock, S.W.2d 414 Ark. App. City tions an invalidly in this case is levy (1993), challenged concluding tax, Ark. Code Ann. by a fee authorized rather than imposed (a), the statutory 14-200-101 14-200-101(a) (1987). Section § for its enactment of of Little Rock authority by claimed con- “terms and assess levy, empowers this patently streets, other or of its highways, ditions” for occupancy resolution, which are then deemed by ordinance places, acting However, I with court agree facie reasonable. to be prima was, look, that, this levy a closer the substance of appeals fact, tax, and, such, validly have been imposed a as could not electors of the City pur- adoption by qualified without its Code Ann. 26-73- еlection. Ark. suant to a or general special (1987). look at the taking challenged act of a closer simple theBy which, it sum- appears, I contravene the majority opinion levy, “fran- since the is called a challenged levy concludes that marily to declared exer- fee” is enacted City pursuant chise by 14-200-101(a), under section any statutory authority cise “fee” with view to it as analysis levy classifying judicial short, I am not that the persuaded or “tax” is inappropriate. via this the mechanism of its levy statutory City’s adoption (a) a fee under section 14-200-101 authority necessarily precludes con- analysis, versus tax or renders analysis inappropriate (a) “term the fact that valid section 14-200-101 sidering although alone, be the enact- and condition” enacted оrdinance may Hence, the electorate. I ment of a valid tax requires approval that the should be undertaken. analysis am of opinion so, (and it is a fee if difficult to as Clearly, classify this franchise, license, user, kind, rent), or a occupancy, what e.g., 17’s fact and conclusions of law findings tax. PSC Order No. this as follows: point, summarize pertinent part, *16 2. the How the ordi- charge imposed by challenged nance is denominated will not be permitted to control determination of its The validity. enactment of the original amendment, as well as its challenged clarifying in referred adopted variously to this as both charge a fee and a tax. renewals of this ordinance refer Subsequent to it as a fee. only franchise It does not extensive require case law and finanсe reading treatises to municipal that the see technical historical and traditional distinction between tax and a fee has become so blurred in modern usage and that it practical has application effectively lost its This meaning. blurring process was also noticed Dr. by Venus, economist. expert Both seem to parties [AT&T’s] agree that essential characteristics the charge levied by viewed, the ordinance to control how it ought is not how it is labeled. This is the which has approach been used in this in case analyzing ordinance in question. is Validity being determined at such as looking things under what legal authority City claims the power enact such ordinance and how impacts financially utilities which it is as imposed to how other compared ordinances other impact utilities operating within Rock. Order 17No. at pp. 8-9.
This court has addressed the fee versus tax
in
analysis
sev-
decisions,
Baioni,
eral
most notably, City Marion (1993).
3. fee the to the benefits conferred upon payors. related the charge that the label to The court also noted applied the analy- or itself is not on court’s binding the enactment levy The found the challenged the as fee tax. court charge sis of or fees, invalid taxes. were valid rather than in this case charges Graham, 278 Ark. Little Rock v. In North City of fee” (1983), this invalidated a “public safety S.W.2d 452 court as an voter city approval, enacted without pursuant by ordinance was the challenged City invalid tax. adopted raising implement municipal the a sum certain to for purpose a flat The contested was charge and firemen salaries. police household, fee on each business monthly imposed apartment Again, in certain low-income the municipality, exempting persons. the fact that the in this court found analysis, noteworthy for for the revenues contribu- raising was imposed purpose the of maintaining existing tion toward cost municipality’s a spe- and fire rather than for specific, police protection, providing for the of the tax. cial service payors Dierks, City in Holman v. Finally, flat san- an annual rate (1950), this court concluded S.W.2d 392 tax on itation each business house and in the imposed dwelling for for with city city an insec- purpose paying fogging was, fact, ticide periodically a valid “fee for during year of a performance service” and not a tax. the factors utilized in the case
Applying law to preceding instant I note the levy, following: — 1. What was the purpose general raise
revenues pay specific and service special ren- dered to the levy’s payors? At the administrative hearing, Deputy Manager tes- City tified that the need for recognized additional revenues beginning Local budget cycle. service were a franchise companies already fee. The paying City con- sidered on franchise fee placing service compa- fee, nies using structuring knew how much revenue it was attempting This generate. revenue, to the according Deputy City Manager’s testimony, *18 to be restriction, used for all without municipal not ded- purposes icated to .any and particular not purpose, segregated from other Baioni, general funds. Unlike municipal in which the fees tapping were in placed segregated accounts be solely used to expand the sewer and water systems and for no other the evi- purpose, dence in the instant case is that fee was collected to supple- ment the City’s general revenues without special use restriction.
2. Are proceeds this levy restricted use for future solely exclusively and payors? benefit not. Clearly As evidenced Deputy Mаnager’s this testimony, were proceeds levy always intended for use general as revenues The City. facts parties’ stipulated that, enactment, confirmed since its the City has collected monies pursuant challenged franchise and that the City treats revenues received under franchise general ordinances as with revenues no restrictions their on use. reasonable,
3. Is the levy related reasonably fair to the payors? benefits conferred Legitimate franchise are fees supported by both statutory law, and case and will be so as the fee is upheld not unrea- See, Municipal Corpo- Law McQuillen, E. e.g., sonable. in this context 1986). ed. “Reasonableness” rations (3d 34.81 of the services with the cost the fee comparing is determined by Baioni, to the fee рayors. to be provided case, to use right “service” 1. In provided S.W.2d this in detail discussed This issue is the City’s public case, I in which this dissenting opinion in Justice Dudley’s in this levy the contested which holds that as to join part 11(C)- discriminatory charge (parts case is an unreasonable therein). IV through sum, chal- consideration of substance after above, I would with factors outlined accordance
lenged levy to enact authority pur- not a fee within the levy City’s find the (a), a tax which is invalid for but is suant to section 14-200-101 with 26- in accordance section lack the electorate of approval that, were if instant a fee rather I note even the Finally, 73-103. tax, the reasons that I still find that it is invalid for than a would with the ratio- in accordance discriminatory it is unreasonable nale forth in Justice Dudley’s dissenting opinion. set reasons, dissent from the majority these I respectfully
For opinion. v. C. C. DONOHO
Tommy DONOHO