Opposing a Town’s Attempt to Pay For Its Sewer System’s Repair By Imposing an Illegal Tax on Property Developers
The question raised by this Massachusetts Supreme Judicial Court (“SJC”) appeal was whether a town could exact from property developers a costly monetary “contribution” towards payment for the town’s state-ordered repair of its dilapidated sewer system. The state of the sewer system is a result of the town’s longstanding neglect, and is not connected in any way with property development in the town. Apparently other cities and towns in the Commonwealth have imposed “fees” similar to those at issue in this case, thereby widening the impact of this case on the rights of Massachusetts property owners. After the town of Saugus failed for a number of years to repair its defective sewer system, the Massachusetts Department of Environmental Protection (“DEP”) in 2005 entered into an administrative consent order with the town, under which Saugus agreed to make the necessary repairs. This case results from the town’s attempt to defray its cost of compliance with the consent decree by subjecting certain property developers to a mandatory contribution for the town’s sewer repair, which the town terms a “fee,” as a condition of being connected to the town’s sewer system. The developers have challenged this “fee” on the ground that it is actually an illegal tax, rather than a valid fee, under Emerson College v. Boston, 391 Mass. 415 (1984), in which the SJC announced a three-part test to guide courts in determining whether local government is exacting an unlawful tax in the guise of a permissible fee. The inquiry asks whether local government is providing a particular service that benefits the party subject to the monetary exaction (hence a valid fee), or whether local government is in fact requiring a small class of individuals to pay for government’s discharge of its general duties (hence an unlawful tax). Applying the Emerson College test, both the Massachusetts Superior Court and Appeals Court held that Saugus’s mandatory contribution is an unlawful tax. The town obtained further appellate review from the SJC and NELF, joined by co-amicus NAIOP Massachusetts, filed an amicus brief supporting the developers. NELF argued in its brief that Saugus’s disputed “fee” fails the Emerson College test, and other applicable state law, because the town is not providing a “service” to the plaintiffs. Instead, the town is merely fulfilling its duties owed to DEP in the 2005 consent order, and the town’s attempt to defray the cost of compliance with those public duties in fact functions as a tax, which the SJC has defined as “[‘]an enforced contribution to provide for the support of government.[’]” Doe v. Sex Offender Registry Bd., 459 Mass. 603, 610 (Mass. 2011). NELF also argued that the town’s exaction of a “fee” as a condition for property development violates the Takings Clause under Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994). Since there is no connection between the “fee” and any likely public impact caused by the plaintiffs, Saugus’s action fails under Nollan-Dolan and the Takings Clause.
In a decision issued on June 29, 2012, the SJC disagreed with both NELF and the lower courts and held that the charge at issue was a valid proprietary fee. The Court based its decision on its view of the 2005 consent order, which it said required a moratorium on any new connections to the sewer system unless Saugus established a “sewer bank.” Since, without the sewer bank, there would have been a complete moratorium and the Court concluded that the amounts paid by the developer in this case were connected to the sewer bank, it concluded that the fee was a sufficiently particularized benefit to pass muster under Emerson College. In reaching this result the Court held that “[a] precise balancing or weighing of public benefits against a particularized benefit is not part of the first Emerson College.” Rather, the Court held, the relevant inquiry is “whether the limited group [here property developers] is receiving a benefit that is, in fact sufficiently specific and special to its members.” As the Court pointed out, it was the maintenance of the “sewer bank” that made the development at issue possible. Unlike both the Superior Court and the Appeals Court, the SJC apparently ignored the fact that the “fees” were used to benefit the entire population of Saugus and were used to fix a sewer system that the town itself had allowed to deteriorate.
The question raised by this Massachusetts Supreme Judicial Court (“SJC”) appeal was whether a town could exact from property developers a costly monetary “contribution” towards payment for the town’s state-ordered repair of its dilapidated sewer system. The state of the sewer system is a result of the town’s longstanding neglect, and is not connected in any way with property development in the town. Apparently other cities and towns in the Commonwealth have imposed “fees” similar to those at issue in this case, thereby widening the impact of this case on the rights of Massachusetts property owners. After the town of Saugus failed for a number of years to repair its defective sewer system, the Massachusetts Department of Environmental Protection (“DEP”) in 2005 entered into an administrative consent order with the town, under which Saugus agreed to make the necessary repairs. This case results from the town’s attempt to defray its cost of compliance with the consent decree by subjecting certain property developers to a mandatory contribution for the town’s sewer repair, which the town terms a “fee,” as a condition of being connected to the town’s sewer system. The developers have challenged this “fee” on the ground that it is actually an illegal tax, rather than a valid fee, under Emerson College v. Boston, 391 Mass. 415 (1984), in which the SJC announced a three-part test to guide courts in determining whether local government is exacting an unlawful tax in the guise of a permissible fee. The inquiry asks whether local government is providing a particular service that benefits the party subject to the monetary exaction (hence a valid fee), or whether local government is in fact requiring a small class of individuals to pay for government’s discharge of its general duties (hence an unlawful tax). Applying the Emerson College test, both the Massachusetts Superior Court and Appeals Court held that Saugus’s mandatory contribution is an unlawful tax. The town obtained further appellate review from the SJC and NELF, joined by co-amicus NAIOP Massachusetts, filed an amicus brief supporting the developers. NELF argued in its brief that Saugus’s disputed “fee” fails the Emerson College test, and other applicable state law, because the town is not providing a “service” to the plaintiffs. Instead, the town is merely fulfilling its duties owed to DEP in the 2005 consent order, and the town’s attempt to defray the cost of compliance with those public duties in fact functions as a tax, which the SJC has defined as “[‘]an enforced contribution to provide for the support of government.[’]” Doe v. Sex Offender Registry Bd., 459 Mass. 603, 610 (Mass. 2011). NELF also argued that the town’s exaction of a “fee” as a condition for property development violates the Takings Clause under Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994). Since there is no connection between the “fee” and any likely public impact caused by the plaintiffs, Saugus’s action fails under Nollan-Dolan and the Takings Clause.
In a decision issued on June 29, 2012, the SJC disagreed with both NELF and the lower courts and held that the charge at issue was a valid proprietary fee. The Court based its decision on its view of the 2005 consent order, which it said required a moratorium on any new connections to the sewer system unless Saugus established a “sewer bank.” Since, without the sewer bank, there would have been a complete moratorium and the Court concluded that the amounts paid by the developer in this case were connected to the sewer bank, it concluded that the fee was a sufficiently particularized benefit to pass muster under Emerson College. In reaching this result the Court held that “[a] precise balancing or weighing of public benefits against a particularized benefit is not part of the first Emerson College.” Rather, the Court held, the relevant inquiry is “whether the limited group [here property developers] is receiving a benefit that is, in fact sufficiently specific and special to its members.” As the Court pointed out, it was the maintenance of the “sewer bank” that made the development at issue possible. Unlike both the Superior Court and the Appeals Court, the SJC apparently ignored the fact that the “fees” were used to benefit the entire population of Saugus and were used to fix a sewer system that the town itself had allowed to deteriorate.
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